Rent regulation: Lessons from Sweden Hans Lind Professor of Real - - PowerPoint PPT Presentation

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Rent regulation: Lessons from Sweden Hans Lind Professor of Real - - PowerPoint PPT Presentation

Apr 24, 2023 349 likes •444 views

Rent regulation: Lessons from Sweden Hans Lind Professor of Real Estate Economics Formerly at KTH Stockholm Stylized picture of how rents are set Rents are set at market level in new construction Rents in the stock follow inflation

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SLIDE 1

Rent regulation: Lessons from Sweden

Hans Lind Professor of Real Estate Economics Formerly at KTH Stockholm

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SLIDE 2

Stylized picture of how rents are set

  • Rents are set at market level in new

construction

  • Rents in the stock follow inflation
  • Rents can be increased only when the quality
  • f the apartment is increased
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SLIDE 3

How are apartments allocated?

  • No formal rules
  • Trades between tenant
  • Contacts
  • Queues
  • Black market
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SLIDE 4

Development in recent years

  • Increasing housing shortage

– Increases gap between rents in new and old apartments – Makes queues longer in older stock – Landlords can be more selective – Less formal turnover – Stronger incentives for landlords to renovate

  • More and more difficult for new low‐income

households, e.g. immigrants

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SLIDE 5

Less relevant classical problems

  • Economic incentives for new construction:

– But market rents in new construction

  • Incentives for maintenance:

– Can increase rents when renovate

  • Efficient use of the stock

– In physical terms – In terms of willingness to pay

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SLIDE 6

More serious problems

  • (Rental apartments turned into condominiums)
  • Increasing black market: contracts sold, illegal

subletting at high rents

  • Weaker political incentives for planning for increased

housing construction

– A large majority of the population are not affected negatively by the housing shortage – Perhaps most important effect in long term

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SLIDE 7

Recommendations

  • Slowing down the movement towards market rents for sitting

tenants are perhaps socially/politically necessary when general demand on the market increases

– But don´t block the movement completely

  • Not necessary to allow increase to market rent for vacant

apartments, but should allow a larger increase than for sitting tenants

  • Using housing allowances to compensate certain groups: elderly

that have lived long in an area where rents increased more than average

– Slow down gentrification

  • Focus on increasing supply of all kinds of housing