r/Economics • u/whicky1978 • 19d ago
Why rent control isn’t working in Sweden News
https://www.bbc.com/news/business-5831755516
u/already-taken-wtf 18d ago
The article states: “Once you have one of these highly-prized contracts it's yours for life.” Hence every apartment might be blocked for 60 years. And especially in the inner city there won’t be much newly build housing.
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u/Phanterfan 18d ago
Well, it's common law in many European countries. This seems like a tame version. In Germany for example landlords cannot end rent contracts unless they meet some very strict requirements. So basically all rent contracts are contracts for life unless the tenant decides otherwise
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u/moonlandings 19d ago
I’m amazed that they have rent control and also citizens spending 40% of their income on rent. Seems there’s a pretty significant flaw in their system somewhere.
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u/whiskey_bud 18d ago
Rent controls are the reason why people are spending 40% of their income on rent. It fucks up the natural supply / demand balance and drives up prices.
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u/BayouBeavs 19d ago
It’s almost like people don’t build new housing if they can’t charge market rent
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u/ASquawkingTurtle 19d ago
Same reason why all cities in the USA that has rent control also have either: high rent prices or are slums.
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u/SrpskaZemlja 18d ago
40% sounds like an impossible dream in the US, where are you from?
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u/nick_olas_89 18d ago
It's not impossible, you'll just find the area "undesirable".
I'm making my area desirable in Ohio, at just over 7% before taxes. And my job does not need a degree.
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u/moonlandings 18d ago
But it’s Ohio…..
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u/wollier12 18d ago
Ohio is awesome! World class museums, multiple professional sports teams. The north coast and islands allow for lots of recreation, affordable housing, lots of jobs. A great park system Ohio has a lot to offer.
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u/theerrantpanda99 18d ago
Ohio is nice, I just can’t get good bagels and pizza there. 😜 I do look at what I could buy there with what I pay here in the Northeast, and sometimes feel envious. But alas, my industry is tied to this location for the foreseeable future. I think Ohio will see a resurgence as global warming starts to change things along our coasts.
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u/wollier12 18d ago
There’s some Amazing pizza here but you gotta look for it and know where to go. I run and Airbnb and always recommend the local eateries and people are always surprised, you can eat from everywhere right here, Indian, Jamaican, hungry for Hungarian, we have you covered, the coasts have this misconception that we’re all rednecks but we are an extremely diverse state
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u/theerrantpanda99 18d ago
Hey, I travel often, we don’t think you’re all rednecks (just a decent portion lol) j/k. One of the problems I find traveling, whenever I’m in the Midwest, the locals always want me to try their pizzas, bagels, sushi’s and biryani’s. It’s never as good. Now local flavors, are pretty damn good. I definitely do suffer from pretty big pizza and bagel Bias. The best pizza I ever had was in Reno of all places. The guy was from NJ, dragged his pizza ovens all the way there to find a cheaper place to live.
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u/moonlandings 18d ago
I have nothing against Ohio. Except for people coming into bars and screaming “O-H”. But that’s another story. My girlfriend is from Akron actually, so I always take the chance to dig on the state.
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u/moonlandings 18d ago
I live in an area without rent control though. So I’m not surprised at the amount real estate and rentals go for here.
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u/Hapankaali 18d ago
This is what the article says:
Only around 8% of Swedes live in households spending more than 40% of disposable income on housing, compared to 15% in the UK and almost 40% in Greece, according Eurostat data.
Those spending more than 40% of disposable income on rent aren't living in rent-controlled properties.
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u/Akitten 17d ago
Yes, because rent control increases the rent for all other properties initially. That is the issue.
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u/Hapankaali 17d ago
The percentage of people spending a large amount of their income on rent depends mostly on how much poverty there is. There's less poverty in Sweden than in the UK, and less in the UK than in Greece. This is of course not because of rent control but because of a larger degree of income transfers in Sweden. The reason I responded to the comment was the weird disconnect between saying "rent control doesn't work" while citing a figure in which Sweden performs best.
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u/Fortune-After 19d ago
Swedes are also less likely to live with their parents than any other young Europeans.
So many problems would be non-existent if it wasn’t like this.
I’m looking at America before Sweden, though.
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u/AnybodyRmbrLfter 19d ago edited 19d ago
Why is living with parents seen as a solution to high rent prices ?
The overcommidification of property is going very mainstream in our culture. Imagine someone living with their parents to save money, who also rents out a property for "passive income". Their parents also do the same thing
Many problems to high rent problems that are happening everywhere in the world
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u/Fortune-After 19d ago
It’s not the solution, but people deciding to take up more and more space than they really need to is a HUGE part of the problem. The human population can only grow so much in any given area before there’s just no room left to reasonably accommodate them.
I know people who do the “passive income” thing you described with inherited properties, but the income isn’t much because rents are quite cheap. There aren’t a ton of people that lucky
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u/Richandler 18d ago edited 18d ago
Quite the opposite, if so many people weren't hunkering down with their parents building up a war chest to splurge on a tiny condo, we'd actually have demand for real housing. Instead we have people not contributing at all to the economy, but trying to get rich instead. Essentially the problem is people need to stop settling for less. Especially those people out there in 400 ft studios. It's like, what's with the self flagellation?
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u/KAZVorpal 17d ago
Price ceilings and floors never work. That is mathematically inevitable.
Or, more precisely, they never do what they pretend to do. They DO enrich the cronies of corrupt politicians, and have other benefits like that.
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u/ten-million 18d ago
It sounds like there is not enough rent controlled apartments or apartments in general. Contrasting that to major cities without rent control and you have the exact same problem. Sky high rents and not enough availability. So what is the problem with rent control? It’s good for the lucky few that get it but the same for everyone else.
It seems like Tokyo is the only major city with affordable rents. They allow a lot more density.
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u/crossj828 18d ago
I mean this is obvious and well known why rent controls never work and have never worked.
All it does is create a black market and sky rocket rents. The only solutions are building more housing stock en mass and potentially controls on unskilled labour that fuel cheaper illegal housing on black market (you’ll still have a black market but without people who are that desperate and easy to exploit you can at least make some head way).
The main point should always be build more housing stock.