A home is more than just a place to live; it’s a source of comfort and security. A well-functioning housing market is vital for both individuals and businesses, but unfortunately, Sweden’s rental market faces significant challenges. Historically, it is close to impossible to secure a rental apartment, particularly in urban areas where waiting lists are at all-time highs.
Renting a house or apartment in Sweden is so competitive that there is a black market for long-term leases.
Stockholm is one of the world’s most beautiful cities. It boasts centuries-old architecture, a city center surrounded by water, clean air, and nature never more than a stone’s throw away, where you can escape the city’s hustle and bustle. This is also one of the reasons Stockholm typically scores well in international rankings that measure so-called liveability – the conditions for quality of life and well-being. Therefore, it provides an outstanding opportunity and starting point for those who want to live, work, and lead their lives here.
Nimmerison will give you an insight into the current situation in the Swedish rental market and the challenges it faces.
A prominent challenge the past years in the Swedish rental housing market has been the lack of available rental apartments. For all those who cannot secure a first-hand lease, the secondary housing market becomes the only realistic option, which has led to a significant imbalance between supply and demand. Due to the exceptionally high demand the secondary housing market is characterized by short-term lease agreements and significantly higher rents compared to the primary market. The high demand has also opened up the opportunity for more scams and more people are taking advantage of the situation. Read more about how to spot a scam further down.
So How is the rent determined?
When it comes to rental pricing, it depends on the type of housing in question. In general, with a condominium (bostadsrätt), you can set a more flexible rent, while for rental apartments (hyresrätter), there are stricter rules governing the rent that can be charged. For instance, rental apartments cannot be leased for profit and must be based on the actual costs of the housing. There are other factors at play, but the guideline is that the rent must be reasonable.
So what does the rental law say about condominiums and houses?
According to the law on the rental of one’s own residence, Section 4, Subsection 2, a reasonable rent for condominiums and houses is calculated by adding the housing’s capital cost and operating expenses together, along with a potential surcharge for furnishings. The capital cost is calculated as a reasonable return rate on the housing’s market value. There are calculators online to help set a “reasonable” rent.
Renting a condominium in Sweden comes with its own set of challenges:
- Strict Regulations: There are strict regulations in place regarding the renting of condominiums, which can make the process more complex and lengthy. The owner of the apartment/property needs permission to rent out from the Housing association and the tenant needs to be approved by the association before renting. During the summer holidays in Sweden this can be a lengthy process as most people are away during the months of July and August.
- The owner of the apartment/property needs a valid reason to rent out a property and for what duration. For example: Working in another location, such as abroad, is a valid reason for renting out a property in Sweden. Typically, approvals for such rentals are granted for approximately four years, one year at a time.
- Tenant Screening: Landlords often conduct thorough tenant screenings, which may include credit checks and references, making it competitive for prospective renters. Some landlords favous tenants that work at a large company and who can give some kind of guarantee for the tenant.
- You can only rent the apartment for a maximum of 12 months meaning that your lease agreement will terminate at the end of the lease period. The only way to get an extension is for the owner to ask for another permission and has a valid reason.
- Deposits: Renters may be required to pay a security deposit, usually equivalent to a few months’ rent, which can tie up a significant amount of money.
Working with an experienced relocation provider can offer solutions to ease the process of renting:
- Local Expertise: They possess local knowledge and understand the Swedish rental market, which allows them to provide valuable guidance to clients.
- Tenant Screening: Nimmersion can assist with tenant screening, ensuring that clients meet the requirements of landlords.
- Language Support: For non-Swedish speakers, Nimmersion can provide language support, translating documents and facilitating communication with landlords.
- Negotiations: Nimmersion can negotiate rental terms, including lease conditions, on behalf of our clients to secure favorable agreements.
- Documentation: Nimmersion can assist with the completion of necessary rental documents, ensuring compliance with Swedish rental laws.
What does the rental law say about rental apartments?
According to the Rent Act, Chapter 12, the Land Code, Section 55, Subsection 4, a reasonable rent for the subletting of a rental apartment is on the same level as what the landlord pays, with additional charges for operating expenses and potentially furnishings.
In the case of subletting a rental apartment, you are only allowed to charge the same rent that you yourself are paying. You can add to the rent if the rental apartment is furnished or if it includes other amenities such as electricity, broadband, parking, etc.
Just like a condominium, you must have substantial reasons for subletting. These reasons can include: due to illness, work or studies in another location, or cohabitation trials, for example. You also need approval from the landlord or rental board, if you sublet the apartment without permission, you risk losing it.
Many argue that rent regulation is the cause of the long housing queues, the unauthorized trading of lease contracts, and the conversion of many rental apartments into condominiums.
The discussion about rent regulation is complex and varies depending on the region, where different regulations and political measures are applied. There is no universal consensus on its advantages or disadvantages, and the debate continues.
Due to these challenges and factors, a highly competitive and dynamic environment arises, making it increasingly complex for renters to navigate the renting market. With a widening gap between growing demand and stagnant property supply, property owners and intermediaries have had the upper hand for years leading to:
- Dictate visit schedules, organizing group visits with other potential tenants.
- Impose lease types
- Request for a guarantees with a preference for a Corporate lease agreement
As landlords and intermediaries have held a dominant position in the market for the past few years, the industry has enjoyed prosperity, resulting in an increase in the number of suppliers entering the market, especially in the Stockholm region. This is an alternative to many individuals, families and companies in order to navigate the rental housing market. One of the biggest advantages of an intermediary is that you are offered a secure rental where both the landlord and the tenant receive assistance with all questions and issues that may arise. Renting through an intermediary may involve a service charge, higher rent, or an additional payment, but it also provides a certain level of security throughout the rental period.
Even though renting from an intermediary has its advantages their business has been questioned by the Swedish rental law and their future is unclear.
Those who are searching on the secondary rental market not only risk paying twice as much in rent as individuals with primary leases but also face the prevalence of rental scams on rental websites and social media platforms. One risks encountering individuals who pretend to offer a cheap apartment and demand an upfront payment. However, once the money has been paid, there is no apartment available. Avoid websites where anyone can create an ad without verifying their identity.
The images in the ad can quickly provide insights into how serious the landlord is. Save them and do a reverse image search to see if they appear in other ads. Similarly, you can search for parts of the ad text to check if it has been copied from elsewhere.
Present time, the economic situation, characterized by significant cost increases for homeowners, has prompted them to explore options like renting out spare rooms or entire apartments, particularly for individuals moving in with a partner. This change has resulted in a remarkable 45% increase in the supply of second-hand housing within one year. However, the heightened supply has also extended the time it takes to rent out properties by 38%. Additionally, rent levels have stabilized, especially when compared to the escalating costs faced by homeowners. As a result, the housing market has shifted in favor of tenants, a concept less commonly discussed in Sweden. It’s important to note that this shift doesn’t necessarily entail lower rents, but rather a greater availability of properties for rent, which is a novel development after a prolonged period of housing shortage.