Sweden’s rental reform could make housing more expensive

Sweden’s new private rental law has made it easier for homeowners to sublet their properties, as the government seeks to increase the number of homes available on the rental market. However, the Swedish National Board of Housing, Building and Planning (Boverket) has warned that the reform could also push up rents and apartment prices, particularly in areas where demand is already high.

The rules entered into force on 1 July 2026. They give private owners greater freedom to rent out more properties, continue subletting for longer periods and negotiate higher initial rents.

The government argues that the changes will make better use of Sweden’s existing housing stock and help people who currently struggle to enter the regular housing market. Critics and housing officials, however, say the reform could make investment purchases more attractive and increase competition between private tenants and companies.

Sweden’s new private rental law expands subletting

Under the previous system, Sweden’s private rental legislation generally applied only to the first home rented out by an individual. A second property was subject to the broader and more restrictive rules governing ordinary residential tenancies.

The new private rental law (privatuthyrningslagen) can apply to as many as two homes rented out by the same private owner. A person who regularly lets more than two properties will normally fall outside the private rental framework.

The reform also makes it easier for owners of tenant-owned apartments, known in Sweden as bostadsrätter, to receive permission to sublet. A bostadsrätt is a common Swedish ownership model in which residents buy the right to occupy an apartment while becoming members of the cooperative that owns the building.

Previous periods of subletting will now count against a new application only when the apartment has already been rented out to a significant extent. The government expects this to allow properties to remain on the secondary rental market for longer.

Minister for Infrastructure and Housing (Infrastruktur- och bostadsminister) Andreas Carlson, from the Christian Democrats, said the objective was to make subletting clearer and safer for both sides.

“To make it possible to rent out a home a little more easily and make more homes available to those who cannot currently enter the housing market, this is an effective and good method that provides clarity and security for both the tenant and the landlord,” Carlson told SVT.

Landlords receive greater freedom to set rents

The legislation also changes how a reasonable rent is assessed.

Under the previous rules, rent levels were calculated partly on the basis of the property’s market value and prevailing interest rates. Under the new system, landlords and tenants have greater freedom to agree on the initial rent.

A tenant may still challenge the amount before the regional rent tribunal (hyresnämnden). However, the tribunal can reduce it only when it is significantly higher than the rent generally charged for comparable private lettings.

The government describes this protection as a safeguard against unreasonable rents. In practice, however, the reform gives landlords more room to reflect demand when setting the price of a tenancy.

This could be particularly significant in Stockholm, Gothenburg and other cities where housing shortages have created a large and competitive secondary market.

More profitable rentals could raise apartment prices

Boverket has warned that easier subletting and more flexible rent-setting could affect not only tenants but also people trying to buy a home.

Magnus Jacobsson, a unit manager at the housing authority, told SVT that some buyers could begin purchasing apartments primarily to rent them out. This would introduce additional demand into the ownership market.

“In attractive locations, this could push prices up somewhat,” Jacobsson said.

The effect may be concentrated in neighbourhoods where rents are high enough to make an investment property profitable. Prospective owner-occupiers could therefore find themselves competing with buyers who view apartments as sources of rental income.

The reform may consequently increase the supply of temporary accommodation while making access to home ownership more expensive. Whether the additional rental supply will be sufficient to moderate rents remains uncertain.

Companies may gain an advantage over private tenants

The broader reform package also changes Sweden’s rules on block leasing (blockhyra). Under this system, at least three apartments are rented together and then sublet, often by an employer providing accommodation to staff.

The new provisions are intended to make it easier for businesses to secure housing for employees and to support shared housing arrangements in which residents rent individual rooms while using common spaces.

Rents may be higher when apartments are leased to companies. Boverket says this could encourage property owners to favour corporate tenants over private individuals.

“If it becomes more profitable to rent to companies, it will of course become more difficult for people who do not work for that company to find housing, because some homes will effectively be reserved for its employees,” Jacobsson said.

Corporate accommodation can help employers recruit workers who need to relocate, particularly in areas with severe housing shortages. At the same time, it may remove homes from the segment available to students, young workers and people without access to a permanent first-hand contract.

Sweden’s housing shortage remains unresolved

The reform focuses on making better use of existing homes rather than directly increasing residential construction. It may therefore provide additional options for some tenants without resolving the structural shortage affecting several Swedish cities.

More flexible rules could persuade owners to rent apartments that would otherwise remain empty. They could also create a larger and more transparent private rental market.

The risks identified by Boverket point in the opposite direction. Higher potential returns could increase both rents and purchase prices, while companies and investment buyers could gain an advantage over households seeking a home for themselves.

The long-term impact of Sweden’s new private rental law will depend on how many additional apartments enter the market, how tribunals interpret the protection against excessive rents and whether the reform changes buying behaviour in the most sought-after areas.