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| Pitfalls of rent restraints: why Stockholm's model has failed many | Pitfalls of rent restraints: why Stockholm's model has failed many |
| (35 minutes later) | |
| For the past two years, Viktor Fridh Kleberg and his girlfriend, Louise, have been sharing a studio apartment in Vasastan, one of the most desirable areas of central Stockholm. Together they pay 5,266 kronor (about £390) a month. | |
| “I consider myself very lucky to be in the situation I’m in,” says Kleberg, 26, a student. “I have my own great, affordable apartment in an attractive area of the city, which allows me and my girlfriend to live the way we want to.” | “I consider myself very lucky to be in the situation I’m in,” says Kleberg, 26, a student. “I have my own great, affordable apartment in an attractive area of the city, which allows me and my girlfriend to live the way we want to.” |
| Kleberg is one of the 40% of Stockholmers who are sitting pretty. They rent an apartment directly from a rental company and enjoy the benefits of the Swedish capital’s tightly regulated rental market. | Kleberg is one of the 40% of Stockholmers who are sitting pretty. They rent an apartment directly from a rental company and enjoy the benefits of the Swedish capital’s tightly regulated rental market. |
| Related: New York's rent controls: 'essential for the future of the city' | |
| Buy-to-let is almost unheard of. “It is considered speculation, profiting from people in a way you are not supposed to,” says Billy McCormac, head of the Fastighetsägarna property association. | Buy-to-let is almost unheard of. “It is considered speculation, profiting from people in a way you are not supposed to,” says Billy McCormac, head of the Fastighetsägarna property association. |
| “It is legally quite hard to acquire apartments and start renting them. You can sublet your rental apartment for a fixed period, but it’s up to the landlord.” | “It is legally quite hard to acquire apartments and start renting them. You can sublet your rental apartment for a fixed period, but it’s up to the landlord.” |
| Rents are 1,050 kronor (£80) a sq m a year on average, so a single bedroom apartment of 65 sq m is about 5,700 kronor a month, or £420, according to Statistics Sweden. On average, rent makes up about a quarter of people’s income, according to Fastighetsägarna. | Rents are 1,050 kronor (£80) a sq m a year on average, so a single bedroom apartment of 65 sq m is about 5,700 kronor a month, or £420, according to Statistics Sweden. On average, rent makes up about a quarter of people’s income, according to Fastighetsägarna. |
| Each year, rent rises are negotiated between the tenants’ association, representing 350,000 tenants, and the Stockholm property agency, representing 5,000 private rental companies. Over the past decade, rents have risen by 19% – not far ahead of inflation, which was about 12%. Last year’s rent rise for the city was 1.12%. | Each year, rent rises are negotiated between the tenants’ association, representing 350,000 tenants, and the Stockholm property agency, representing 5,000 private rental companies. Over the past decade, rents have risen by 19% – not far ahead of inflation, which was about 12%. Last year’s rent rise for the city was 1.12%. |
| “The protracted negotiations over the increase cost more than the additional money we will get,” McCormac complains. | “The protracted negotiations over the increase cost more than the additional money we will get,” McCormac complains. |
| Related: Sky-high London rents prompt calls for new controls on landlords | |
| However, the system is experiencing acute pressures. Building of rental homes almost dried up after a financial crisis in the early 1990s, and there is a dire shortage of properties. Demand is such that it is almost impossible to get a direct contract. With nearly half of all Stockholmers – about 500,000 people – in the queue, it can take 20 or 30 years to get to the top of the pile. | However, the system is experiencing acute pressures. Building of rental homes almost dried up after a financial crisis in the early 1990s, and there is a dire shortage of properties. Demand is such that it is almost impossible to get a direct contract. With nearly half of all Stockholmers – about 500,000 people – in the queue, it can take 20 or 30 years to get to the top of the pile. |
| Some of those who live in overcrowded accommodation are able to jump the queue, but there is no system of prioritising key workers or people in desperate need of a roof over their heads. Rents in newbuild apartments are higher because the companies have been exempted from rent controls, although quality is said by some to be higher. Low rents in the municipal sector mean many properties require renovation and repair. | Some of those who live in overcrowded accommodation are able to jump the queue, but there is no system of prioritising key workers or people in desperate need of a roof over their heads. Rents in newbuild apartments are higher because the companies have been exempted from rent controls, although quality is said by some to be higher. Low rents in the municipal sector mean many properties require renovation and repair. |
| The result is a thriving rental property black market, with bribes of as much as 100,000 kronor per room to obtain a direct contract, McCormac says. Many people sublet space in their rental apartments. When one tenant advertised a tiny closet last year for rent, there were many potential takers. | The result is a thriving rental property black market, with bribes of as much as 100,000 kronor per room to obtain a direct contract, McCormac says. Many people sublet space in their rental apartments. When one tenant advertised a tiny closet last year for rent, there were many potential takers. |
| Related: Snakes and ladders for tenants as Berlin rent cap starts to bite | |
| “It is almost impossible for immigrants and new arrivals to penetrate this market – it is all about who you know and how much money you have,” McCormac says. Students, young people and immigrants are consequently shut out, and ethnic and social segregation is increasing. | “It is almost impossible for immigrants and new arrivals to penetrate this market – it is all about who you know and how much money you have,” McCormac says. Students, young people and immigrants are consequently shut out, and ethnic and social segregation is increasing. |
| “Rent controls were supposed to enable people to live in central locations, but now it is having the opposite effect,” McCormac says. | “Rent controls were supposed to enable people to live in central locations, but now it is having the opposite effect,” McCormac says. |
| “People without social connections will have a very hard time finding a flat,” says Kleberg. “I have a friend living in a not very lavish, newly built apartment in Hagsätra, a suburb 30 minutes away by metro from central Stockholm, and he pays a higher rent than I do for a similar sized apartment.” | “People without social connections will have a very hard time finding a flat,” says Kleberg. “I have a friend living in a not very lavish, newly built apartment in Hagsätra, a suburb 30 minutes away by metro from central Stockholm, and he pays a higher rent than I do for a similar sized apartment.” |