Advanced

Fri kontra reglerad hyressättning – En studie av Stockholms hyresbostadsmarknad

Wangenborg, Joel LU (2012) In TVBP VBEM01 20111
Department of Construction Sciences
Civil Engineering
Abstract
Several Swedish municipalities, in particular Stockholm inner city, suffer from excessive housing shortage – demand exceeds supply by far. The result of this is for example a market with a long housing queue, illegal trade with lease agreements and rental houses being transformed into building societies. These problems are due to the fact that the rental housing market in Sweden is controlled and Stockholm is the region in Europe with the most strictly controlled rental housing market in Europe. Most people agree that abolish of the regulation would lead to an increasing production of rental houses. This thesis concentrates on supply and construction of rental houses in Stockholm. The overall purpose of the study is to investigate how rent... (More)
Several Swedish municipalities, in particular Stockholm inner city, suffer from excessive housing shortage – demand exceeds supply by far. The result of this is for example a market with a long housing queue, illegal trade with lease agreements and rental houses being transformed into building societies. These problems are due to the fact that the rental housing market in Sweden is controlled and Stockholm is the region in Europe with the most strictly controlled rental housing market in Europe. Most people agree that abolish of the regulation would lead to an increasing production of rental houses. This thesis concentrates on supply and construction of rental houses in Stockholm. The overall purpose of the study is to investigate how rent control in Sweden in terms of the user value system works and what impact it has on supply and demand. The aim of the study is to increase the knowledge about different stakeholders’ views on rent control and the opportunities and obstacles associated with a possible abrogation. A qualitative study was carried out in the form of ten interviews with representatives of six large rental housing companies in Stockholm, a representative of the Swedish Property Federation, a representative of the Swedish Union of Tenants, a representative of the Swedish organization for adolescents looking for a place to live (Jagvillhabostad.nu) along with a political adviser from the Ministry of Health and Social Affairs.
The system of today is a long way from market adjustment, according to the interviewed representatives of the rental housing companies. Location, condition and standard of the flat must be given greater significance in the rent-setting. The union of tenants’ does not agree – it is not necessary to change the system of today and the organization has nothing against it. According to the property federation there will not be any private rental houses left in the inner city of Stockholm if the current trend continues. It has to be more profitable to own and manage rental houses. It is not the user value system that leads to insufficient production of new houses according to Jagvillhabostad.nu and the Swedish Union of Tenants’. Both parties agree that the user value system itself is all right and that a system with a totally free market would lead to excessive rent increases. There has to be a part of the market that is controlled. The disagreement between the property federation and the union of tenants’ is about the application of the user value system. According to the new legislation the municipal housing companies have to act businesslike and there are different opinions about what this means in practice. The future development of the market depends largely on which party finds support for their interpretation of the new law.

The reason that the parties could not settle on a new model for rent-setting (Stockholmsmodellen) was that the union of tenants’ demanded an agreement that higher rents in the inner city would have to be compensated with lower rents in the suburban areas, i.e. a zero-sum arrangement. The property federation could not approve that. A crucial condition to be able to implement the new model is that the question is raised from the district to the regional level – Stockholm must be managed as one region and not several different municipalities. All interviewees agree that social housing is not a desirable system in Sweden. It is stigmatizing, leads to lock-in effects and creates segregation. The Swedish model with general investments in housing for all citizens is a better way to handle the problem.
Subsidizing construction is the wrong instrument for solving the housing shortage, the interviewees agree. It is expensive for the state and leads to political construction instead of construction on market conditions. Subsidies tend to be engulfed by increased construction costs. Since 1990, construction prices in Sweden have increased by four times the retailer price index. In addition, subsidies are associated with political risk and the property owners are seeking to minimize their risks. The union of tenants’ suggests lower VAT for construction. This requires an alteration in an EU directive and while waiting for this to change it would be suitable with investment grants to stimulate the launch of construction. This investment grant must be linked to a certain rent level to keep the rents low. Jagvillhabostad does not consider subsidies as right or wrong, but argues that it is up to the construction firms to prove that they do not need subsidies – they have not showed that yet. In order to create incentives to increase housing construction simplifications are necessary. On a municipal level it is about finding properties to exploit and about ensure that the planning process does not become a limiting field. Furthermore, some municipalities have to take greater responsibility to make sure that houses are built. Maybe the law about housing must be tightened up to increase the pressure on those municipalities who neglect housing. Lessons can be learned from Helsinki where municipalities in the region collaborate in order to increase building sites and create houses for people in need. The public sector needs to simplify the planning and building act and equalize the rules for rental housing with other tenures. Rental housing is disadvantaged in respect of taxes compare to house and building-society flat, primarily due to certain deductions applying to house and flat owners. For the individual consumer it costs approximately 2000 SEK more per month to live in a recently built rental instead of a building-society flat. This must be reviewed. It is too easy to appeal against construction. It takes time, costs money, and people become frustrated. Those who complain do not risk anything themselves. It is about moving the scale in this balance of interests. The public interest must be weighed against the private. (Less)
Please use this url to cite or link to this publication:
author
Wangenborg, Joel LU
supervisor
organization
course
VBEM01 20111
year
type
H3 - Professional qualifications (4 Years - )
subject
publication/series
TVBP
report number
TVBP-5430
language
Swedish
id
3288163
date added to LUP
2013-01-08 09:46:21
date last changed
2013-01-08 09:46:21
@misc{3288163,
  abstract     = {Several Swedish municipalities, in particular Stockholm inner city, suffer from excessive housing shortage – demand exceeds supply by far. The result of this is for example a market with a long housing queue, illegal trade with lease agreements and rental houses being transformed into building societies. These problems are due to the fact that the rental housing market in Sweden is controlled and Stockholm is the region in Europe with the most strictly controlled rental housing market in Europe. Most people agree that abolish of the regulation would lead to an increasing production of rental houses. This thesis concentrates on supply and construction of rental houses in Stockholm. The overall purpose of the study is to investigate how rent control in Sweden in terms of the user value system works and what impact it has on supply and demand. The aim of the study is to increase the knowledge about different stakeholders’ views on rent control and the opportunities and obstacles associated with a possible abrogation. A qualitative study was carried out in the form of ten interviews with representatives of six large rental housing companies in Stockholm, a representative of the Swedish Property Federation, a representative of the Swedish Union of Tenants, a representative of the Swedish organization for adolescents looking for a place to live (Jagvillhabostad.nu) along with a political adviser from the Ministry of Health and Social Affairs.
The system of today is a long way from market adjustment, according to the interviewed representatives of the rental housing companies. Location, condition and standard of the flat must be given greater significance in the rent-setting. The union of tenants’ does not agree – it is not necessary to change the system of today and the organization has nothing against it. According to the property federation there will not be any private rental houses left in the inner city of Stockholm if the current trend continues. It has to be more profitable to own and manage rental houses. It is not the user value system that leads to insufficient production of new houses according to Jagvillhabostad.nu and the Swedish Union of Tenants’. Both parties agree that the user value system itself is all right and that a system with a totally free market would lead to excessive rent increases. There has to be a part of the market that is controlled. The disagreement between the property federation and the union of tenants’ is about the application of the user value system. According to the new legislation the municipal housing companies have to act businesslike and there are different opinions about what this means in practice. The future development of the market depends largely on which party finds support for their interpretation of the new law.

The reason that the parties could not settle on a new model for rent-setting (Stockholmsmodellen) was that the union of tenants’ demanded an agreement that higher rents in the inner city would have to be compensated with lower rents in the suburban areas, i.e. a zero-sum arrangement. The property federation could not approve that. A crucial condition to be able to implement the new model is that the question is raised from the district to the regional level – Stockholm must be managed as one region and not several different municipalities. All interviewees agree that social housing is not a desirable system in Sweden. It is stigmatizing, leads to lock-in effects and creates segregation. The Swedish model with general investments in housing for all citizens is a better way to handle the problem.
Subsidizing construction is the wrong instrument for solving the housing shortage, the interviewees agree. It is expensive for the state and leads to political construction instead of construction on market conditions. Subsidies tend to be engulfed by increased construction costs. Since 1990, construction prices in Sweden have increased by four times the retailer price index. In addition, subsidies are associated with political risk and the property owners are seeking to minimize their risks. The union of tenants’ suggests lower VAT for construction. This requires an alteration in an EU directive and while waiting for this to change it would be suitable with investment grants to stimulate the launch of construction. This investment grant must be linked to a certain rent level to keep the rents low. Jagvillhabostad does not consider subsidies as right or wrong, but argues that it is up to the construction firms to prove that they do not need subsidies – they have not showed that yet. In order to create incentives to increase housing construction simplifications are necessary. On a municipal level it is about finding properties to exploit and about ensure that the planning process does not become a limiting field. Furthermore, some municipalities have to take greater responsibility to make sure that houses are built. Maybe the law about housing must be tightened up to increase the pressure on those municipalities who neglect housing. Lessons can be learned from Helsinki where municipalities in the region collaborate in order to increase building sites and create houses for people in need. The public sector needs to simplify the planning and building act and equalize the rules for rental housing with other tenures. Rental housing is disadvantaged in respect of taxes compare to house and building-society flat, primarily due to certain deductions applying to house and flat owners. For the individual consumer it costs approximately 2000 SEK more per month to live in a recently built rental instead of a building-society flat. This must be reviewed. It is too easy to appeal against construction. It takes time, costs money, and people become frustrated. Those who complain do not risk anything themselves. It is about moving the scale in this balance of interests. The public interest must be weighed against the private.},
  author       = {Wangenborg, Joel},
  language     = {swe},
  note         = {Student Paper},
  series       = {TVBP},
  title        = {Fri kontra reglerad hyressättning – En studie av Stockholms hyresbostadsmarknad},
  year         = {2012},
}