Why rent control isn’t working in Sweden

Swedes are also less likely to live with their parents than any other young Europeans

In a red-brick 1960s tower block, 20-year-old Oscar Stark is heating leftover vegetarian pasta. He keeps to a strict food budget, because more than half his income goes towards sub-letting a studio apartment in one of Stockholm's outer suburbs.

"I struggle to make it work, but I'm not giving up," says the marketing consultant.

Mr Stark couldn't find anywhere cheaper than 11,000 kronor (£920; $,1260) a month to rent and is unable to stay at home with family, because his mother lives elsewhere.

"I really don't have a choice, but of course I'm not satisfied," he says.

The average time spent waiting for a rent-controlled property in the capital is now nine years

A shortage of accommodation in Stockholm and other cities, is causing a major headache for young Swedes - in a country which has been championing rent controls since World War Two.

Rents are supposed to be kept low due to nationwide rules, and collective bargaining between state-approved tenant and landlord associations.

In theory, anyone can join a city's state-run queue for what Swedes call a "first-hand" accommodation contract.

Once you have one of these highly-prized contracts it's yours for life. But in Stockholm, the average waiting time for a rent-controlled property is now nine years, says the city's housing agency Bostadsförmedlingen, up from around five years a decade ago.

This wait-time doubles in Stockholm's most attractive inner-city neighbourhoods.

The traffic-jam has fuelled a thriving sub-letting or "second-hand" market, with "first-hand" renters and owners alike offering apartments to tenants for very high prices, despite regulations designed to stop people being ripped-off.

"I really feel like Sweden actually has failed [on housing]," says Mr Stark, who believes he pays double the price his apartment should be leased for.

Other rent-controlled apartments are passed between relatives and friends, which benefits those with existing networks, and challenges newcomers to the city.

In Stockholm's most elite central district, Östermalm, Christoffer, who asked just to be identified by his first name, splits a similar rent to Mr Stark with his girlfriend, for a one-bedroom flat found through a colleague.

"It's obviously a privilege to be in that position," says the 24-year-old part-time student and start-up worker. "It's not a good solution in the long term to have to rely on that."

The Swedish capital's skyline is dominated by apartment blocks

Regulations designed to prevent owners from making long-term profits are also fuelling market instability.

Since even legal sub-lets can rarely be extended beyond a year or two, it means those renting "second hand" have to jump between short-term contracts.

Rooms in flat-shares are also hard to come by. Most rented housing is for independent rather than group living: Sweden has Europe's highest proportion of single-person households.

"I have a lot of friends who are struggling - moving many times per year," says Maria Grigorenko, a 29-year-old brand manager in Stockholm who is originally from Russia.

She recently got a rent-controlled apartment after queuing for nine years. But says she knows few others "as lucky" as her.

"In principle I do believe the system is there to help, however, I think that the market and the demographics have changed so much."

In Sweden flat-sharing is uncommon, compared to other European cities

Europe-wide problem?

Despite its complex challenges, Sweden is in a better position on housing than many other EU countries.

Only around 8% of Swedes live in households spending more than 40% of disposable income on housing, compared to 15% in the UK and almost 40% in Greece, according Eurostat data.

Swedes are also less likely to live with their parents than any other young Europeans.

But until recently, getting a well-maintained, rent-controlled apartment straight after school is something some Swedes have just taken "for granted", argues Liza, a 37-year-old tech worker, who didn't want to share her last name.

She moved to London from Stockholm last year, and believes Swedes complaining about housing shortages would do well to put their struggles in a wider context.

"In the UK, apartments are often super old and not of good standard, even though the rent would be much more than in Sweden."

Sweden's Covid experience has been very different to lockdowns endured in its neighbours

But others argue the increasing squeeze on Stockholm's housing mirrors the worrying pattern of young people being priced out of Europe's capital cities.

An Abbé Pierre Foundation report released in May indicated a 11.5% rise in the number of young Swedes on low incomes living in overcrowded properties since 2009.

Businesses have also raised concerns about the economic impact, as cities seek to attract skilled workers. The Confederation of Swedish Enterprise (Svenskt Näringsliv) says one in five firms have found it difficult to recruit staff because of housing shortages.

The long-running focus on rent-controlled buildings also means there are comparatively fewer private letting agencies and corporate apartment possibilities than in many European cities.

"We were looking to help a family from London relocate to Stockholm and it was not possible for us to find a variety of [housing] options for this to be feasible," says Harald Överholm, who runs a solar power start-up in Stockholm. "It's very frustrating."

Companies in Stockholm are struggling to find housing for overseas staff

Finding solutions

Efforts are being made to solve this. Between 2015 and 2019, Stockholm gained 83,000 new homes, with construction increasing at an "unusually high" rate, according to Länsstyrelsen, a state-run body which connects municipal and national authorities.

But Sweden's leaders are deeply divided on other moves.

Some centre-right opposition parties want incentives to help more young people to buy instead of rent, such as lower mortgage payment requirements.

Others argue that if private landlords can set their own prices - already the case in most European cities - this will stimulate more investment in rental accommodation.

"A new market model needs to price rent more accurately," says Dennis Wedin, a housing spokesperson for the Moderate party, which is in opposition nationally but leads Stockholm city council. "A result would be slightly higher rents in the city but lower in the suburbs."

The Social Democrats, who lead the country's centre-left national coalition, recently mulled reforms allowing market rents for newbuilds - but backtracked in June after the idea temporarily brought down the government.

"We like our system with the rent control, because that's a system where everybody can afford a rental apartment," says Karin Wanngård, Stockholm's Social Democrats leader. She says a market system would push up rents, making Stockholm less "open" for low-income residents.

Politician Karin Wanngård feels adopting a market system would push rents higher

But she agrees that even with major investments, it could take a decade to cut tenants' waiting time to less than a year or two.

The private sector is also attempting to tackle this, with a few co-living spaces springing up - including converted apartment buildings, a medieval townhouse and a former hotel. Kitchens and communal spaces are shared, and some offer hostel-style bunkbeds for those on tight budgets.

For tech worker Liza, who lived in two co-living properties in Stockholm, the experience was a positive, it saved her money and introduced her to friends she'll stay in touch with "for years".

"Although I know it is still considered a bit different...it's actually a really amazing, healthy way of living."

It's not for everyone though. Back in his suburban studio, Oscar Stark is sceptical. "The Swedes are very introverted in general and not as social."

While potential solutions are debated, Sweden's swelling population looks set to add to the problem. Stockholm's one of Europe's fastest growing regions, with an extra 400,000 people expected in the city by 2030.

Where they will all live, remains to be seen.