View_city_hall_waterfront_building: Relocation: New Rental Law In Sweden

Photo by Erik G Svensson / https://www.stockholmbusinessregion.com/press/media-bank/

 

A new law effective October 1st, 2019 may leave some of your staffers in a very vulnerable position!

Sweden has had a housing crisis for 115 years. This is a major issue for companies who bring talent to Stockholm and other Swedish cities since there is simply not enough choice and housing is expensive in relation to disposable income.

 

A new law effective October 1st, 2019 may leave some of your staffers in a very risky position. They can find themselves evicted.

 

Unlike most other countries being allowed to sublet a property or having professional landlords that own many properties and rent them out for a living, Sweden has strict rules around who is allowed to rent out their apartments and why. The letters are mostly private leaseholders who are renting out their apartments (council flats that are common here) because they are doing something else in the meantime such as studying or working abroad. These types of situations are grounds for the leaseholder to apply to the property owner for a permit to sublet.

The property owners are keen to have control over who resides in the buildings and they are greatly aided by the law of REGISTRATION OF RESIDENCY. Everyone must register occupancy with the Swedish tax agency and a ℅ address isn’t allowed. Each person must be listed at a specific apartment which makes it very easy for a property owner to monitor their buildings. This information is public and is a google search away.

Just like in any market where there is a shortage, scams and fraud will follow. Many property owners are unwilling to allow subletting for a longer period of time and they can deny a request to sublet unless there is a valid reason. Examples of valid reasons are mentioned above. A firsthand leaseholder is allowed to trade their lease for another property so in an expensive real estate market it represents a great value even though it’s not an owned property. Therefore, many subletters try to go under the radar and don’t ask for the necessary permit to avoid alerting a property owner that they are not using the apartment themselves.

This is a recipe for disaster. While relocation companies will ensure the validity of a permit, young people or an international talent will be unlikely to even know that this is even a requirement. While illegal subletting has always been common in the market and there has been an element of risk connected to such an arrangement, the consequences have been annoying and expensive rather than a REALLY URGENT problem that needs a solution today.

Starting October 1, 2019 the firsthand leaseholder that sublets without permission will lose the right to the property with immediate effect and the subletting tenant will be evicted. The firsthand renter has committed a crime that is punishable by law and he can be sentenced to 2 years in prison. The firsthand lease is void and there is no possibility to do it over and do it right. It’s not unlikely that we will see more empty apartments as the valuable lease is an investment in the future even if it’s empty.

The severe shortage of properties is especially difficult to navigate around for young people who come with a limited budget. Some are expected to handle a lot on their own in terms of relocation, and it’s hard for them to know what to ask for. It’s also common that people will knowingly enter illegal sublets simply because there just isn’t anything else available to them at their price point.

Having a clear briefing about the market and what to look out for is essential.  Companies that have talents left to their own devices may consider a Plan B on how to handle urgent homelessness if their employees are evicted.

Companies that sign leases and engage relocation companies have nothing to worry about as it is stipulated by law that the agent needs to check the permit to make sure it is legitimate. Many companies have both models where some employees get assistance and others are expected to sort this out on their own. A good idea is to brief them so they can get out of a potentially bad situation before it’s urgent.

If you are planning on sending employees to Sweden, you can learn loads of useful information from our Guide to Bringing Foreign Talent to Sweden.

 

For any question on the Swedish housing market and how to validate a rental feel free to email info@nimmersion.com, or download our 2019 housing guide to learn general information about renting in Stockholm.

Download the Housing Guide

 

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