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ECONOMY

Homeless to ‘skip’ long rental queues in capital

Some of Stockholm's homeless population are set to be offered permanent accommodation in the city centre, as part of efforts to help them reintegrate into society. But the move is a highly controversial one in the capital where there is a long queue for first hand rental contracts among tax-paying residents.

Homeless to 'skip' long rental queues in capital
There is a long queue for housing in Stockholm. Photo: Image Bank Sweden
Stockholm's Social Democrat-led City Council has announced that it wants to give more help to vulnerable people who have been unable to secure first hand rental contracts in the heart of the capital.
 
“This could be large families, homeless people, addicts,” Green Party councillor and social affairs spokeswoman Ewa Larsson told Swedish newspaper Dagens Nyheter.
 
She added that the move was designed to avoid concentrating these groups in social housing projects in the Stockholm suburbs.
 
“We'll take a greater responsibility, we want all locals to have an opportunity to stay in their city,” added housing commissioner Ann-Margarethe Livh.
 
The move builds on previous projects run by SHIS, a private organisation contracted by Stockholm City Council which already provides seven-year contracts to disadvantaged groups.
 
Under the new plans, some homeless people will be given permanent accommodation in existing and new apartment complexes run by SHIS, which currently takes responsibility for 2,300 apartments in 22 locations around the city.
 
“We provide help for all kinds of people – young, old, families, people with addictions or debt problems, who live alongside other Swedes in our accommodations, bridging the gap between housing provided by social services and the regular housing market,” SHIS spokesman Fredrik Jurdell told The Local.
 
“They pay the rent like everybody else, although sometimes that comes from benefits. What is different is that we have specially trained staff on hand, restaurants and reception areas – facilities that provide extra support for people who live there and makes the housing more acceptable to others in the neighbourhood,” he added.
 
According to Jurdell, giving some residents permanent contracts will help “ease the pressure” on individuals and families currently “limited to seven years” of secure accommodation in Stockholm.
 
“We are talking about giving more stability to people who have really struggled. For example giving a seven-year contract to a 60 or 70-year-old addict who has spent ten years on the streets and putting him an apartment on his own out in the suburbs…well it would be better if they were among others in a place where they can get support.”
 
But the move is a controversial one in a city where in some areas tax payers are facing a 20 year wait for rental accomodation. This has resulted in a strong subletting culture, with prices spiralling in recent years despite rules designed to cap rental increases.
 
However it is backed by Sweden's largest centre-right party, the Moderates, which led the previous government.
 
“We see it as a continuation of “housing first”, a similar project the Alliance worked with during our mandate,” it said in a statement emailed to The Local.
 
Asked if he understood complaints about the plans to give first-hand contracts to homeless residents, Jurdell told The Local: “It is a relevant question. I would say that our main task is still to act as a stopgap to help people before they can get back into the regular housing market. But for some groups they could spend years in the queue and still struggle to get a permanent contract because of their problems or because they don't have references, or because there are so few apartments available for very large families. So the changes will help with this.”
 
The announcement by Stockholm City Council comes a day after Sweden's Prime Minister Stefan Löfven unveiled his national strategy for tackling the housing crisis, pledging that 150,000 new homes would be built each year from 2016, in a move designed to help both Swedish and international workers.
 
“We have a major housing shortage in Sweden. Housing is a key part of the government's labour strategy,” he told a press conference.
 
“A housing shortage is one of the biggest obstacles to growth, such that people cannot move wherever they want,” he added.
 
While in many other European countries public housing is reserved for those on lower incomes, anyone can apply for this kind of accommodation in Sweden, which is usually maintained to a high standard. Both public and privately owned apartments are available to those who register with the city's housing service.
 
Around one in three Swedish adults lives in rented accommodation.
 
Most vulnerable adults in Stockholm are already offered some form of state-subsidised social housing, in line with national guidelines, but this is not always permanent and is often in suburbs outside the city centre.
 

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MONEY

Three ways Sweden’s slashed interest rate will boost your finances

Sweden's central bank, the Riksbank, in May lowered the policy rate for the first time in eight years. How could this affect the finances of those of us living in Sweden?

Three ways Sweden's slashed interest rate will boost your finances

Lower mortgage rates

The policy rate is not the same as the interest rate on your mortgage, although they are linked. In a policy rate prognosis from March, the bank predicted that the policy rate could drop to as low as 2.75 percent by the end of 2025, a drop of 1.25 percentage points since the beginning of 2024.

If mortgage rates drop by the same amount, you could expect a drop in the monthly cost of a 3 million kronor mortgage of around 3,000 kronor a month, not including the tax rebate for interest costs.

Higher property prices

As mortgage rates get lower, the housing market is likely to improve, as buyers know their monthly costs aren’t going to skyrocket due to ever-rising interest rates.

If you already own a home and you’re planning on buying and selling at the same time in the market, this will affect you less, as the price of your new home will most likely go up at the same rate as the price of your old home, but this is good news for anyone planning on selling.

It’s worse news for first-time buyers, who will have to save a larger deposit as prices go up, but on the other hand they’ll get lower mortgage rates and a more stable policy rate makes it easier to plan ahead for the future without being surprised by ever-increasing rates.

A stronger Swedish economy

The Riksbank’s decision to lower the interest rate is proof that the bank believes inflation is over – for now at least. This means that we can expect to see inflation remain at a more stable level, and we’re unlikely to see anything close to the ten percent inflation we saw at the end of 2022.

Lower inflation means that Swedish monetary policy won’t need to be as cautious or restrictive in the future, as the government and the central bank no longer need to put all their efforts into fighting inflation.

That’s not to say that authorities will start stimulating the economy just yet – they’re likely to proceed with caution to make sure inflation really is down for the long-term – but Thursday’s interest rate announcement indicates that the “economic winter” Finance Minister Elisabeth Svantesson warned of in September last year could be drawing to a close.

Is it all good news?

In the short term, the value of the krona is likely to worsen somewhat, as the central bank has lowered Sweden’s interest rate ahead of other major central banks. The krona weakened slightly after the bank’s announcement on Thursday, dropping 8 öre in value against the dollar and 7 öre against the euro.

This is good news for people with income in other currencies, but bad news for those of us who are paid in kronor.

Having said that, a stronger Swedish economy is good news for the value of the krona in the long term, although it’s difficult to predict when the krona will start to gain in value and by how much.

At the end of last year, Riksbank governor Erik Thedéen described the krona as “undervalued”, and underlined the importance of having strong foundations in the Swedish economy.

“The Swedish economy is, at its foundations, well-managed, and sooner or later this will lead to a stronger exchange rate,” he said. “Sweden has strong finances, a well-educated labour force, responsible salaries and a good underlying level of competition.”

“As anyone who has tried to predict the exchange rate knows, it’s genuinely difficult to say exactly when it will go up and by how much, but it can also happen quickly when the trend is broken and the krona starts to gain in value.”

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