Response to interpellation 2023/24:218 on rent setting systems

Justitieministern Gunnar Strömmer (M)

Madam Speaker! Alireza Akhondi has asked the Minister for Infrastructure and Housing whether it is the intention of the Minister and the Government to carry out a rent reform during this parliamentary term and, if the answer is yes, whether we can then expect a reform based on the already completed investigation on free rent setting in new production. The work within the Government is distributed such that it is I who shall answer the interpellation.

In order to eventually address the structural problems that exist in the housing market, several measures were needed. Today's rent-setting system leads to lock-in effects, a shortage of rental apartments on the market, and long waiting times. It reduces mobility in the housing market and makes it more difficult for, for example, young people to enter the rental housing market.

A freer rent setting in new production can increase the drive to build new rental apartments by making it more profitable. It can also contribute to increasing mobility in the housing market. It makes it easier for people to move to where there are jobs and for companies to recruit staff. Rents can also become more fair by giving greater weight to tenants' valuations of their housing. I am therefore fundamentally positive towards a change in that direction.

At the same time, it is important that larger changes to the rent-setting system are carried out in a responsible manner, taking into account the different interests that exist. Careful analyses are needed of the issues that arise and the consequences that a change of today's system can lead to.

Since the proposals in the investigation commissioned by the previous government were submitted, there has been an economic development with rising inflation and increased interest rates, which has had a major impact on the housing market. This raises questions about how the rents would develop during the lease period. This needs to be considered when taking a position on whether a reform can be based on the proposals in the investigation. I cannot today provide any further information on when a potential reform of the rent-setting system could be implemented or exactly how it should be designed.

The government is working on several reforms to achieve a better functioning housing market. This includes, among other things, increasing the availability of buildable land, implementing significant simplifications of the rules for building, and shortening lead times in the planning and building process.

In order to create good conditions for building new rental apartments, the government has commissioned an investigator to review the rules regarding the adjustment of rents for newly produced apartments, so-called presumption rents. The review is requested by the parties in the rental market. The investigator shall also propose measures that facilitate private individuals' rental of housing. This is important so that existing housing can be utilized in a more efficient way. The assignment in the part concerning presumption rents shall be reported in September 2024 and the other parts in March 2025. I look forward to the investigation's proposals.

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Alireza Akhondi (C)

Madam Speaker! Thank you, Minister, for the answer! I hope the Minister is not too tired after so many debates on different subjects. What an exciting portfolio Gunnar Strömmer has!

The housing market is, as the Minister knows, very fragile. The wave of warnings has reached my own immediate vicinity, where a number of people have been warned. It concerns highly educated civil engineers, architects, land surveyors and others. We also know that a very large proportion of private individuals' housing loans will need to be refinanced this year. The bitter effect, so to speak, of everything that has followed in the wake of inflation will occur during 2024.

The Minister's third term in the position is now nearing its end, and the same applies to the Minister for Infrastructure and Housing. What is concerning is that the Minister and the government seem to be quite helpless in the face of the fact that the housing market is about to crash.

We see in the forecasts that housing construction has decreased from over 60,000-70,000 homes per year to under 20,000. We also see that inflation is indeed moving in the right direction, but that they still have not succeeded in getting a grip on it. Extra alarming are, for example, the unemployment figures from the American market, which have fallen to 3.7 percent. This means that the Fed's opportunities to act and lower interest rates, which to a large extent also affect the interest rate situation in Sweden, become more limited. What the ECB, the European Central Bank, and the Riksbank are doing is shrouded in mystery. There are many different opinions about what will happen.

Against this background, it becomes difficult to accept and manage the frustration that exists in this chamber over the fact that there are no bills for the Riksdag to take a position on.

We see that the state is withdrawing from agreements, for example when it comes to the high-speed railway and the new main lines, which has huge consequences for the municipalities that have chosen to build urban areas in the hope that the main lines would come. We also see that the investment support, with all its flaws, is being removed, even for applications that were submitted well in advance and in the correct order.

One can combine this with what is stated in the Minister's response, that it is a very good proposal that could improve the situation but that a government bill is being delayed until 2024, possibly until the autumn of 2025. Those of us who are familiar with the Government Offices' working methods know that the bill will arrive at the earliest in 2025. One becomes extra frustrated when reading the Minister's response, which just as easily could have been written by a member of the Centre Party. The Minister seems to be so positive about the proposal itself.

Now that there is a completed investigation, Gunnar Strömmer, why not take advantage of it and try to contribute to keeping the housing market under control during this difficult time?

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Mikael Eskilandersson (SD)

Madam Speaker! In his interpellation, Member Alireza Akhondi writes: "Recently we were reached by the news that the Sweden Democrats have opened up to carrying out a rent reform." Here Member Alireza Akhondi is handling the truth carelessly, I would like to assert.

What I have said is the same thing as I said in March this year and which I have also said previously in that regard, namely that we can imagine talking about all issues within the cooperation with the Tidö parties. It does not particularly concern this issue but generally for all issues. I think it is wrong to paint red lines and to say no to negotiating on certain issues already before one has even started talking about them.

During the previous parliamentary term, I had a debate with Member of Parliament Ola Möller from the Social Democrats, also regarding the fact that SD said that we can discuss and negotiate on all issues, linked to the question of market rents or rent setting in new production. It shows how ugly the political game can become, because while Ola Möller stood in the speaker's chair and discussed with me, the Social Democrats sat and negotiated the proposal on free rent setting in new production that we later defeated the government on.

Member Ola Möller made the same misinterpretation as Member Alireza Akhondi is doing now, namely that the fact that one, generally for all issues, can imagine negotiating is the same as having changed position on an issue.

I am, of course, pleased that Member Alireza Akhondi now wants to negotiate with the Sweden Democrats. I welcome that. However, Member Alireza Akhondi does not seem to quite understand what it means to negotiate on issues where there is no agreement. Perhaps it is the case that the Centre Party immediately changes its opinion in negotiations where they have an entry point, but that is not how it works in my party. One could at least get the impression that it works that way in the Centre Party, given the Centre Party's actions in the committee, where they tried to initiate a committee initiative without having support from any other party there.

At the occasion, I shall take and speak with Member Alireza Akhondi about how one negotiates so that one does not always lose the negotiation. We negotiate based on our voters' interests and ensure that we get as much weight for our opinions and proposals as possible. It may very well be the case that the other Tidö parties let our proposals win in the end.

In the question regarding rent setting, we defend the Swedish model, but there are sometimes reasons to adjust the regulatory framework even if one is fundamentally in favor of a model in large. When it comes to presumption rents, a review was needed, in our view. An investigation has been commissioned which, if the figures I have received are correct, shall present its partial report on presumption rents by September 2, 2024, at the latest. Naturally, it is my hope that it can go faster than that.

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Justitieministern Gunnar Strömmer (M)

Madam Speaker! Let me first just say a few words about the importance of fighting inflation. There is no doubt that it is an extraordinarily great pressure on the Swedish economy. It concerns Swedish households, it concerns Sweden's municipalities and regions and, in that respect, also the state, but it also concerns to a large extent important parts of the Swedish business sector. The housing sector is unfortunately no exception to this.

The most important thing we can do is to conduct an economic policy that pushes back inflation as soon as possible. There was a time when it was simple in Swedish politics to gain support for an economic policy dedicated to pushing back inflation and strengthening the work line. It is the government's direction, and once we have this grip, it will be very favorable for the issues we are now discussing.

There is no doubt whatsoever that we are in a very concerning situation with both too little construction, low mobility, long waiting times, lock-in effects, a shortage of rental apartments, and a shortage of new production. This justifies, in my opinion, reforms of the rent-setting system. We shall have to return to that, as it suffers.

I have also said that we are already doing a number of different things aimed at addressing several of the problems we are seeing now. I will mention some of these things.

We are making a temporary increase of the ceiling for the rotor deduction, we are increasing the availability of buildable land with a number of different measures, for example, incentives to municipalities that adopt detailed plans, and we are making significant simplifications of the building regulations. Boverket has been tasked to propose relaxations of the building requirements when it comes to student apartments. On May 1, the Planning and Building Act was amended, among other things by extending the possibility to grant time-limited building permits for new construction for residential purposes by five years and so on.

The presumed rents have been mentioned, and there is an ongoing investigation on this matter that has been requested by the parties. I want to state emphatically that there is no silence on this area. On the contrary, we have taken measures both in the legislative area and in the budget aimed at both handling the short-term challenges we face and, in the long term, making reforms that are structurally important.

For my part, I am of the opinion that this should also include changes to the rental pricing system, precisely in order to increase mobility, increase new production, and so on.

Regarding the investigation that has been mentioned here and which Alireza Akhondi referred to, it is a reality that that investigation also contains its challenges, as they are called.

One thing was that it was carried out in a short time. It had, partly through its directives, a rather difficult task to produce something that was sustainable over a longer period. Reality has somewhat caught up with some of the assumptions that formed the basis for the investigation. The second thing was that the investigation was never referred.

It is not quite the case that there are finished and fully prepared proposals on the shelf in the Government Offices that can simply be put into action, but this is now part of the work being done so that we can see in what way we can move forward for the benefit of both housing construction in the country and thus for those citizens who are to rent their homes or, for that matter, own their homes.

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Alireza Akhondi (C)

Madam Speaker! I thank the Minister for the answers.

I will start by commenting on the strange post from my Sverigedemokraterna colleague here. I honestly do not understand at all how it is relevant to this interpellation debate.

We know very well that the question itself is not about market rents. There are systems with presumed rents. And when one speaks with companies that build these homes, the vast majority of them say that they cannot charge more rent than people are prepared to pay, even if it means that they cannot make the calculation work.

I am going to bring up something that is concerning, and this will be a bit difficult for the Minister to, excuse the choice of words, wiggle out of. The government's legislative proposals pass through the committees here in the Riksdag. And it is in the Committee on Civil Affairs that these issues are handled in all respects. There are no proposals there that solve the problems we have on the housing market.

Since 2006, we have had over 62 public inquiries concerning housing policy. Therefore, there is quite a lot that has been fully investigated in the Government Offices, and a great deal has been referred. Then, I naturally understand that it might not be possible to take all these parts straight on. But at the same time, there are also fast-tracks with ministerial memoranda that could be used to accelerate these processes, which the Minister is well aware of.

Every time these pressing issues are raised with Gunnar Strömmer or Andreas Carlson - I will have an interpellation debate with Andreas Carlson a bit later today - regarding the need to act, and there have been four, five, or six interpellations in the past year, they refer to the fact that work is ongoing in the Government Offices. And I have all respect for the fact that processes take time. But at the same time, the situation is alarming. One cannot simply say that one is working on the issues and that one is working on regulatory changes and refer to inquiries in matters that have previously been investigated, and in some cases several times over. It is not possible to dodge.

We know that there are long lead times in the housing sector. It takes an average of nine years from start to finish. At the same time, we see that the skills shortage problems that have existed in this sector are exacerbated by the fact that personnel who are now being laid off may seek other jobs. But when inflation is under control, there may not be people who can and want to work in this sector. That is what scares me most when there are proposals. Now they are reconsidering a bit. The coastal protection investigation is a clear example that the government has finally come to its senses and is nevertheless prepared to do certain things while awaiting further measures. But I truly hope that the Minister, who seems to be positive towards such a reform, uses the tools available in the Government Offices and presents proposals that at least temporarily save the situation.

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Mikael Eskilandersson (SD)

Madam Speaker! Now it was Member Alireza Akhondi who, by misinterpreting what I have said, interfered in this interpellation debate.

Then I think that Member Alireza Akhondi has a somewhat dull view of what is happening at the moment. I think quite a lot is happening. We heard the Minister list a number of things, and I could add further things. Lantmäteriet's mission regarding digitalization to facilitate and speed up the processes is an important part that is also happening right now.

But to return to the original question, the issue of presumption rents is perhaps what will hopefully come up next time. I look forward with great confidence to what this investigation will actually conclude. We need, in fact, a freer rent setting, though perhaps not as free a rent setting as the Centerpartiet has proposed. It is not quite as simple as one can just say that one cannot set higher rents than what people are prepared to pay. Unfortunately, that is not how it looks on a housing market that has the extreme housing shortage that prevails today. It is a legacy we have after the government that the Centerpartiet was involved in supporting the appointment of less than nine years ago, I believe it will be.

If more had been done earlier, there would have been less that had to be done now. But unfortunately, we have concluded that a great deal is missing. In that case, it is a matter of starting to build from the ground up. And I look forward to the continued debate here for the rest of the evening. The Minister for Housing will also come here later, and then we will probably continue to debate what actually should have been done and what has been done.

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Justitieministern Gunnar Strömmer (M)

Madam Speaker! Fundamentally, I want to repeat what I have said so far. If it were the case that there were completed, well-elaborated, well-prepared, and well-ready proposals lying and waiting in the Government Offices with a precision that would allow them to be implemented immediately, it is clear that we would be in a position where we could consider it. Now, it is not in that way.

What it fundamentally comes down to is that the investigative work carried out during the previous parliamentary term was conducted under considerable time pressure and with rather troublesome starting values, and the investigation was never referred. Furthermore, the global circumstances have caused a significant number of the premises behind this investigation to change in such a way that also substantial parts of that model do not allow themselves to be applied here and now in the same self-evident way.

I say none of this to put things on the shelf permanently, but only to underscore that if one is to undertake a major reform of how the rental market functions, it must be something that is well-elaborated and well-balanced. It should not be part of a short-term crisis solution, but in that case, a long-term reform intended to truly solve the fundamental problems in the housing market.

It is clear that in the short term there is no doubt that there is a cyclical problem affecting the construction sector. Without claiming any victories in advance, as it is called, cyclical problems are, after all, usually of a transitory nature.

Now we are talking about long-term reforms and how the housing market should function in the long run. From a historical perspective, we can see that the Swedish housing market is burdened with a number of quite troublesome problems. These are lock-in effects, a shortage of rental apartments, and long waiting times. Then there is the question of what is the chicken and what is the egg. But the low mobility in the housing market is, regardless of the current economic cycle, a long-term problem when we are to get Sweden moving again, strengthen competitiveness, and increase growth in such a way that it benefits the citizens. These are issues that, in my opinion, we must address.

But while this is being prepared in the way that must be done when one is to engage in that type of more long-term reform, the government, with the support of the Sverigedemokraterna, is doing a number of other important things. I am happy to repeat them again. It concerns the temporary increase of the ceiling for the rotavdrag, increasing the availability of buildable land with a number of different measures, and significant simplifications of the building rules. We have already discussed the presumption rents. It also concerns relaxations of the building requirements when constructing student housing and other things.

I do not at all agree that there is a state of silence in this area. I also do not agree that there are finished reforms on the shelf that can simply be implemented. The work is ongoing, and we will return when we have well-weighed proposals to present.

In conclusion, I still want to return to the economic policy and state that the government's primary priority in this area is to get a grip on inflation and push it back. Even the fact that citizens' money is losing value has its say, so to speak, on the housing market. We must get a grip on the economic situation and, once we have done that, underpin the work line and strengthen competitiveness with a number of reforms in the area of housing policy, as well as in others.

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Alireza Akhondi (C)

Madam Speaker! I shall raise a few matters.

There are some rumors in the corridors that the issue of rent setting is nevertheless being prepared in some form at the Government Offices. Could the Minister possibly elaborate on what type of discussions are being held regarding this issue?

The Minister also refers to the fact that the issues are not fully prepared, but there was a government bill on the Riksdag's table during the previous parliamentary term. Obviously, there are therefore a number of things that, with some kind of modification, could be handled correctly almost immediately.

The housing sector accounts for 10 percent of Sweden's GDP. There are questions where there is a large majority in this chamber, for example, the abolition of the tightened amortization requirements and other types of issues, which may not be the long-term solution to the structural problems we have in the housing sector but which could nevertheless be considered some kind of relief given the situation.

I want to devote the last seconds of my speaking time to appealing to the Minister of Justice. One cannot wait until things have been destroyed to such an extent that it becomes harder and takes more time to rebuild them. My point is, Gunnar Strömmer: Take advantage of this time! If enough is destroyed, it will indeed take even longer to clean up the structural problems.

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Justitieministern Gunnar Strömmer (M)

Madam Speaker! I thank you for the opportunity to discuss these pressing issues today.

To begin with, I want to say the following: During the more than twelve months that I can oversee, the government, with the support of the Sweden Democrats and both within the framework of the budget cooperation - with two budgets that have passed through the Swedish Riksdag without any fuss or hassle - and through a series of measures in the legislative area, has moved these issues forward in an excellent way.

I believe that the change of government gives us the conditions to work with these issues long-term in a different way than before, both because there is a fundamental reform force and because it will be possible to build a majority around the reforms that the government will gradually put forward. It is an enormous strength, and I believe it is very important, not least in this area, which is in need of long-term stable rules of the game.

I have mentioned several of the things that have already been done during the year, everything from the temporary increase of the tax deduction for renovations and simplified building rules regarding student housing to the investigation on presumptive rents that is ongoing and other things. My own opinion is that it will also require long-term and more structural reforms on the housing market.

Unfortunately, it was not the case that there was a bill on the table regarding this area during the previous parliamentary term, but rather there was an investigation that was not fully referred. It was, so to speak, what we found on the shelf when we stepped in. We also have a global development that has made it so that some substantial parts of the assumptions that formed the basis for the investigation may perhaps need to be reassessed in light of inflation and such.

I just want to confirm that the ambition for reform is high even in this area. I also want to confirm the need for it both for the housing market as such - for the tenants and the housing cooperative owners - and for Sweden's long-term growth and competitiveness.

The interpellations debate was hereby concluded.

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