Is Sweden Getting Rid of Rent Control?

Sweden is often seen as a beacon of social welfare, particularly when it comes to housing and rental markets. However, the landscape of rental housing in Sweden is changing, with discussions and legislative actions aimed at reducing rent control. This shift has sparked debates within the country and among economists, particularly in comparison with other nations like the UK.

Landlord Landscape: In the UK, there are many buy-to-let landlords, whereas Sweden largely lacks this phenomenon. Most Swedes either own their properties or rent through large rental firms like HSB. Housing cooperatives discourage short-term rentals, keeping the market more stable and less susceptible to private landlords. This system means that the rental market is more aligned with property ownership and less with short-term tenancy.

Deregulation Challenges: While removing rent control might seem like a quick fix, it is important to note that it does not solve all the problems in the housing market. For example, cities face issues with short-term rentals (like holiday lets) which sharply increase prices, shifting the focus away from long-term, affordable housing needs for young people and those not in high-paying jobs.

Attitudes and Changes: The shift towards deregulation in Sweden is not just a response to economic theories but also reflects a broader neo-liberal trend that has influenced many policy decisions. Many believe that the Swedes and Swedish officials recognized that rent control does not work and made changes accordingly. This decision does not stem from the inability to pay higher rents, as detailed below.

Economic Impact: According to Linda Lvgren, a housing analyst at WSP Advisory, a significant portion of households in Sweden, particularly in the major cities of Stockholm, Gothenburg, and Malm?, struggle to afford rents even at relatively high standards. Only 27% of households can afford the average rental price of 60 square meters in existing rentals, and a higher percentage cannot afford the more expensive new rentals. This indicates that rent control is indeed a pressing issue in Sweden.

Conclusion: While the move to reduce or eliminate rent control in Sweden is driven by a combination of economic realities and ideological shifts, it remains to be seen how these changes will impact the housing market in the long term. As Sweden navigates this complex landscape, it is crucial to strike a balance between maintaining affordability and ensuring a robust supply of rental housing for all.