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Saturday, May 25, 2024
HomeLifestyleRent Increases in Sweden Reach Highest Level in 30 Years

Rent Increases in Sweden Reach Highest Level in 30 Years

Rents in Sweden are increasing by an average of 4.2 percent this year, the largest increase in 30 years, according to the Tenants’ Association. This makes rents – in the shadow of wages – an important so-called anchor for the now unusually high inflation.

With agreements on rent increases for almost 1.1 million apartments in place, Erik Elmgren sums up the rent increases as reasonable – even though many members are already having a tough time in the inflation shock.

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“It’s not just the rents that are going up. There is high inflation. Food prices are high. It is a cost of living crisis,” he says.

The property owners began the negotiations with requests for rent increases of 10 percent in the fall of 2022, to cover at least parts of the interest rate hike and other cost increases for the landlords.

“And rent increases will stay at 4.2 percent, which is actually well below core inflation. So I think we have taken our responsibility,” Elmgren said.

Among the members in Malmö, a group of property owners has tried to compensate with demands for a second rent increase from July.

Tomas Ernhagen, chief economist at Fastighetsägarna compares this year’s rent increases for a normal sale with the cost increase of perhaps SEK 12,000-14,000 per month that affects households with a normal-sized loan for three rooms and a kitchen in a condominium.

“Those cost increases also exist when it comes to rental properties. But the tenants don’t have to take that. The landlord can take that instead,” he said.

Elmgren at the Tenants’ Association calls the demands in Malmö a violation of 70 years of practice in the rental market.

In addition to the disputed Malmö agreements, rent negotiations remain in around 50 municipalities.

Elmgren believes that the negotiations on the 2024 rent increases will be easier than this year’s round.

At the same time, Ernhagen warns of long-term problems if the rent increases do not keep pace with the cost increases in the wider economy.

“You are sending a signal that is quite negative. I think it makes it difficult to attract capital for new production of rental properties,” he said.

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