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Buying vs renting in Sweden: Which is best?

Buying vs renting in Sweden: Which is best?
Rent or buy? These are the factors to weigh up. Photo: Fredrik Sandberg / TT
Whether you're planning for your move to Sweden to be permanent or not, accommodation is one of the key things to arrange, and choosing between buying or renting is a big part of that.

Before weighing up the pros and cons of the two approaches, the first thing to know is that there are two main types of rental properties in Sweden.

With a ‘first-hand’ rental contract, you rent directly from the landlord. These properties are often subject to rent controls and you can stay long term, but they are often allocated via a queue system. A national housing shortage means you might be waiting for many years or even decades before you’re eligible for somewhere first-hand.

Second-hand renting is the Swedish term for subletting, meaning you rent either from someone with a first-hand contract themselves (known as hyresrätt) or from someone who has bought their property (called bostadsrätt if it’s an apartment).

These are very different options, with the most notable difference being that you can usually stay in first-hand rentals for as long as you want, whereas there are caps on the maximum time you can sublet.

The paperwork

There’s no rule in Sweden that prevents non-citizens or non-permanent residents from buying property, but it is significantly harder to get a mortgage as a new arrival.

You’ll need a Swedish social security number or personnummer and proof of stable finances in Sweden, and you’ll be subject to a credit check. This means that you’ll usually need a history of employment and paying tax in Sweden, although some banks are more lenient than others when it comes to, for example, self-employed people or recent arrivals.

Some housing queues will also require a personnummer, whereas for second-hand rentals the main requirement is to prove to the landlord that you’d be a responsible tenant, for example by showing proof of stable finances or providing references.


Whether renting or buying, in popular areas there’s often competition. Photo: Fredrik Persson/Scanpix/TT

Location, location, location

Sweden is a vast country and the best option for you will depend partly on where you’re searching. As mentioned above, Sweden’s larger cities tend to have fierce competition for rentals — but these are also the areas where property costs the most to buy. Some rural areas, meanwhile, may have limited rental opportunities but much lower property prices.

When deciding which option is right for you, your starting point should be using sites like Hemnet and Booli to find out the price and availability of housing to buy in your area, and compare this with rentals, which you’ll either find through the municipality or state-regulated housing queue, or through websites like Blocket, Samtrygg, and Qasa for sublets.

Check out The Local’s extensive listings of apartments and houses for rent in Sweden


Photo: Per Pixel Petersson/imagebank.sweden.se

House or apartment?

Whether you want to live in a house or apartment, there are usually options for both renting or buying, but of course what’s on offer varies by location.

Potential buyers also need to know that buying a detached house is quite different from buying an apartment in Sweden.

If you buy an apartment, you’ll almost always be part of a bostadsrättsförening (housing association), which means you pay a fee to this association in return for them managing the building. This also applies to some houses, usually terraced houses. 

Buying a house that isn’t part of an association means you’ll pay all your bills (electricity, water, heating and so on) directly to the providers and that you are entirely responsible for the building. That means arranging a survey before you buy and keeping on top of maintenance once you move in.

Photo: Fredrik Sandberg/TT

Cost

To buy a property in Sweden, you’ll usually need at least a 15 percent deposit. 

To see how much you should expect to pay on an owned property, use a few mortgage calculators (again, Hemnet and Booli can show you typical prices for your preferred size and location) and add on estimates for bills and fees.

Bills and fees vary based on property size and amenity usage, and for owners of a bostadsrätt your monthly fee varies depending on the assoication’s financial situation and exactly what’s included. 

These vary based on the size of property and your usage, and while owners of a detached house will pay all their bills individually, owners of a bostadsrätt will pay a fixed monthly fee (avgift) to the building association which covers things like water and heating, but also costs of building maintenance such as plumbing.

The actual process of buying is surprisingly cheap, at least for a bostadsrätt; you don’t usually get a survey and there are no legal fees. The extra fees for buying a bostadsrätt are a transfer fee (överlåtelseavgift, paid by either the buyer or seller depending on the association), and, if you’re taking out a mortgage, a one-time registration fee (pantavgift), which are usually less than 2,000 kronor in total. When buying a detached house, there are additional fees such as a survey.

When it comes to renting, first-hand contracts are subject to rent controls which makes them an attractive option if you can get your hands on one.

Officially, second-hand rentals shouldn’t be much pricier than the first-hand equivalents, but there’s often an added fee of 10-15 percent for a furnished property. If you are sub-letting from someone who owns the apartment, they have the right to set the price based on the property’s current market value, so these can be much pricier than sub-letting from someone with a first-hand contract even if the landlord is following the rules. And you’ll need to watch out for scams; there are cases of unscrupulous landlords charging much more than is reasonable – though Sweden has cracked down on this.

Is it an investment?

Comparing your monthly costs is one thing, but what about the chance to make money? If you’re buying a home, each month part of your mortgage goes towards paying off the loan, so that you own a greater proportion each month.

Buying property has historically been a good investment in Sweden, but this varies depending on the type and location of the property, and there’s certainly no guarantee you’d sell for a profit. That’s something foreign residents should consider especially carefully; if you had a job opportunity or family emergency that meant you needed to leave Sweden, you may not have the chance to wait out a bad spell in the markets.

Even if you do make a profit, sellers are required to pay Swedish capital gains tax on 22 percent of any property profits, although you can defer this indefinitely if you use the money to buy a new home either in Sweden or within the EU/EEA. 

Compared to many countries, the Swedish system is not designed for property owners to make money. In many cases, however, that’s exactly what happens, but it’s not a safe investment.


Photo: Hasse Holmberg/SCANPIX

Making a house a home

Keen to put your own stamp on a place? As a renter, you’ll be limited in exactly what you can do to the property. Even if you own your apartment, there will be some restrictions and you may need to apply for permission from the bostadsrättsförening for big projects, such as installing a washing machine or adding or removing a wall. 

One advantage of second-hand rentals is that you can often choose a furnished option, especially for shorter terms. This makes them convenient for people not in Sweden for the long haul, but remember that your landlord is likely charging up to 15 percent extra for the apartment being furnished, so weigh up whether it’s worth buying your own furniture.

Repairs and renovations

The flipside of having the right to make adjustments to your owned property is that you’re also responsible for fixing any issues that crop up. As a tenant, if a kitchen appliance breaks or you have a leak, it’s your landlord’s job to fix this, but as a home-owner these are things you should factor into your budget.

The extent of your responsibilities also depends on whether you buy a bostadsrätt apartment (or a house that’s part of a bostadsrättsförening) or buy your own house. The monthly fee paid to a bostadsrättsförening goes in part to building maintenance, and the rule of thumb is that you’re only resonsible for fixing things within your own four walls, while the association will take care of things like roofs, windows, doors, plumbing and electricity. 

In other words, anyone planning to buy should remember to budget extra for repairs and maintenance, and you should set aside a bit more if you own the entire building.


Responsibility for repairs might be a pro or a con. Photo: Vilhelm Stokstad/TT

How long will you stay?

You may not know the answer to this when you first arrive in Sweden, but this is one of the most important factors.

If you’re in the country on a fixed-term job or study programme, it may be a big gamble to invest in property, given the costs associated with furnishing, maintaining, and eventually selling your home. 

On the other hand, if you’re based in a city where queues for first-hand rentals are long, it’s likely you’ll need to move fairly often as a second-hand renter due to caps on how long people can sublet a property for. This could mean you’ll face the time, costs and stresses associated with moving, not to mention the difficulty of feeling truly settled in Sweden. 

Ultimately, there’s no right answer, but you can make an informed decision on whether to rent and buy based on your budget and finances, what’s available in your area, and your ideas about your future.

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