A political crisis surrounding the housing market in Sweden threatens to overthrow the incumbent government in the coming days. The government is facing an ultimatum issued by the left-wing party, which has so far supported it from the outside, to reverse a reform that would allow a “market price” to be charged for apartments built after July 2022. And according to the opponents – created waiting lists of years for apartments in popular places and a developed black market.
The current Swedish government led by Stefan Leven is a minority government, as it has been for most of Sweden’s years (and as is customary in Scandinavia), but it is dependent on both right-wing and left-wing parties for its continued existence, and has only about a third of the Swedish parliament (116 out of 349). It is made up of the Social Democrats and the Greens.
The political crisis has developed rapidly in recent days. It begins with an initial declaration of a law initiated by the government, after more than a year of dealing with the corona plague, designed to make a difference in Sweden’s regulated rental market. In contrast to the current situation, where apartment owners have to charge a “fair rent” determined by considerations such as size, condition of the apartment and year of construction, the government has proposed allowing the collection of a “market price” for new apartments, in buildings to be built from July onwards. The goal, she says, is to encourage new construction and reduce the huge demand for apartments, especially in areas rich in job opportunities.
This reform is in fact part of the commitment of the minority government to the Liberal Party and the Center Party (Venstre), which agreed in January 2019 to support it from the outside in exchange for adopting a long list of demands. However, with the announcement of the planned law, the Left Party announced that it was issuing an ultimatum – either the government would shelve the bill or involve the tenants’ organizations in the matter. “Our support (in the government) will stop if the government implements any proposals for a free rental market,” the party announced.
Stefan Leven, Prime Minister of Sweden / Photo: Associated Press, John Thys, Pool
Although the Left Party warned as early as early 2019 that it intends to overthrow the government if it changes the delicate balance in the rental market, the government initially underestimated the intentions of the socialist opposition. “No one thinks it is worth sending Sweden to the polls for a law that has not even been tabled yet,” a government official said.
But the opposition of the Left Party was surprisingly joined by a party from the other end of the political spectrum – the “Democratic Swedes”. It is an anti-immigration right-wing party that, like similar parties in Western Europe, has gained increasing popularity as the number of refugees, asylum seekers and immigrants entering Europe over the past decade has increased. The party, which has 62 seats in parliament, took advantage of the narrow coalition support and submitted a no-confidence motion scheduled for Monday. It now remains to be seen whether the Left Party, which previously rejected cooperation with the “Democratic Swedes” because of its positions, will vote with it in a no-confidence vote in the government. Other parties in parliament have also announced that they will vote against the government, on the grounds that “its time has come”.
This afternoon, the prime minister announced that he had reached a compromise with the liberal parties and the center that demanded the amendment to the law. He did not elaborate on the nature of the compromise, but clarified that a dialogue would be opened with the participation of “all players” in the Swedish housing market, including the strongest tenants’ association operating in the country, regarding rents in new apartments. “We are giving all players the opportunity to find a solution,” Leven said today. “We now expect the parties to show responsibility and not throw Sweden into a political crisis.” The Left Party has not yet announced with an acceptable compromise on it and how it will vote in the vote still planned for tomorrow.
The rental market in Sweden has a unique model, which tends towards controlling the maximum prices that can be charged from the three million Swedes living in rent (about a third of the country’s population). Protected contracts and non-possibility of raising the rent are some of the characteristics of those who hold a direct contract with the landlord, but the waiting list for these contracts goes back more than ten years. Meanwhile, many Swedes, especially those interested in living in sought-after areas, live in subleases that are also supervised, but alongside it there is a “black market”.
Many Swedes are reminiscent of what happened in Finland, where following the economic crisis the government “completely” stepped out of supervision and regulation of the rental housing market, and rental prices rose along with the deterioration of the tenant’s status and rights.