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Sweden: 436,000 homes needed

Government suggests economic support for new construction

Stockholm, 31 March 2015 | Published in Economy, Social

The Swedish population is increasing very rapidly and urbanisation is proceeding at a rapid pace. But statistics produced by Statistics Sweden (SCB) on the mandate of SABO, The Swedish Association of Public Housing companies, show that housing construction is not keeping up. The Government’s national objective of 250,000 new homes up to and including 2020 will not solve the housing shortage. 436,000 homes need to be built.

The Swedish Government considers that the market is not capable of keeping up with housing construction on its own and is now appropriating economic funds.

“In the serious situation that we are in today the Government considers that extraordinary initiatives are required, and that construction can be boosted through government support. I share this view. But the support needs to be structured so that construction prices continue to be restrained and so that homes that more people can afford are built. Through the framework agreement SABO’s Kombohus, public housing have shown that it is possible to build energy-efficient and accessibility adapted homes at a construction price that is 25 per cent lower. Such price pressure must continue for us to be able to resolve the housing shortage,”

says Kurt Eliasson, CEO of SABO, commenting on the Government’s proposal.

The Government wishes to support new production of small rental properties and student housing in municipalities with housing shortages. The support applies to new building commenced as of 25 March 2015, and will be adapted according to the cost situation in the various regions. The support will be particularly great for small apartments, of up to 35 square meters, and imposes requirements for energy efficiency, reasonable rent and for the apartments to be mediated in an open way.
The Government support is conditional, with requirements for capped rents, adapted to the situation in various regions.

“Rents for newly built apartments are always higher than those for existing stock, even when construction prices are pressed. But it is important to do everything possible to keep rent levels down. We need more housing for which more can afford to pay, and in new production presumptive rents are a good tool. They are set in agreement between property owners and tenant associations and apply for 15 years before they can be reviewed in relation to the other stock according to the utility-value system,”

explains Kurt Eliasson.

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In the framework procurement of Kombohus, SABO pressed prices yet at the same time imposed stringent energy demands, 65 kWh in climate zone 3. This is a very stringent requirement, and the construction companies have demonstrated that they can meet this and nonetheless supply buildings at a lower price.

“To reduce energy use in the housing stock is very important, but for housing companies the measures need to be commercially justified. The support needs to be structured so that it does not impede the rate of building,”

says Kurt Eliasson.

SABO will analyse the Government’s proposal on the basis of the organisation’s previous proposal for a tax reform for rental properties. According to the government Property Taxation Inquiry, due to current taxes it is approximately SEK 3,000 more expensive per month to live in a rental property compared with a tenant-owner apartment or an owner-occupied home. This severely impedes the new production of rental properties, a form of housing that is in demand in most of Sweden’s municipalities.