Sweden cracks down on black market rentals: What the new laws mean for you

Sweden's parliament has voted through a range of regulations which will tighten up the housing market.

There are two major parts to the legislation: firstly, it will become illegal to buy or sell a rental contract, and secondly, landlords who overcharge second-hand tenants could lose their own first-hand rental contract.

In its summary of the new changes, a parliamentary statement said: "The proposal is made up of measures against trading of rental contracts and other abuse of the right to rent, with the aim of getting a better functioning rental market. The measures should lead to a better turnover of first-hand contracts, better rental conditions and healthier living environments." 

Apartments in Sweden are rented out through a queue system, which means people join a housing queue and are offered rent-controlled apartments based on their position in that queue. Due to population growth and a housing shortage in the major cities, these queues can be long, with many residents needing to wait ten years or even longer to be able to rent in Stockholm, Gothenburg or Malmö.

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Photo: Tomas Oneborg/SvD/TT

People with one of these elusive first-hand contracts are able to sublet these apartments in special circumstances, usually for no more than one to two years – for example, if they have temporary employment elsewhere. But private individuals are not supposed to make a profit from subletting, and the new law changes aim to crack down on black market rentals, where some unscrupulous landlords charge second-hand tenants far more than the market value of the apartment.

Statistics from the National Board of Housing (Boverket) shared with The Local earlier this year showed that the average second-hand rental is around 65 percent more expensive than an equivalent first-hand contract.

"You can find people from all demographics struggling with housing, but it's mostly the young, newly arrived people and foreign workers. We know there's a substantial black market, but it's very hard to map this," Assar Lindén, a lawyer at Boverket, told The Local at the time.

Under the new regulations, the punishment for selling or helping someone to sell a first-hand contract has been increased. The laws also make it a crime to buy a first-hand rental contract.

People found guilty of these offences face losing the rental contract immediately, and the typical punishment will be fines or a jail sentence of up to two years, although this could be increased to four years in serious cases.

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Photo: Björn Lindgren/TT

Landlords who charge too high a rent to second-hand tenants will also risk losing their own rental contract, even if their own landlord approved the price. In principle this means second-hand tenants should pay the same rent as first-hand tenants. Landlords can still charge extra for furniture, equipment and other items the tenant has access to, but the amount added on for this must be considered 'reasonable'.

Previously, landlords who overcharged tenants could be forced to repay the difference between the amount charged and the amount considered 'reasonable', but now the stakes have been raised as those who fall foul of the law could actually lose the apartment altogether.

The measures were based on a four-party agreement between the ruling Social Democrats and Green Party as well as the Centre and Liberal parties. The 73-point deal included proposals linked to immigration, labour law, and housing, including cracking down on black market rentals and abolishing rent controls on newly built properties.

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These rule changes do not affect landlords who own their apartment, known as having bostadsrätt (literally 'right to the property'), rather than hyresrätt (literally 'right to rent the property', or a first-hand rental contract). 

Landlords in this category can charge rent at the cost of the property's current market value (even if they have fully paid off the mortgage) and they may also add on four percent of the home's market value to cover the 'cost of capital'.