Market rents in new construction mean serious problems for tenants
In Sweden, the issue of market rents is highly controversial. Most recently, the Swedish Productivity Commission (Produktivitetskommissionen), in its interim report from 2024, proposed deregulated rent setting for newly built rental apartments (a final report is expected in autumn 2025). But what would this mean for tenants? Can rent legislation still protectfor residents from excessive rent increases?
Bo Bengtsson. Photo: Mikael Wallerstedt.
In a new report, Bo Bengtsson, professor of political science at the Institute for Housing and Urban Research (IBF), reviews the Commission’s proposal using a model (or checklist) of nine points based on previous research on the specific characteristics of the rental market and on the political intentions behind current Swedish rental legislation. He has previously applied this model in a critical analysis of the 2021 proposal for market rents in new construction – a proposal that was later withdrawn after triggering a government crisis.
– Both the 2021 inquiry and the Productivity Commission’s interim report present a simplified and misleading view of housing markets, treating housing as an ordinary market commodity. The focus lies solely on economic efficiency and incentives for property owners, with no regard for safeguarding tenant security or housing standards. It is remarkable that the specific features of the housing market, which economists have highlighted for decades, are not even discussed in the current proposals for market-based rent setting, says Bo Bengtsson.
– Nor are the proposals related to the intentions behind Swedish rental legislation.
As previous research has shown, the specific characteristics of the housing market create a power imbalance between tenants and property owners in an unregulated market. An important issue highlighted in the report is that market rents for new construction are likely, over time, to influence the existing housing stock as well – making the proposals more far-reaching and problematic for tenants than suggested by the inquiries.
Bo Bengtsson’s report emphasises that rental legislation should be viewed as protective legislation – a tool to ensure reasonable rents and real security of tenure for tenants. Efficiency and productivity are important aspects, but they must be balanced against tenants’ rights and broader societal goals on housing access and social security.
– The conclusion is clear – market rents in new construction are not the answer to today’s housing challenges. Instead, we need reforms that strengthen the collective rent-setting system and the institutional frameworks that protect tenants – especially those with limited financial resources. A rental policy that puts residents’ needs at centre is essential for a sustainable and fair housing market. Let’s hope the Productivity Commission reconsiders before publishing its final report, says Bo Bengtsson.
