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Photo by Erik G Svensson / https://www.stockholmbusinessregion.com/press/media-bank/
A new Swedish rental law effective October 1, 2019, may leave some of your staffers in a very vulnerable position. First, what is this new law? Second, how will it change renting in Sweden? Third, how will it affect renters? Lastly, how can your employees protect themselves to ensure a continued stay in the country?
The new Swedish rental law may affect your staff
Sweden has had a housing crisis for 115 years. It is a significant issue for companies that bring talent to Stockholm and other Swedish cities. The reason is that there is not enough choice, and housing is expensive for disposable income.
To make matters worse, a new law effective October 1, 2019, may leave some of your staffers in a precarious position. They could even find themselves evicted. However, before we get into the details of the new law, it would be helpful to explain how renting works in Sweden.
Renting in Sweden is different from many other countries
Unlike most other countries being allowed to sublet a property or having professional landlords that own many properties and rent them out for a living, Sweden has strict rules around who is allowed to rent out their apartments and why. The letters are primarily private leaseholders renting out their apartments (council flats that are common here) because they are doing something else in the meantime, such as studying or working abroad. These situations are grounds for the leaseholder to apply to the property owner for a permit to sublet.
The property owners are keen to have control over who resides in the buildings. To help them with this, they are greatly aided by the law of REGISTRATION OF RESIDENCY. Everyone must register occupancy with the Swedish tax agency, and an ℅ address is not allowed. Each person must list at a specific apartment. It makes it very easy for property owner to monitor their buildings. This information is public and is only a google search away.
Renting without a relocation company carries risk
Like in any market with a shortage, scams and fraud will follow. Many property owners are unwilling to allow subletting for a more extended period. They can also deny a request to sublet unless there is a valid reason – examples of good reasons mentioned above. A firsthand leaseholder is allowed to trade their lease for another property, so in an expensive real estate market, it represents a tremendous value even though it is not an owned property. Therefore, many subletters try to go under the radar. Namely, they don’t ask for the necessary permit to avoid alerting a property owner that they are not using the apartment.
It is a recipe for disaster. While relocation companies will ensure the validity of a permit, young people or international talent will be unlikely even to know that this is a requirement. Illegal subletting has always been common in the market. Such arrangements have always carried an element of risk. However, the consequences have been annoying and expensive rather than AN URGENT problem that needs a solution today.
What is the new Swedish rental law?
Starting October 1, 2019, the firsthand leaseholder that sublets without permission will lose the right to the property. It will happen immediately, and the subletting tenant will be evicted. The firsthand renter has committed a crime that is punishable by law. They could even sentence to two years in prison. The firsthand lease is void, and there is no possibility to do it over and do it right. It is not unlikely that we will see more empty apartments as the valuable lease is an investment in the future, even if it is open.
The severe shortage of properties is challenging to navigate around for young people who come with a limited budget. Some expect to handle a lot on their own in terms of relocation. It can be challenging for them to know what to ask. Likely, people will knowingly enter illegal sublets. The reason is that there is nothing else available to them at their price point.
A clear briefing about the market and what to look out for is essential. In addition, companies with talents left to their own devices may consider a Plan B for handling urgent homelessness if their employees evict.
Companies that sign leases and engage relocation companies have nothing to worry about as it stipulates by law that the agent needs to check the permit to make sure it is legitimate. Many companies have both models where some employees get assistance, and others expect to sort this out on their own. The good idea is to brief them so they can get out of a potentially harmful situation before it is urgent.
Would you like help with moving your employees to Sweden?
If you are planning on sending employees to Sweden, you can learn loads of helpful information from our Guide to Bringing Foreign Talent to Sweden.
If you have any questions on the Swedish housing market and how to validate a rental, email info@nimmersion.com. You could also download our 2019 housing guide to learn general information about renting in Stockholm.
