A Canadian in Sweden

Stockholm real estate

As many of you know, I have more than a passing interest in all things related to real estate. Whenever I go somewhere new, I try to find things out about the real estate market. I was down in Stockholm yesterday and had the opportunity to talk to several of the locals, who are researchers and scientists down there. The majority of them rent and they had interesting stuff to discuss.

Apparently, in Stockholm there is a 16 year waiting list to get a rental apartment.

You read that correctly. I thought they were joking at first - I had never heard of such a thing outside of the old USSR.

But wait, it gets better. It is tacitly recognized by everyone involved that this is an unworkable situation, so if you know the right people or pay enough money under the table you can get bumped up the list. The outgoing Swedish prime minister was recently accused in the newspapers of doing exactly this. Someone I met in Stockholm yesterday told me they paid 15 000 SEK ( say $2500 CAD) under the table to get pushed up the list.

Once you have reached the top of the list, you have to pay the rental company or landlord a one-time "fee" of up to 90 000 SEK before you can take possession. This appears to be a direct response to the Swedish policy of heavy rent control. Rent downtown is ridiculously cheap: about 3000 SEK per month for a prime 2 bedroom downtown apartment. That is about $500 Can. Without the unofficial (and uncontrolled) "fee", landlords would end up bankrupt.

Ahhh, the law of unintended consequences. The government imposed rent control in order to ensure that the underpriviledged would have access to reasonably priced housing. Since no investors could afford to own apartment buildings under these conditions, they simply started charging astronomical "fees" which don't fall under government control. Now, someone needs to be able to cough up a lump sum of up to 100 000 SEK (bribe and "fee" combined) up front before even taking possession ot their apartment. I wonder how this benefits the underpriviledged. I wonder if it would be more equitable to simply allow market rates and abolish the fees. But hey, that is just me.

Most interesting to me was that all of this nonsense is generally regarded as just being the way things get done. Kind of like cheating on your income tax in Canada: it is regarded as more of a sport than as fraud.

My first peek at the underbelly of socialist policy.

posted by Jeff @ 3:36 AM