The problem (based in my massive experience of reading one article) seems to be that there are a lot of rent-controlled apartments, but they end users aren't getting the benefit of that low rent controlled price. Instead some private citizens are getting to collect free profit for subletting.
If you make subletting a rent-controlled property illegal, then the people who are living in them are unaffected, and the people who aren't living in them will have to give up their rent-control contract freeing up the property for others.
Rent-controlled apartments can be sublet legally with almost no markup. Bought apartments can be sublet legally to a market rate [0].
I'm guessing that the guy in the article is in a sublet owned apartment.
Regardless, sub-letting of rent-controlled apartments is very strictly controlled and is essentially "banned". But of course it's quite tricky/expensive to enforce.
(My, in Sweden very unpopular, opinion is that subletting is the last thing that gives young people some kind of chance to mobility. Especially those whose's parents can't buy them an apartment. If all forms of subletting were banned, I would have had no chance to live in Stockholm).
The reality is that Stockholm geographically challenged. The major pieces of available land is the city airport and areas of parkland. The city airport has been given a lease until 2040. The areas of parkland is a national park.
The housing market is one the most important markets in Sweden. Anything that significantly lowers the value of real estate will be political suicide. Meaning that in the current market there can't be any solution that actually delivers affordable housing.
There is also little will from the voters to accept measure that would stabilize the market long terms like removing the mortgage interest deduction, introduce an actual real estate tax or regulating lending similar to other countries.
All this means that it's very unlikely that there will ever be even a relatively affordable market in Stockholm. Which will end up being disastrous when the cost of rent is also among the biggest single cost in the knowledge economy. For companies you can argue that the increase in housing cost will be offset by the larger available workforce but you can't say the same for public services.
Past or future deregulation isn't going to solve this. On the contrary it is what prevents a correction. The natural thing to do when something becomes too expensive is look for alternatives. In the housing market this means moving somewhere else. But as companies can attract those good or privileged enough to Stockholm anyways they don't have to move. So the average person doesn't have much of a choice but to move there themselves. Which in turn makes Stockholm even more attractive.
The paradox is that most any improvement of the Stockholm housing market will there make the situation worse long term. So the solution has to be not to cater for this market but to improve the market somewhere else instead. Unfortunately this also unlikely.
A pet "dictator for one day" idea of mine is to simply move the capital to something like Linköping! Has an airport, enormous amounts of farm land that can just be built on etc, less than 2 hours away from Stockholm by train.
Make Stockholm like NYC and Linköping as DC. If all government headquarters (and related functions) were forced to move, it would certainly take hundreds of thousands of people with them (including family members etc).
Brasília but on Östgötaslätten :-).
https://www.fastighetsvarlden.se/notiser/flera-myndigheter-t...
You wouldn't have to move the government though just companies. This is a major part of creating the problem from the beginning. Because as you probably know many of the industrial companies where distributed to other locations like Linköping, Trollhättan, Karlskrona and so forth. As those companies and the industry general has shifted to no longer need things like manufacturing facilities everyone ends up in Stockholm. It's a paradox that when you can work from anywhere it also means everyone can work from the same place.
Of course if a larger company would move outside of Stockholm that places would soon face the same problem even quicker as it's smaller. But if it happened to many different places there might be a shoot. Unfortunately you would have the same issue that many people would have to undermine their immediate interest for it to happen. But at least it would be technically possible. Stockholm has probably gone so far that it is socially and technically impossible as the economic consequences of an effective solution might be unpredictable.
What percentage of the population owns the house they live in (or has a mortgage)?
39,8 % Single-family home
20,7 % Co-op apartment
= 60,5%
28,4 % Rental apartment
Rather, voters choose between one option, thinly veiled as two chooses, set by monied interests and corralled by media barons.
If they are going to have a rent control law, then allowing the person to sublet that on for a profit then you basically dont have rent control at all (except for the lucky / honest minority).
You are almost there to why regulations, however well intentioned, rarely work to their expectations versus the alternatives :)
What doesnt work is what passes for regulation or legislation these days, written by some moron, that politicians attach to whatever bill or budget that is certain to pass. They barely reach the threshold of 'well intentioned' and would more charitably be described as vitue signaling or just spin.
You get to stand infront of the microphone and parrot off the 'This is a Win for the voters' but rarely has anyone read, understood or debated what is now a binding law or regulation, along with its unintended and at times intended consequences.
But inevitably, there exists a timeline where the regulation becomes antiquated and outdated. It no longer serves its purpose, and it actually becomes the very barrier to progress. And in my time being alive, I've rarely seen politicians act quickly to improve regulations to serve a current need. More often than not, they grandstand over the value of the regulation, and pass laws that increase the bureaucratic reach of the regulatory arm. They effectively become rubber stamping desks.
If anything there’s lack of enforcement of existing regulation.
You're right that if it was the cheapest way of getting property then tenants probably wouldn't report. But if the whole thing is making property more expensive then I definitely would.
Recently on Reddit there were some screenshots of a ground-floor 'studio' flat that was entered through a window. It didn't have a door and was still quite expensive. That's illegal according to UK rules, and lots of people on Reddit happily reported it.
That gives the tenant an automatic incentive to report the person who sublet it to them.
If I could dream, my ideal Stockholm area would be one where I (and other's like me) would be interested in living outside of the city center. Where the whole Swedish model of Soviet-style housing blocks along the subways didn't really happen, and instead that the city grew organically outwards. More like Aspudden and less like Solna centrum. Imagine if Vasastaden style of housing extended outwards!
But I also feel that the current system is very inefficient in alleviating the segregation. For starters, the most socially exposed people haven't been in Sweden long enough to even dream about a rent-controlled apartment (anywhere in Stockholm). Then we have all the people who have been standing in queues for decades, while living in a villa in Bromma, and now sells it to move into a large flat in the city center with a rent that is a third of "what it should be".
Finally, my opinion is that nothing good comes out of pretending that attractive locations aren't more expensive. They are! If we want to give low-income people the chance to live in expensive areas, we should do that directly. Perhaps by subsidising their rent or have the government owned property companies save X% of apartments to people who are less well off.
Pretending that market forces don't exist and forcing Swedes in their 20's to borrow hundreds of thousands from their parents, or moving every 12 months is not a good solution either.
In Stockholm, it's completely the reverse. I think rent control and where poor people live has nothing in common. It's impossible to get an apartment in the Stockholm city centre if you want to rent it.
Especially when the cities lets immigrants cut the queue. Most wealthy people can afford the super expensive apartments and the medium wealthy can buy contracts illegally.
All you're doing with rent control is to give incentiment for people to hold on to their contracts no matter what, cheat the system or buy/sell contracts illegally. It is really widespread and landlords are making a lot of tax free money on it.
Even worse is the situation if you buy apartments, you cannot rent it out to whomever you want or for how long you want since you don't really own it. You only own a smaller piece in the economic foundation that owns all apartments and give you the right to live in it. They can require you to not rent it out or limit the timing to a couple of months increasing the instability of the second hand contracts. Also, if the economic foundation makes bad decisions and gets a bad economy they can be forced to sell the entire apartment complex and you'll loose the apartment to a presumably shitty price.
The only good way of owning your housing in Sweden is to actually own the entire property OR own one of the new types of "äganderätter" which are very few and far between.
If you think old people can get an apartment in Sweden, that is just laughable. Even in smaller cities the queues are like 10 years. You'll have to pay up
With the difference being that 19.5 EUR would give me a square meter in Helsinki tomorrow. 11.3 EUR doesn't give me anything in Stockholm for the next decade. ≈ 30 EUR give me a second hand semi-short term contract in Stockholm.
Six to seven years is nothing compared to Sweden where you can have queues about 20-30 years easily for the big cities. My GF have 12 years in the queue and she can get a decent apartment in the outskirts of Stockholm but that is about it.
There are special housing for elderly, which is a bit shorter in the queues but still very long.
Norway does not, not sure about Finland, but Denmark definitely has a form of rent control. There are ceilings on rent that will be determined by appeal to a local rental board. There are exceptions however, anything built from 1992 and onwards, as well as some different rules for units that have undergone major renovations.
So you really think there is no connection between housing politics and segregation?
> All you're doing with rent control is to give incentiment for people to hold on to their contracts no matter what, cheat the system or buy/sell contracts illegally
Holding on to a contract is not necessarily a bad thing, if you enjoy living in your apartment and it is priced according to its size (giving incitament to switch to a smaller one if you don't need a big one anymore). Of course people try to cheat the system, but it is illegal ... and tenants paying illegally high rents can take the contract owner to court and get all excess rent back.
> Even worse is the situation if you buy apartments, you cannot rent it out to whomever you want or for how long you want since you don't really own it.
This has nothing to do with rent control and depends on which BRF you live in. Considering the lack of interest for äganderätter I'm not sure if so many people are with you on this opinion.
That is not what I said.
> Of course people try to cheat the system, but it is illegal ... and tenants paying illegally high rents can take the contract owner to court and get all excess rent back.
Yeah but that never happens. All parties involved have interest in making it stay in the shadows. They don't pay illegally high rents, they pay normal rents but buy the contract to live there in the first place. A LOT of people is doing that, because the queues are impossible.
> This has nothing to do with rent control and depends on which BRF you live in. Considering the lack of interest for äganderätter I'm not sure if so many people are with you on this opinion.
The biggest reason why there is a lack of interest is because of loans. Builders take out massive loans on every new BRF, as much as they can which makes the new BRF sensitive for economic shifts.
Yes but basically all large BRFs have rules that say that you can only rent out your apartment for 6-12 months at a maximum time. They also need to vet the one your renting out to and can say no. If you have a bad relationship with the BRF, they can mess with you easily.
I also rent second-hand and it sucks, but I don't think things will improve just by abolishing the controls on first-hand contracts.
We just need to build far, far, far more. Especially with so much immigration.
If I'm going to live in Stockholm (or any other large city really), I want to live in the city center. I want to walk or bike to the office, and have all the restaurants near by etc. It's very unlikely that the housing stock in the central parts of town will ever increase substantially.
I'm willing (and honestly lucky enough to be able) to pay the premium for living downtown, if market rates were imposed.
(There's an argument to be made about how abolished rent controls can increase interest by companies to build rental properties and get municipalities to issue building permits. Also that a non-negligible share of attractive rent-controlled housing is under-utilised, e.g people who don't live in them full-time but keep the contract because it's nice to have every once in a while).
But yes, we definitely need a lot more housing overall. Cheap and close/with good connections to places where people work.
> I'm willing (and honestly lucky enough to be able) to pay the premium for living downtown, if market rates were imposed.
I think this basically points out the trade-off. Right now, difficulty living in the city center of Stockholm or a large city is somewhat more evenly distributed compared to typical European countries, it unusually effects even the rich. Under a more strictly market approach the difficulty would be eliminated for the rich and increased for others.
Whether that's a net win depends who you are, of course.
> It's very unlikely that the housing stock in the central parts of town will ever increase substantially.
So one way or another there are more people who want to live there than there is housing. How is it allocated? It can be allocated by a waiting list, in which you might have to wait 9 years. It can be allocated based on the market, in which those with more ability to pay get to live there. It can be allocated based on some combination of "personal network/nepotism" and "graft", in which leaseholders of rent-controlled apartments rent them out at profit to them, or at no profit to their family and those they know.
Based on the article, the current system of course is a combination of all of those. Adjusting the portion of each of them would benefit some people and disadvantage others, depending on how adjusted.
But overall, yes, I totally agree. It's an allocation problem of a finite resource, with different tradeoffs.
My favourite idea, if we are going to keep the rent-controls, is to use a lottery.
They're both kind of "everyone is equal, you don't get a leg up becuase of how much money you have or other status, everyone gets a chance for this limited in-demand resource" approaches, at least on their faces... the same portion of everyone interested actually gets a house either way... I'm confusing myself trying to think through the practical experienced implications of a lottery (which you can keep entering every year) vs multi-year-long waiting list. I mean, I guess obviously the lottery stops privilging those who expressed their desire longest ago/first! I'm not sure if this is good or what. I guess it would give younger people, or people who don't plan out their whole life in advance, a better chance?
1: I don't believe there's a moral value attached to being in the waiting list. Everything else equal (completley ignoring personal situations, current housing, income etc), everyone waiting "deserves" an apartment the same amount.
2: My view is that there's actually an inverse relationship between "deservedness" (taking personal situation in to account) and amount of time waiting, especially on decade timescales. People who have been waiting for 20 years are older, have had more time to potentially save money, are arguably more likely to have a resonable housing situation. Basically they are "point wealthy", they weren't forced to spend their queuing points on a bad apartment after 8 years, they are still collecting more points waiting for the nicer ones. And the fact that they can do that, to some extent, indicate that they are in a better situation.
(2b: It would eliminate the absurd situation when people live 30 years of their life in an expensive house, collecting queue points, and then sell the house and move into a rent controlled apartment.)
3: It would incentivise/allow a centralisation of the allocation system and increase mobility between cities.
Right now each city have one or a few different queues. People are generally not signed up to all queues across the country, because of hassle and cost (each queue is like 0-20 USD / year). So if I wanted to move to say Gothenburg, I would start from zero and be years away from an apartment.
Because of this, there is no interest from anyone to create a centralised queue. If everyone joined the central queue at birth, it would be meaningless!
But with a lottery based system, a central queue would be no problem. I could just select the cities I'm interested in at the moment, and have the same chance as everyone else. I could take a "bad" apartment, because I'm still in the lottery and might win a better one to upgrade,
I just hope they never abolish the restrictions on second hand contracts. That has completely destroyed London, Barcelona, etc. - where your landlord might just be some investor in Zurich or New York.
Also allowing for more remote work, so people can do more from smaller cities.
Not to mention historical controls on building, rules about shading out other buildings, onerous permitting processes that take years, potential lawsuits, the annoyance of prostrating oneself before random bureaucrats begging for the ability to spend one's own money, etc. I think I'll just go YOLO into options futures instead, or throw my money in a global index fund.
Each of these rules is well intentioned, or at least has a well intentioned sounding justification. (Often, the main force behind them is a monopolist who specializes in navigating them, and doesn't want to have to compete on an even footing in an open market.) Altogether, however, the rules make a sticky web that causes entrepreneurs to throw up their hands and go elsewhere.
Rules about building is like dessert. A few desserts is a good idea. A meal constructed entirely of dessert is not so healthy, especially in the long run. Figure out how to make it easy to build, and people will build. And those folks need to be wooed, not with sweetheart deals out of the public purse, but with a clear, easy to navigate regulatory environment. If you make it easy to compete, there will be much competition.
Overwhelmingly, though, there's no competition in these kinds of jurisdictions because powerful interests LIKE it that way. Think of those folks who spent EUR 10K on a square meter of condo. Are they going to be happy at your proposed regulatory reform that promises to quadruple the rate of building? Of course not! You are directly attacking their asset, that they strived and scrimped and worked for for years! Are they going to come out and say that? Only rarely. They are going to talk about the character of the neighborhood, or the historical significance of whatever, or the environmental impact of a skyscraper in the downtown, or make overtly racist comments about who might move into these new buildings, or anything that will rally people to their cause to STOP THAT BUILDING!
According to https://www.macrotrends.net/countries/SWE/sweden/net-migrati... net immigration to Sweden has been consistently dropping since ~2010, and at 0.3368% of the population per year, that doesn't sound like it would move the needle on housing.
If you want something cheap there are plenty of cheap apartments available in the suburbs.
You can definitely buy apartments from new blocks though, and then you're just paying the normal market price.
Second-hand contracts and commercial rentals also aren't covered by the rent controls, but I imagine the property developers can't rent them like that directly (only by selling them).
The new building can charge whatever they want, they just can't depend on large increases in rent later on after their initial pricing. This same assumption, no huge rise in rents later, is also applied by financiers.
Anything that reduces that value $X likely has a negative influence on marginal housing construction.
. 1120 CAD/sqft
. median before tax household income (City of Vancouver) 72,585 CAD
. ~30pc tax -> ~51k after tax
. 400 sqft 1120= 448k. 15% = 62k for a 15pc downpayment for a 400sqft condo.
Summary: In Vancouver the median household* would not be able to save 15% of a down payment for a 400 sqft "home" if they spent NOTHING for a year. We'll ignore the fact that housing appreciated for many years here at more than 10%/y.
This is good for ppl like me b/c I own stuff and this situation forces ppl to work more for less money in jobs they hate. For folks starting out (incl new immigrants), it's terrible. The root cause is very high immigration. Sweden (and Canada) have very high rates which puts pressure on the low end of the job market and pushes up home prices.
The US has a much lower rate (0.5%/y) than Canada (1.1%/y), which is likely one reason why homes are still somewhat affordable there.
[1] https://www.canadaland.com/podcast/real-estate-3-terminal-ci...
* Median pre-tax household income: $103k
* Post-Tax: $70k
* Median home price: $1.6M (~$1200 USD per sqft)
* 400 sqft: $480k (note: this is without the 20-30% premium you'd pay for smaller properties)
* 15% downpayment: $72k
Housing prices are broken all over the place...
[0] https://complyadvantage.com/knowledgebase/vancouver-money-la...
Quite convenient actually, as every company had its own renting agent, and money was always guaranteed.
When the rent control ended, renting turned into horrible shit-show. The register of good and bad customers was illegal and you could not easily check their financial status. And maximum security money was limited to 3 months. After few bad experiences I stopped renting out and just sold my apartment(s).
Saving 20% of the post-tax salary will take you 30-something years to buy the apartment cash only.
Sweden and a few other EU nations have their own Central Bank and can do distortions greater than the European Union Central Bank, while garnering even less publicity, let alone less local knowledge that these are strange actions.
Well, of course you want that if you have a large salary and can pay the rents other people can't. Why not support government lead building of housing according to need instead of just throwing out the poor as a "solution"?
Buying an apartment is expensive, and problematic even for well payed young people. In central Stockholm prices are around 1000 USD / sq feet (≈10000 EUR / sq meter), and you need a 15% down payment. For a 400 square feet single room apartment that's a down payment of a full years post-tax salary. If you manage to save 20% of it, then it'll take you five years.
Until you can afford it, the best option is market-priced second hand contracts. Which work well enough, but are quite expensive and very insecure. The landlords often bought the apartments with the intention to live in them, so most contracts are semi-temporary.
First hand rent-controlled contracts are extremely hard to get and basically not an option. The queues are decades long. There's often a 2-300% difference between second-hand (market) rates and first hand contracts, so once someone gets such a contract, they'll never move out.
Of course the lower cost of rent-controlled apartments helps the inner-city be more diverse, allowing people with lower income living there. But there's also a large share of well-of people that have gotten their contracts via connections, or who have just been in the queue for a really long time.
I really hope that the rent-controls are abolished in my lifetime, but there's a vocal large public option for them, so I'm not too sure...