55 ms·

Rent control isn’t working in Sweden

254 points by ZeljkoS 5y ago

walkedaway 5y ago
"The biggest economic fallacy in housing is that affordable housing requires government intervention." - Thomas Sowell https://www.youtube.com/watch?v=dnj2WRIG11U https://www.youtube.com/watch?v=dnj2WRIG11U
mdorazio 5y ago
To save you from reading to answer the clickbait title: insufficient supply combined with people abusing the system to sublet for profit or gift rent controlled apartments to friends and family.
- ahoy 5y ago
  so the same things that cause issues in NYC
  - NovemberWhiskey 5y ago
    Right - "rent control not working because of predictable outcomes of rent control".
    - ahoy 5y ago
      alternatively, "Rent control not working because government allows it to be undermined."
      - mc32 5y ago
        How do you even monitor against fraud if even in communist countries this could happen? People will game it, if there is “profit” in it. The only way to avoid it is a very tyrannical East German system where people rat on each other to, we’ll, gain something, maybe that coveted apartment…
        oytis 5y ago
        How do you monitor that people are not working illegally? Or are not selling drugs? It's hard to make sure either of this never ever happens, but it is definitely possible to make sure it's not happening as much as to become a social problem.
        mc32 5y ago
        That’s my point. It’s not possible and you can only get close if you use tyrannical methods of surveillance and invasions of privacy.
        oytis 5y ago
        Even in a democratic country if the only jobs people can find are sketchy illegal ones without social protection you can tell the government has failed at its job.
      - YPPH 5y ago
        It seems awfully hard to enforce all cases. If a subletter voluntarily enters into an agreement with a lessee to pay above the rent control amount, who is the victim? Is it not a victimless crime?
        danuker 5y ago
        I suspect the subletter is breaking the law, due to charging more than is allowed. The victim is the person not able to rent on a first-come-first-serve basis instead of someone willing to pay more than is allowed.
        YPPH 5y ago
        >The victim is the person not able to rent on a first-come-first-serve basis instead of someone willing to pay more than is allowed. That's indeed the only sensible thing I can think of. But it's a very odd thing to me (that a mutual, consensual agreement between two people is governed by the interests of third parties).
        TheOtherHobbes 5y ago
        That's because there's a thing called the social contract, which makes it clear to anyone who can parse situations like a mature adult that all policy has wider social consequences, and short term gimme gimme can have disastrous long term results. And also because "consensual agreements" rarely are. Typically one party has more power than the other and can force terms. By definition, you only get truly consensual agreements when the balance of power is equal - which it very much isn't in rental markets with deliberately restricted stock.
        exhilaration 5y ago
        Isn't the landlord the victim in this case? The extra money should be going to them, not the lessee that is likely violating their rental agreement.
        988747 5y ago
      - 988747 5y ago
        Rent control is not working because it cannot work - it is directly contradicting the laws of nature, such as supply and demand. Housing gets build in order to extract profit from it. If you disallow profit, you are disincentivizing new housing construction, and you create perverse incentives to work around rent control.
        TheOtherHobbes 5y ago
        Strange how rents were manageable in the UK while there was a national not for profit council house building program. Perhaps there's a lesson to be learned from that.
        imtringued 5y ago
        Land is expensive and nobody wants to tax it. More generally. Non reproducible assets/aka monopolies can extort more money out of people now that people have more money thanks to low interest rates. Notice how being rich doesn't make you rich because of abuse of monopoly power to do perfect price discrimination.
        occz 5y ago
        >the laws of nature, such as supply and demand. This has got to be satire, right?
        988747 5y ago
        It is actually not. Basic laws of economy are much like the laws of physics: they work the same whether you believe in them or not. Trying to circumvent them with legislation such as rent control leads to various second order effects. For rent control that means limited supply and worse quality of the available apartments. Also: people unwilling to move, occupying apartments much too big for them, just because they are rent-controlled.
        occz 5y ago
        I know that the observable properties of economic systems happen regardless of belief. It's just seriously strange to equate them with 'laws of nature'. Next thing you know someone is going to call something like the law of demeter a law of nature. Just sort of absurd, really.
      - imtringued 5y ago
        There is no such thing as non undermined rent control. There are a thousand things to do with a property and the government decides, hey guys, stop that 1 thing out of thousands. Then people will do all the thousand other things. The government then acts surprised that its incomplete policy has failed. You can also just tax the land.
  - dijit 5y ago
    Supply underpins most of the housing crisis' London is having a hard time because supply is less than demand. Stockholm, NYC, Paris for the same reason. It's really one of the largest things that seemingly every developed country is struggling with right now. I don't personally believe Stockholm is more affected than any other European capital except perhaps Berlin, which somehow seems to stay affordable (likely because of supply).
    - Nav_Panel 5y ago
      >It's really one of the largest things that seemingly every developed country is struggling with right now. Not Japan! Tokyo rents are surprisingly cheap relative to other major cities.
      - ilammy 5y ago
        The key here is considering housing a consumable with 20-year lifespan tops, as opposed to multigenerational investment vessel.
        kalleboo 5y ago
        Yeah this is the big difference. A home in Japan is not an investment. You buy a home to live in, the mortgage is around the same or a bit cheaper than rent, but the property depreciates like a car, and while the land has value, the house you built on it has negative value (since the next tenant has to tear it down).
        jlokier 5y ago
        > (since the next tenant has to tear it down). In Tokyo?
      - nwj 5y ago
        My understanding is that in Japan zoning restrictions are controlled at a federal rather than local level. I've read that this helps prevent local incumbents using the zoning system to exclude new construction. In other words, Japan lacks the regulatory environment (common in all these other countries) that depresses supply.
  - nivenkos 5y ago
    It's not the same as NYC though. Most renters in Stockholm are renting second-hand or commercial and are not covered by rent control at all. It's more akin to the council housing crisis in the UK.
- merpnderp 5y ago
  How is something as simple as basic supply and demand still a shocker to so many people? Rent control is just the government picking the winners and losers, with those who are corrupt, play dirty, and generally antisocial being the winners.
  - TheOtherHobbes 5y ago
    Which only happens in housing, and not in - say - defence contracting. Or banking.
  - occz 5y ago
    > How is something as simple as basic supply and demand still a shocker to so many people? Rent control is just the government picking the winners and losers, with those who are corrupt, play dirty, and generally antisocial being the winners. Because it's not just about supply and demand, and attempting to frame it as such is seriously reductionistic. Essentially you're at Why #1 here, and you have at least 4 more Why's before you even begin to scratch the surface of the root cause
    - epistasis 5y ago
      This would be a far more convincing comment if you could hint at these other directions, otherwise it's just extremely condescending. I'm a big supporter of rent control. But I also think the problem here is supply and demand. I've never met a supply-and-demand skeptic that would do anything except deny its applicability. They could ever explain why themselves or point to somebody else's explanation. And I've met a fair number of such folks. I'm left thinking that they just don't want to see new homes or new people. But if you have an explanation, I'm all ears.
      - occz 5y ago
        I was wary of trying to go down the rabbit hole of explaining more of the situation, as I don't feel that I'm enough of an expert in the subject. I was merely critical of the lack of nuance in the analysis ("it's just supply and demand"). But let's give it a shot! There's no denying that there is a lack of supply in housing in some parts of Sweden, particularly in Stockholm, where there are very long queues to get a reasonably priced apartment to rent. There's no denying that rent controls are probably one contributing factor to why the supply is too low. But it's important to note that it's just one of many variables in this equation. So what other contributing factors are there? Well, for one, acquiring permits is pretty damn hard in Sweden. It's a long process with a lot of NIMBYism, not entirely unlike what I've understood is the case in San Francisco. There's also the issue of rental units being profitable on a far longer horizon, leading investors looking to make their money back quickly to look at the buyers market instead. Which leads us down the path of the very high prices in the buyers market. What's causing that? For one, very low interest rates in the housing loan market (about 1-2%), but also tax policy, giving lenders a tax deduction relative to their interests payments. Yes, you read that correctly - buying a home, ie being richer than average, comes with tax deductions. In Sweden, paying off your home loan for a long time wasn't even required - you just continually paid the interest, and perhaps lent even more money against your home when the value increased. There's also the fact that the public housing providers have more or less been dismantled in many cases, and sold off to what essentially amounts to slumlords, attempting to game the ever-living hell out of the rent control rules. The playbook is more or less: - Buy old public housing Then - Spend as little as possible on upkeep, be actively hostile to current tenants - When anything goes wrong inside the rental unit, refuse to do anything but a full-scale renovation And - When any tenant moves out, perform a full-scale renovation And finally - Legally raise the price, as the standard of the rental unit has increased, often increasing the price as much as 50% I don't pretend to know the answer to this complex issue, nor do I pretend to entirely understanf every part of it. Nor do I claim that rent control is the right answer or the wrong. But one thing is for sure - reductive arguments claiming that rent control is the root cause is wrong on the basis that it does not begin to understand the issue even slightly. Hopefully this begins to cover some of the nuance of the issue.
- alistairSH 5y ago
  Title is also, potentially, not actually supported by data... >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. Something is keeping rent low in Sweden (relative to a few other European counties).
  - bjourne 5y ago
    It may also be interesting to note that rent control is supported by 75 to 80% of the population. For a policy that "isn't working" it is strangely popular.
  - ransom1538 5y ago
    "Something is keeping rent low in Sweden (relative to a few other European counties)." Weather.
  - nivenkos 5y ago
    There are separate controls on being able to rent out flats for more than 2 years. So you can't really be an absentee landlord. The rent controls apply to first-hand contracts (kinda like council housing in the UK). Which is basically non-existent for working people now.
  - melolife 5y ago
    Rent control does keep rent low. What it creates is a supply problem, which could possibly explain the decades-long wait list for an apartment in Stockholm.
    - nivenkos 5y ago
      Those queues are for public first-hand contracts. You can always rent second-hand (for up to 2 years, from a private owner), private first-hand (more expensive queues from development firms), company rentals (in some cases, your company can be a guarantor, and you rent like a commercial entity with no time limit or deposit, etc. but usually higher rents), or you can buy a place. The issue is there aren't enough first-hand contracts, or enough properties in general. But the rent controls as discussed only apply to first-hand contracts, which are the minority.
- tbihl 5y ago
  Typical populace, responding to incentives and trying to find ways to thrive.
HPsquared 5y ago
What a surprise, the forces of supply and demand can't be overridden by wishful thinking. Perhaps building more housing might make it easier to find a place to live.
- 238475235243 5y ago
  Reminds me of the Pratchett / Discworld song "wouldn't it be nice, if everyone was nice?": https://www.lspace.org/fandom/songs/wouldnt-it-be-nice-if-everyone-was-nice.html https://www.lspace.org/fandom/songs/wouldnt-it-be-nice-if-ev... (sung to the tune of "It's a Small World") If we all were friendly I'm sure you would agree That the world would be a better place For you and for me And if everyone was kind I'm sure no-one would mind So let's all be nice Chorus: Wouldn't it be nice if everyone was nice? Wouldn't it be nice if everyone was nice? Wouldn't it be nice if everyone was nice? Let's all be nice. Being good to people Is lots of fun And it makes a difference To everyone And a smile is a frown When it's turned upside down So let's all be nice. Repeat chorus ad nauseam.
  - teddyh 5y ago
    (Warning: Tangential rant.) Yes, we should all be nice to everyone. Except to people who are not nice. Those are the outgroup. We, the nice people, are nice, because we are not those not-nice people. You should avoid those not-nice people. Do not associate with them. Shun them. Exclude them from your life. Block them. Refuse them service. Take all possible actions to make sure not-nice people are excluded and removed. Make sure all the nice people knows who the not-nice people are, so that all the nice people can avoid the not-nice people. Learn the signs of not-nice people. The subtle flags and secret signals, the words they use. Learn to never use those words, lest someone mistake you for a not-nice person. Call out loudly every time you see or hear someone use those words, for they must surely be a not-nice person! The not-nice people are always trying to sneak their way into your life, so you must be on constant lookout for all suspicious flags and signals. Call out loudly every time you discover a not-nice person, so that every nice person can be alerted, and take proper action. Remember, we must all do our part in being nice!
- nivenkos 5y ago
pydry 5y ago
>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. I wonder what metric they use for "not working". It's not like a lack of rent control is creating vast new supplies of housing here in London and as far as Im aware the fastest period of homebuilding in NYC was in the 50-60s when rent control was at its strictest (https://cbcny.org/sites/default/files/media/image-caption/Housing%20Production%20Tables%20and%20Figures-01_2.png https://cbcny.org/sites/default/files/media/image-caption/Ho... ).
- marcinzm 5y ago
  >It's not like a lack of rent control is creating vast new supplies of housing here in London and as far as Im aware the fastest period of homebuilding in NYC was in the 50s when rent control was at its strictest. They started to remove rent control in the early 50s due to a housing shortage. So by your argument removing rent control helps increase supply. http://www.tenant.net/Oversight/50yrRentReg/history.html http://www.tenant.net/Oversight/50yrRentReg/history.html
  - nivenkos 5y ago
    In Sweden it _only_ applies to first-hand contracts. So I don't think NY is a good comparison here. The main issue is that the government doesn't build enough. There are just nowhere near enough first-hand contracts, like not even the same order of magnitude. They've effectively abolished the system by just never building any, much like council housing in the UK.
    - theonlybutlet 5y ago
      Thinking this might have been the case... Good strategy amongst the more extreme neoliberals out there. Can see them doing it with the NHS too, play the long game, dismantle it piece by piece and then when everyone has forgotten what it once was like, the private solution becomes insatiable when compared to a disfunctional system that supposedly "never worked".
  - 5y ago
megamix 5y ago
Also common public property was sold during 90s and large amount of property requires now a mortgage. This has not helped the rental market. Instead now people are controlled by the banks instead. You lose your job, you lose your mortgage and life. Oppressive system.
throwawayay02 5y ago
When has it ever.
kaycebasques 5y ago
> In Sweden flat-sharing is uncommon, compared to other European cities Is this a legal limitation or a cultural tendency?
- teddyh 5y ago
  Not specific to Sweden, but, to paraphrase myself¹: A landlord will need a single legal person to be responsible for the paying of the rent, and own the lease. Most individuals will not have anything close to the sort of documented income or credit history to make any sensible landlord agree to the lease. “My friends will totally chip in to pay the rent!” is just not going to work. 1. https://news.ycombinator.com/item?id=6383809 https://news.ycombinator.com/item?id=6383809
kiklion 5y ago
Isn’t rent control, as a means of addressing housing affordability, one of the things that nearly every economist agrees doesn’t work? If you want to use rent control as a means to ensure individuals of various levels of wealth intermingle… then there is a conversation to be had. But it completely fails to make housing more affordable overall.
- RandomNick 5y ago
  It's basic economic principle: Price ceiilngs, like rent control, cause a shortage of supply. Price floors, cause surpluses in supply. Everything else is just nonsensical hand-waving people use in an attempt to justify why various schemes they favor are not working yet again.
  - Finnucane 5y ago
    Or not. I mean, we used to have rent control in Boston and Cambridge, and when it was eliminated (by statewide referendum) rents just went up. And they went up in surrounding areas, as people went looking for cheaper rent elsewhere.
    - seoaeu 5y ago
      A trend which surely had nothing to do with the tech/biotech boom in the area. When a region gains hundreds of thousands of new jobs and doesn't build housing to compensate, then rents are going to increase
      - Finnucane 5y ago
        There's actually been a fair bit of construction. In fact, a 2400 unit development is under construction here right now.
        seoaeu 5y ago
        There have literally been hundreds of thousands of new jobs created in the region in recent decades. Cambridge alone added nearly 50,000 new jobs since 1980! So yes 2400 units is a start, but we need dozens more like it before we start to even come close to solving the shortage.
l33tman 5y ago
This is just a bad article, you can always find a couple of people to interview who just HAVE to live in the most central area in the most popular city and then complain that it's difficult to get a cheap apartment. There were new stricter laws on black-market leases recently in Sweden, and if you pay too much for a normal lease, you can go to court and get a refund. My personal opinion is that the system works as well as you could expect (except for the most central parts of Stockholm maybe that the clickbait article seems to focus on).
- nivenkos 5y ago
  It sucks that you're being downvoted because people don't understand the Swedish housing system and that the main rent controls only apply to first-hand contracts. Stockholm doesn't have the same setup as New York. That said, the 20% YoY increase in property prices is insane.
mc32 5y ago
It doesn’t matter that it’s proven to not do what it’s supposed to achieve. There will always be a contingent that invents reasons why “this time” it will work. “We just haven’t done it right”. And they go on to fail once again.
symmetricsaurus 5y ago
Not working compared to what? From the article: > Despite its complex challenges, Sweden is in a better position on housing than many other EU countries. > 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. > Swedes are also less likely to live with their parents than any other young Europeans. The situation is certainly not good in Sweden but there are no simple solutions. Otherwise it would be much better elsewhere.
- radu_floricica 5y ago
  If you have a 9 year queue, it just doesn't work. Swedes may find other ways to cope that don't involve this particular mechanism.
nivenkos 5y ago
I live in Sweden, rent control is practically non-existent for most people now. The trick is to buy a place as soon as you can, unfortunately property prices are also going up (20% YoY!) so that's tough too. In Sweden you can't usually privately rent out an apartment for more than 2 years, without returning to live in it for some time (or selling it). So this puts a lot of pressure on to buy a place to live in, as the rental market is a disaster of moving every year. Sweden needs to build far, far more flats and houses. Like 10x current levels at a minimum. The population has increased by 20% in the last 20 years.
- pbuzbee 5y ago
  Why are property prices skyrocketing in seemingly every western country? Is this a chronic lack of supply? Inflation? Something else?
  - rory 5y ago
    Mostly societal accumulation of wealth and consistently low interest rates (which are low in part due to the high ratio of accumulated wealth to productive capacity).
  - nivenkos 5y ago
    Housing becoming an investment rather than somewhere to live in. Why is Bitcoin so overvalued? Once it becomes a "store of value" the price just goes crazy.
    - anchpop 5y ago
      That shouldn’t affect the price of rent though. Landlords are largely price takers and have no pricing power. But rents are also going up.
ericyan 5y ago
Based on what I learnt from my economics class back in the day, rent control is never supposed to work. A ceiling on rents would reduce the supply and eventually the quality of housing available will also drop. Rent control is usually a vote-winner, but vast majority of economists would also agree that it is a bad policy.
jdasdf 5y ago
Rent control works just fine in doing what its intended to do. It's just that what its intended to do isn't to provide housing at affordable prices, but to gain votes for those who implement rent control.
daleharvey 5y ago
This is a curiously timed article from the BBC, an outlet generally opposed to Scottish independence given the pro indy SNP and Scottish Greens are currently negotiating a coalition that would have them form a government. Rent control has been has been one of the core things negotiated for by the Greens (https://www.snp.org/nicola-sturgeon-announces-historic-snp-greens-cooperation-deal/ https://www.snp.org/nicola-sturgeon-announces-historic-snp-g...).
deleted 5y ago
[deleted]
filleokus 5y ago
The housing situation in Stockholm (and many other parts of the country) is pretty bleak. Buying an apartment is expensive, and problematic even for well payed young people. In central Stockholm prices are around 1000 USD / sq feet (≈10000 EUR / sq meter), and you need a 15% down payment. For a 400 square feet single room apartment that's a down payment of a full years post-tax salary. If you manage to save 20% of it, then it'll take you five years. Until you can afford it, the best option is market-priced second hand contracts. Which work well enough, but are quite expensive and very insecure. The landlords often bought the apartments with the intention to live in them, so most contracts are semi-temporary. First hand rent-controlled contracts are extremely hard to get and basically not an option. The queues are decades long. There's often a 2-300% difference between second-hand (market) rates and first hand contracts, so once someone gets such a contract, they'll never move out. Of course the lower cost of rent-controlled apartments helps the inner-city be more diverse, allowing people with lower income living there. But there's also a large share of well-of people that have gotten their contracts via connections, or who have just been in the queue for a really long time. I really hope that the rent-controls are abolished in my lifetime, but there's a vocal large public option for them, so I'm not too sure...
- nivenkos 5y ago
  Would abolishing them really help though? I also rent second-hand and it sucks, but I don't think things will improve just by abolishing the controls on first-hand contracts. We just need to build far, far, far more. Especially with so much immigration.
  - throwaway6734 5y ago
    Rent control decreases the incentive to build
    - nivenkos 5y ago
      I'm not a property developer, so I don't know how many flats they are forced to rent out as first-hand contracts when building new blocks. You can definitely buy apartments from new blocks though, and then you're just paying the normal market price. Second-hand contracts and commercial rentals also aren't covered by the rent controls, but I imagine the property developers can't rent them like that directly (only by selling them).
m00dy 5y ago
Stockholm has the worst. I needed to live and work there for a year. There is rent control, housing queues and black market. Everyone that I met had already been in the queue.So, it is definitely not for new comers. Black market roughly 40% of net income. So, Housing in there quite fucked up.
- alkonaut 5y ago
  The "private market" does work, but regulations mean you typically can't renn a place you own out for more than a year. So you can easily get a contract tomorrow at market rate, and that's what a bartender or software developer will have to do if they move in. If you are a professional, rent should be fairly affordable. If you are a student, it's not affordable. The downside though is the uncertainty. You'll expect to have to move to a new place around every 12 months or so which is a chore, and obviously is out of the question if you have a family. 40% of net income doesn't seem disastrously high tbh.
- nivenkos 5y ago
  A second-hand contract isn't necessary black market though. Black market is when they are sub-letting illegally so you literally can't register your address - and is mainly an issue for people who want very temporary rentals, or very low rents. But yeah, it is still a disaster.
josephcsible 5y ago
So basically, rent control caused the exact set of problems that every competent economist knows that price ceilings cause?
mathverse 5y ago
Build more units: That's impossible if not initiated by someone actually interested in providing more apartments. * urban planning and approval costs a lot * raw materials reached all time high * labor costs are very high even if we subcontract to Eastern Europe You cant wish building more units into existence the same way you cant implement rent control. Decentralization and not requiring people to work/live in areas with huge demand for housing is just the first step alleviate some of this pain.
- fallingknife 5y ago
  > You cant wish building more units into existence You really can, though. Just remove building restrictions and new units will "magically" start appearing anywhere that market rent exceeds building costs.
kwertyoowiyop 5y ago
He pays $1260/month and is unhappy because he believes it should be half that?
- nivenkos 5y ago
  I pay the same roughly. You have to understand that Swedish salaries are far, far lower than US salaries. Like a top-end senior engineer would get $100k here.
mrkickling 5y ago
Number of apartments being built has increased by a multiple of five during the last 10 years (25 000 apartments per year now [1]). During this time, no rent control was removed. Newly built apartments already have (for most young swedes) a high rent (around 10k SEK / 1.15K USD for 50-60m2). If you can accept an apartment 45 min from Stockholms inner city it will be cheaper and easier to get, [2] is the housing queue filtered for newly built apartments. I fail to see why removing rent control would lead to anything else than higher rents. If the housing companies can take a higher rent they will do it, and sure, perhaps build more apartments for a while. But from their perspective, wouldn't it be stupid to build cheap apartments for young swedes outside of the city center when that 1. would lead to less housing shortage (less demand in relation to supply) and 2. give less profit than fancy apartments closer the the city center. In my opinion, the best way to solve the housing shortage is to build apartments, and if the apartments built by the private sector are too expensive for young people, the state has to either subsidize or build their own apartments. [1] https://www.scb.se/hitta-statistik/statistik-efter-amne/boende-byggande-och-bebyggelse/bostadsbyggande-och-ombyggnad/nybyggnad-av-bostader/pong/statistiknyhet/paborjad-nybyggnation-av-bostadslagenheter-forsta-halvaret-2021-preliminara-uppgifter/ https://www.scb.se/hitta-statistik/statistik-efter-amne/boen... [2] https://bostad.stockholm.se/Lista/?cookies=no&s=58.91071&n=59.44501&w=17.62860&e=18.09127&sort=annonserad-fran-desc&nyproduktion=1 https://bostad.stockholm.se/Lista/?cookies=no&s=58.91071&n=5...
jrochkind1 5y ago
> Despite its complex challenges, Sweden is in a better position on housing than many other EU countries. Would be interesting to compare it to the USA too. The struggles people are having finding an affordable apartment in a desirable neighborhood in Sweden's biggest city's seems pretty familiar to struggles people go through in the USA. Which to the extent that's true means that Sweden's attempt to use very different political-economic mechanics to get out of that haven't worked as well as planned, but it doens't necessarily mean they are worse off. There might be different winners and losers and trade-offs between the different approaches, would be interesting to delve into it more than just "people still have a hard time finding affordable housing in Sweden's big cities", which at that general level seems a true statement almost everywhere.
the-smug-one 5y ago
The state/municipality/region should build more rental apartments. If we can vote for rental control then we can vote to build more apartments too. How do you get an apartment in Stockholm as a young person? You ask your parents to take out a loan on their house to pay the downpayment, then you take a loan and buy an apartment. Luxurious and high standard apartments are built all the time in Stockholm! The new Barkarbystaden development in the northern municipality of Järfälla will have added 18000 apartments by 2030, the current population is 80000. Sweden has no issue with building new places to live, as long as they're expensive and luxurious. Miljonprogrammet wasn't a failure.
refurb 5y ago
The alternative to rent control that doesn’t distort the market as much is direct subsidy of rent by the local govt. Rents go up from $800 to $1600? Well, the local govt coughs up $600 to soften the blow. Now that seems egregious right? The govt enriching these rentier landlords? Well yeah. Why is it better? Because the govt will do anything to avoid such payments. I don’t know, things like building more housing? It’s a great arrangement! Make the pain focused on the people who can actually do something about it.
- gruez 5y ago
  >Why is it better? Because the govt will do anything to avoid such payments. I don’t know, things like building more housing? The other and easier option is "we won't do it anymore lol" (assuming the government wants to get it implemented in the first place).
bjourne 5y ago
Utter garbage. Yes, Sweden has housing problems just like every other country in the Western world so that is no reason to conclude that rent control isn't working. What happened in Stockholm, where I live, and other cities was that apartments owned by the municipality were sold to the tenants. The reason for this sale was ideological; the liberal politicians in charge thought it was "bad" for the municipality to own apartments and want to "privatize" the the housing market. This resulted in the tenants getting to purchase their apartments cheaply and those apartments later rose massively in value so the former tenants made huge profits by reselling them. This naturally reduced the number of rental apartments and made the competition for them much stiffer. The people who couldn't afford to buy their own apartments had to compete with others in the same situation for the remaining rental apartments. Thus the rents for these apartments rose, but since they were rent controlled, they didn't rise as much as they "should have" (according to economists and landlords). Thus, a rental contract became an asset that could be resold for profit. This made it very hard to get hold of rental contracts since they are treated as assets that are always rising in value. If you have contract to an apartment in a nice neighborhood in Stockholm, you are never ever giving it up. If you don't live in the apartment you just rent it out second hand and you make a nice profit by gouging whoever is forced to rent it from you. So "Mr Stark" is complaining about his high second hand rent. What he doesn't understand is that that is the rent he would have had to pay if there was no rent control. The landlord would rent out apartments to the highest bidder and the highest bid, 11 000 kr, happened to be his. The problem is that more people want to live in city centers than there is space in city centers. So either you let landlords charge whatever they want, which quite obviously will lead to only rich people affording to live in city centers (and poor people in bad neighborhoods), or you distribute apartments according to some kind of queuing system, which quite obviously will lead to long waiting times. You can't solve this problem perfectly for everyone. Some people will not get to live in the most desirable areas and some people will have to live in the undesirable areas.
alkonaut 5y ago
As much as the title "doesn't work" is true, it's also just a choice between two things: either you have market rents in a city and you accept that only rich people live there. Or you have rents controlled and a black market, long queues etc - but you have some chance of not gentrifying the city entirely. Neither of these is attractive. Neither really "works". While there could be an effect on construction, the area where there is a lack of supply is central Stockholm, which is also of course an area where you can't possible build any significant number of new houses because there simply isn't any land. Market rents could be a very good idea in some smaller cities where there is a shortage of supply because rents are controlled at a too low level, but at the same time there is land available to build on. In central Stockholm, one could remove the queue over night if rents tripled - but it wouldn't create any supply and therefore not address the underlying problem.
- fallingknife 5y ago
  I guess I don't understand why having only rich people live in the most desirable areas "doesn't work." Nobody seems to think that it's an injustice that poor people don't get to have houses on the beach, so why is it a big deal that they have to live in the suburbs and rich people get downtown?
  - alkonaut 5y ago
    I don’t necessarily think it’s a “right” to live in attractive areas, but I do see the point of having all kinds of people in a city. My point was merely this: housing politics isn’t simply solving an economics/allocation/optimization problem. It’s also the sociological problem of creating a city.
  - jlokier 5y ago
    To set the scene, "poor" means middle class and below, but not quite rich enough, to be able to get a mortgage. Or facing any other obstables to a mortgage such as career stability or being self-employed. I think typically "poor" people move in when the prices are just about affordable in the area. There they settle, have families, have their friends, support network, schools, jobs, community, etc. It all seems very reasonable. And then the rents go up, and up, and up, and up... faster than income. So they are forced to move away to a new place where they don't know anybody and have no connections. They settle down in the new place. Children go to a new school. Community programs are scrapped in the old place and re-founded in the new place. Keep in touch with old friends by phone, but in-person friends have to be made anew. Do it all over again. Get really settled in. And then the rents in the new place go up, and up, and up, and up... faster than income again. So they are forced to move again. I think there's a fair moral argument for it being an injustice that "poor" people are not able to settle in any area except the most deprived areas where it's possible to project will stay deprived for decades to come. There's always a substantial chance that wherever they land, if it's a reasonable place that they can afford, conditions will change, and they will be gradually squeezed until they are priced out and forced to reset their lives again somewhere else. Being able to settle long-term in some reasonable place is arguably a significant moral imperative in the design of society. This is one of many possible metrics for evaluating what "works" or "doesn't work". And almost everyone's income drops a lot when they become elderly. Stability of place is really important for the elderly. It's sad when they have to leave to a place where they have nobody.
theonlybutlet 5y ago
Would the government banning subletting for a premium rate on leases going forward not be a good start? (where subtenancy leases signed from today onward be considered legally invalid).
api 5y ago
Rent control is basically California Proposition 13 for renters. It's a wealth transfer from new renters to existing renters and like prop 13 disincentivizes new construction.
dantondwa 5y ago
Well, the lack of rent control in my country, Italy, isn't working either. It has become really, really hard to rent an apartment or even a room in Italian cities (Rome, Milan, Bologna, Turin, at least). The prices are high and there is a lot of demand. Moreover, the quality of the apartments is really, really low. Landlords ask for a lot of guarantees and finding a room in an apartment can take even multiple turns of interviews. Of course, leaving nearby the city center is difficult and public transportation is lacking. It is really hell and I really wish rent control existed.
acd 5y ago
You can find an office to rent in Sweden within a week. An rental appartmeny which has social regulated prices takes years of queing to get. Getting an rental appartment in Sweden is a bit like getting a food item in a previoys socialist state. You have to queue due to price regulation. Price controls in an economy usually does not work that well.
xyzzy21 5y ago
Almost like there are laws of reality (economics) that are stronger than human desires to force things against said laws! At the top are the laws of physics - nothing can beat them. But below those are economics and human nature. And only at the bottom are law, politics and whims/fiats of human imagination and wishful thinking, in that order. The final lowest level: the mad ravings of the individual in his/her own mind which are most powerless in the big picture and long term.
igammarays 5y ago
I am appalled at how many comments in this thread appeal to the "laws of supply and demand" and economic theory as if a theoretical model could apply perfectly to something as complex as housing. The map is not the territory. The invisible hand of the market cannot do its work if it is prevented by the realities of building codes, high capital/safety/aesthetic costs of creating supply, the psychological costs of losing your home and irrational behaviours associated with it, the desirability of having less rich/poor segregation, and the fact that a neighbourhood community cannot form if people keep moving around. Stability in housing is a highly desirable goal even at the cost of efficiency of markets.
- ItsMonkk 5y ago
  All of those things are just a symptom of the economic problem. Existing owners lobby for those things because those things make them rich. Every building not built leads to everyone in the neighborhood making another dollar. When being a NIMBY makes you money, everyone becomes a NIMBY. When you align incentives and setup a Land Value Tax, not having enough housing in an area raises taxes. Suddenly people come out of the woodwork becoming YIMBYs to get those people housing so that their taxes drop. If people still want aesthetic and other factors, they can have it. But it's going to cost them.
- dionidium 5y ago
  > Stability in housing is a highly desirable goal even at the cost of efficiency of markets. So just give poor people money. If somebody needs shoes you can buy them a pair of shoes. You don't have to set price caps on shoe sales. (Meanwhile, if you have laws that are artificially limiting the production of shoes, then you should probably get rid of those laws and let people make more shoes if they want to.)
  - igammarays 5y ago
    The entire point of my comment was to say that commodity products like shoes cannot be compared to housing. There is no psychological cost to changing shoes. There is no effect on community development. Moving homes, however, has second and third-order destructive effects, on families, communities, and even individual mental health. The point is not the price-cap, the point is stability in housing is a desirable goal.
amai 5y ago
But do cities without rent control in general see sufficient supply in apartments? Somehow I start to believe that with or without rent control we see in many places a shortage in housing. So if the prices are not to blame, what is the real reason?
Hokusai 5y ago
> https://www.reddit.com/r/europe/comments/j19txa/average_age_at_which_europeans_leave_their/ https://www.reddit.com/r/europe/comments/j19txa/average_age_... It has been working really well all these years. > But until recently, getting a well-maintained, rent-controlled apartment straight after school is something some Swedes have just taken "for granted", argues Liza, a 37-year-old tech worker, who didn't want to share her last name. She moved to London from Stockholm last year, and believes Swedes complaining about housing shortages would do well to put their struggles in a wider context. The content just contradicts the title.
- nobodyandproud 5y ago
  Isn’t this because London is used as a safe place to park dirty money? That is, the supply is artificially low because oligarchs, off-shore billionaires, and others buy up the supply? That is, London’s failure isn’t about free market pricing vs rent control; but about deficiencies in residence and ownership laws?
aaggarwal 5y ago
Most housing discussions seems to avoid one of the main reason driving the prices up, their treatment as an investment vehicle. Residential housing should not be used as an investment vehicle. Period. Its primary purpose is to allow families to own and live in the house. Mandating that can eliminate the rich landlords/foreign investors buying houses just for investment, stabilize the demand and drive down the prices. One way to mandate that could be progressive property tax based on how many properties you already own with a max cap on number of allowed residential properties one can own. This might decrease incentive to build new housing for developers, but can be solved by temporary tax breaks for building new housing. Am I missing some second order effects?
- akouri 5y ago
  Who will supply the capital to build housing in this world you propose?
  - jungturk 5y ago
    Homeowners, coops, collectives, local government, or NGOs?
  - aaggarwal 5y ago
    City and state governments can offer temporary tax breaks for building new housing in certain zones to attract capital. This is already done in a way when government is trying to attract capital for new industries via SEZs.
- jungturk 5y ago
  A high tax on the capital gains at sale could also work well here. I'm also curious whether decoupling housing from investing could be useful in stabilizing prices.
  - aaggarwal 5y ago
    One problem with high tax based on capital gains at sale is that it needs the sale to happen and you start running into issues where people never sell and houses will get inherited. This still doesn’t tackle the problem head on.
cloudfifty 5y ago
This is a laughably biased article from my Swedish point-of-view. Really embarrassing from something like the BBC. They established that this is caused by rent control by fails throughout the article to even mention that rent control was _of course_ accompanied by large scale involvement by the government in providing housing. That was however abolished in favour of market based construction. This of course has made the price of housing - those you actually take a mortgage for - to sky rocket and building of rental apartments to crash. That end result is not surprising. But this isn't that rent controls has failed per se, it's that the construction has moved to the marked with rent controls still in place. The best solution for the average Swede would be to have the government involved in building housing again, rather than to throw out the poor through market rents.
tzfld 5y ago
Wondering why companies chose to locate where house prices are so high that their employees cannot afford to buy?
markb139 5y ago
It wasn’t very different 25 years ago when I worked there. I remember going to a viewing for a “2nd hand” apartment. I arrived 5 mins early. Swedes take their shoes off upon entering a place, there were so many people viewing the flat that there was a queue of shoes outside. I turned around and went back to think again. I was close to giving up and coming back to London, when a “friend of a friend” had a place he was leaving was offered to me. I was very lucky
HashThis 5y ago
It didn’t work in San Francisco either.
DavidVoid 5y ago
I really don't think you can look at something like rent control in isolation and say "rent control good" or "rent control bad", because how well it works really depends on what other regulatory decisions you make. Something worth mentioning for example (which the article doesn't), is that between 2007 and 2014, around 26,000 rented apartments (hyresrätter) in Stockholm were sold by the municipality and turned into owned apartments (bostadsrätter). The percentage of owned apartments in Stockholm went from being 44% in 2006 to 55% in 2013 [1]. If you self-sabotage the existing rent control regulations by reducing the supply of rented apartments, then of course the waiting times will increase, which you can then use as an argument to try to abolish rent control. [1] https://www.svd.se/ett-paradigmskifte-pa-stockholms-bostadsmarknad https://www.svd.se/ett-paradigmskifte-pa-stockholms-bostadsm...
- beervirus 5y ago
  > If you self-sabotage the existing rent control regulations by reducing the supply of rented apartments, then of course the waiting times will increase, which you can then use as an argument to try to abolish rent control. Rent control always self-sabotages by reducing the incentive to build more and better housing.
  - DavidVoid 5y ago
    Which is why it shouldn't be done in isolation; you also need to have other regulations in place to increase the incentive to build more and better housing.
    - beervirus 5y ago
      Yes, the solution to bad regulations is more regulations.
mensetmanusman 5y ago
We need to build more cities from scratch.
jollybean 5y ago
'Rent Control' and 'State Housing' are completely different subjects. Quebec and Ontario have province-wide forms of rent control (i.e. max rent increases etc.) and it works well enough. 'State Housing' is for poor people only. State Allocated Housing for 'regular citizens' is probably a bad idea, you end up in a Soviet Style situation with valuable things allocated based on power or other infidelities, long waiting lists, lack of maintenance etc.. Also, 'housing' doesn't mean everyone gets to live posh. If you're 27 and are not earning a whole lot, well, what can you expect really? You get a flat in possibly a not so nice building, that's it. I don't get why people would expect the state to provide for them in the 'poshest' part of Sweden. I wonder if we looked at prices in the more marginal areas, what those would be and if they are more affordable.
kazinator 5y ago
LOL, are those buildings in Sweden? Here is Richmond, BC, Canada: https://goo.gl/maps/TjvH4Js2n9h8Z6uZ7 https://goo.gl/maps/TjvH4Js2n9h8Z6uZ7
kazinator 5y ago
Suppose that the government regulates the price of unobtainium. If a transaction occurs whereby 100 grams of unobtainium are exchanged between two parties, no more than a dollar shall be paid by the receiving party, by law. How does anyone rationally expect that to turn unobtainium into obtainium? I have 50 grams of unobtainium. 300 people want it. What to do? Lottery? One lucky winner who gets a great fifty cent deal, 299 losers. No wait, screw that that; for 50 cents, it's not worth it. I'm not even putting that on the market unless they make that a law.
yawaworht1978 5y ago
--pydry 7 hours ago [–] >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. Hold on, how can they say uk is 15percent, I had banker friends who escaped London because of the housing prices. Sure, Leeds and other regions are cheaper, but the economy is rather limited there. Source, used to live in London and other parts of the UK.
humaniania 5y ago
I think that landlord control might be more effective. Make it extremely undesirable for a person to own multiple single family residences. Hoarding housing shouldn't be a viable business.
- anchpop 5y ago
  in what way is someone who owns multiple residences and renting them out hoarding them? Why would the number of houses people own affect rents at all?
- someelephant 5y ago
  Unfortunately that still doesn't increase the supply. If Sweden, like Canada, is experiencing higher population growth than housing growth, prices will continue increasing. There are simply not enough places to live.
WalterBright 5y ago
Governments have been trying to repeal the law of supply & demand for 4000 years. It has never worked yet. It's not just capitalist countries were rent control fails, it fails in communist countries where people are assigned housing, and it fails on military bases where housing is assigned.
tommymachine 5y ago
"in Sweden"
Wolfenstein98k 5y ago
Price controls never work - they just change the currency you pay with from dollars to time, and housing quality. One of the few things Econ 101 is certain about is that price controls never work. This cannot be said too many times. Price controls never work. Not even if you really want them to. The most basic lessons in economics cannot be taught too clearly: https://en.wikipedia.org/wiki/Parable_of_the_broken_window https://en.wikipedia.org/wiki/Parable_of_the_broken_window
anothernewdude 5y ago
Sounds like they need more Rent Control, not less.
timwaagh 5y ago
Letting go of rent control would make some sense. It would push the less educated poor out of the most desirable locations and allow sophisticated city companies to hire well educated tech talent from all over the country. Although obviously it's not so good if you're a poor Stockholm renter. There are definite economic benefits to doing this though. However to enable a boom in private housing construction to fix the supply issue it also needs liberal land use regulation. Which is a measure so controversial nobody in Europe even considers it. Otherwise nothing can be built no matter the potential for profit. I personally wouldn't sell out Swedish egalitarianism for just a bunch of tech corporations. It would probably cause a lot of anger. So I wouldn't do one without the other.
asah 5y ago
Relevant case law, worth reading through: https://caselaw.findlaw.com/ca-court-of-appeal/1771430.html https://caselaw.findlaw.com/ca-court-of-appeal/1771430.html (how hyper-liberal Berkeley, CA balanced the need to maintain properties vs stabilize rents)

254 points by ZeljkoS 5y ago

"The biggest economic fallacy in housing is that affordable housing requires government intervention." - Thomas Sowell https://www.youtube.com/watch?v=dnj2WRIG11U https://www.youtube.com/watch?v=dnj2WRIG11U

mdorazio 5y ago

To save you from reading to answer the clickbait title: insufficient supply combined with people abusing the system to sublet for profit or gift rent controlled apartments to friends and family.

ahoy 5y ago
so the same things that cause issues in NYC
- NovemberWhiskey 5y ago
  Right - "rent control not working because of predictable outcomes of rent control".
  - ahoy 5y ago
    alternatively, "Rent control not working because government allows it to be undermined."
    - mc32 5y ago
      How do you even monitor against fraud if even in communist countries this could happen? People will game it, if there is “profit” in it. The only way to avoid it is a very tyrannical East German system where people rat on each other to, we’ll, gain something, maybe that coveted apartment…
      - oytis 5y ago
        How do you monitor that people are not working illegally? Or are not selling drugs? It's hard to make sure either of this never ever happens, but it is definitely possible to make sure it's not happening as much as to become a social problem.
        mc32 5y ago
        That’s my point. It’s not possible and you can only get close if you use tyrannical methods of surveillance and invasions of privacy.
        oytis 5y ago
        Even in a democratic country if the only jobs people can find are sketchy illegal ones without social protection you can tell the government has failed at its job.
    - YPPH 5y ago
      It seems awfully hard to enforce all cases. If a subletter voluntarily enters into an agreement with a lessee to pay above the rent control amount, who is the victim? Is it not a victimless crime?
      - danuker 5y ago
        I suspect the subletter is breaking the law, due to charging more than is allowed. The victim is the person not able to rent on a first-come-first-serve basis instead of someone willing to pay more than is allowed.
        YPPH 5y ago
        >The victim is the person not able to rent on a first-come-first-serve basis instead of someone willing to pay more than is allowed. That's indeed the only sensible thing I can think of. But it's a very odd thing to me (that a mutual, consensual agreement between two people is governed by the interests of third parties).
        TheOtherHobbes 5y ago
        That's because there's a thing called the social contract, which makes it clear to anyone who can parse situations like a mature adult that all policy has wider social consequences, and short term gimme gimme can have disastrous long term results. And also because "consensual agreements" rarely are. Typically one party has more power than the other and can force terms. By definition, you only get truly consensual agreements when the balance of power is equal - which it very much isn't in rental markets with deliberately restricted stock.
      - exhilaration 5y ago
        Isn't the landlord the victim in this case? The extra money should be going to them, not the lessee that is likely violating their rental agreement.
        988747 5y ago
    - 988747 5y ago
      Rent control is not working because it cannot work - it is directly contradicting the laws of nature, such as supply and demand. Housing gets build in order to extract profit from it. If you disallow profit, you are disincentivizing new housing construction, and you create perverse incentives to work around rent control.
      - TheOtherHobbes 5y ago
        Strange how rents were manageable in the UK while there was a national not for profit council house building program. Perhaps there's a lesson to be learned from that.
        imtringued 5y ago
        Land is expensive and nobody wants to tax it. More generally. Non reproducible assets/aka monopolies can extort more money out of people now that people have more money thanks to low interest rates. Notice how being rich doesn't make you rich because of abuse of monopoly power to do perfect price discrimination.
      - occz 5y ago
        >the laws of nature, such as supply and demand. This has got to be satire, right?
        988747 5y ago
        It is actually not. Basic laws of economy are much like the laws of physics: they work the same whether you believe in them or not. Trying to circumvent them with legislation such as rent control leads to various second order effects. For rent control that means limited supply and worse quality of the available apartments. Also: people unwilling to move, occupying apartments much too big for them, just because they are rent-controlled.
        occz 5y ago
        I know that the observable properties of economic systems happen regardless of belief. It's just seriously strange to equate them with 'laws of nature'. Next thing you know someone is going to call something like the law of demeter a law of nature. Just sort of absurd, really.
    - imtringued 5y ago
      There is no such thing as non undermined rent control. There are a thousand things to do with a property and the government decides, hey guys, stop that 1 thing out of thousands. Then people will do all the thousand other things. The government then acts surprised that its incomplete policy has failed. You can also just tax the land.
- dijit 5y ago
  Supply underpins most of the housing crisis' London is having a hard time because supply is less than demand. Stockholm, NYC, Paris for the same reason. It's really one of the largest things that seemingly every developed country is struggling with right now. I don't personally believe Stockholm is more affected than any other European capital except perhaps Berlin, which somehow seems to stay affordable (likely because of supply).
  - Nav_Panel 5y ago
    >It's really one of the largest things that seemingly every developed country is struggling with right now. Not Japan! Tokyo rents are surprisingly cheap relative to other major cities.
    - ilammy 5y ago
      The key here is considering housing a consumable with 20-year lifespan tops, as opposed to multigenerational investment vessel.
      - kalleboo 5y ago
        Yeah this is the big difference. A home in Japan is not an investment. You buy a home to live in, the mortgage is around the same or a bit cheaper than rent, but the property depreciates like a car, and while the land has value, the house you built on it has negative value (since the next tenant has to tear it down).
        jlokier 5y ago
        > (since the next tenant has to tear it down). In Tokyo?
    - nwj 5y ago
      My understanding is that in Japan zoning restrictions are controlled at a federal rather than local level. I've read that this helps prevent local incumbents using the zoning system to exclude new construction. In other words, Japan lacks the regulatory environment (common in all these other countries) that depresses supply.
- nivenkos 5y ago
  It's not the same as NYC though. Most renters in Stockholm are renting second-hand or commercial and are not covered by rent control at all. It's more akin to the council housing crisis in the UK.
merpnderp 5y ago
How is something as simple as basic supply and demand still a shocker to so many people? Rent control is just the government picking the winners and losers, with those who are corrupt, play dirty, and generally antisocial being the winners.
- TheOtherHobbes 5y ago
  Which only happens in housing, and not in - say - defence contracting. Or banking.
- occz 5y ago
  > How is something as simple as basic supply and demand still a shocker to so many people? Rent control is just the government picking the winners and losers, with those who are corrupt, play dirty, and generally antisocial being the winners. Because it's not just about supply and demand, and attempting to frame it as such is seriously reductionistic. Essentially you're at Why #1 here, and you have at least 4 more Why's before you even begin to scratch the surface of the root cause
  - epistasis 5y ago
    This would be a far more convincing comment if you could hint at these other directions, otherwise it's just extremely condescending. I'm a big supporter of rent control. But I also think the problem here is supply and demand. I've never met a supply-and-demand skeptic that would do anything except deny its applicability. They could ever explain why themselves or point to somebody else's explanation. And I've met a fair number of such folks. I'm left thinking that they just don't want to see new homes or new people. But if you have an explanation, I'm all ears.
    - occz 5y ago
      I was wary of trying to go down the rabbit hole of explaining more of the situation, as I don't feel that I'm enough of an expert in the subject. I was merely critical of the lack of nuance in the analysis ("it's just supply and demand"). But let's give it a shot! There's no denying that there is a lack of supply in housing in some parts of Sweden, particularly in Stockholm, where there are very long queues to get a reasonably priced apartment to rent. There's no denying that rent controls are probably one contributing factor to why the supply is too low. But it's important to note that it's just one of many variables in this equation. So what other contributing factors are there? Well, for one, acquiring permits is pretty damn hard in Sweden. It's a long process with a lot of NIMBYism, not entirely unlike what I've understood is the case in San Francisco. There's also the issue of rental units being profitable on a far longer horizon, leading investors looking to make their money back quickly to look at the buyers market instead. Which leads us down the path of the very high prices in the buyers market. What's causing that? For one, very low interest rates in the housing loan market (about 1-2%), but also tax policy, giving lenders a tax deduction relative to their interests payments. Yes, you read that correctly - buying a home, ie being richer than average, comes with tax deductions. In Sweden, paying off your home loan for a long time wasn't even required - you just continually paid the interest, and perhaps lent even more money against your home when the value increased. There's also the fact that the public housing providers have more or less been dismantled in many cases, and sold off to what essentially amounts to slumlords, attempting to game the ever-living hell out of the rent control rules. The playbook is more or less: - Buy old public housing Then - Spend as little as possible on upkeep, be actively hostile to current tenants - When anything goes wrong inside the rental unit, refuse to do anything but a full-scale renovation And - When any tenant moves out, perform a full-scale renovation And finally - Legally raise the price, as the standard of the rental unit has increased, often increasing the price as much as 50% I don't pretend to know the answer to this complex issue, nor do I pretend to entirely understanf every part of it. Nor do I claim that rent control is the right answer or the wrong. But one thing is for sure - reductive arguments claiming that rent control is the root cause is wrong on the basis that it does not begin to understand the issue even slightly. Hopefully this begins to cover some of the nuance of the issue.
alistairSH 5y ago
Title is also, potentially, not actually supported by data... >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. Something is keeping rent low in Sweden (relative to a few other European counties).
- bjourne 5y ago
  It may also be interesting to note that rent control is supported by 75 to 80% of the population. For a policy that "isn't working" it is strangely popular.
- ransom1538 5y ago
  "Something is keeping rent low in Sweden (relative to a few other European counties)." Weather.
- nivenkos 5y ago
  There are separate controls on being able to rent out flats for more than 2 years. So you can't really be an absentee landlord. The rent controls apply to first-hand contracts (kinda like council housing in the UK). Which is basically non-existent for working people now.
- melolife 5y ago
  Rent control does keep rent low. What it creates is a supply problem, which could possibly explain the decades-long wait list for an apartment in Stockholm.
  - nivenkos 5y ago
    Those queues are for public first-hand contracts. You can always rent second-hand (for up to 2 years, from a private owner), private first-hand (more expensive queues from development firms), company rentals (in some cases, your company can be a guarantor, and you rent like a commercial entity with no time limit or deposit, etc. but usually higher rents), or you can buy a place. The issue is there aren't enough first-hand contracts, or enough properties in general. But the rent controls as discussed only apply to first-hand contracts, which are the minority.
tbihl 5y ago
Typical populace, responding to incentives and trying to find ways to thrive.

HPsquared 5y ago

What a surprise, the forces of supply and demand can't be overridden by wishful thinking. Perhaps building more housing might make it easier to find a place to live.

238475235243 5y ago
Reminds me of the Pratchett / Discworld song "wouldn't it be nice, if everyone was nice?": https://www.lspace.org/fandom/songs/wouldnt-it-be-nice-if-everyone-was-nice.html https://www.lspace.org/fandom/songs/wouldnt-it-be-nice-if-ev... (sung to the tune of "It's a Small World") If we all were friendly I'm sure you would agree That the world would be a better place For you and for me And if everyone was kind I'm sure no-one would mind So let's all be nice Chorus: Wouldn't it be nice if everyone was nice? Wouldn't it be nice if everyone was nice? Wouldn't it be nice if everyone was nice? Let's all be nice. Being good to people Is lots of fun And it makes a difference To everyone And a smile is a frown When it's turned upside down So let's all be nice. Repeat chorus ad nauseam.
- teddyh 5y ago
  (Warning: Tangential rant.) Yes, we should all be nice to everyone. Except to people who are not nice. Those are the outgroup. We, the nice people, are nice, because we are not those not-nice people. You should avoid those not-nice people. Do not associate with them. Shun them. Exclude them from your life. Block them. Refuse them service. Take all possible actions to make sure not-nice people are excluded and removed. Make sure all the nice people knows who the not-nice people are, so that all the nice people can avoid the not-nice people. Learn the signs of not-nice people. The subtle flags and secret signals, the words they use. Learn to never use those words, lest someone mistake you for a not-nice person. Call out loudly every time you see or hear someone use those words, for they must surely be a not-nice person! The not-nice people are always trying to sneak their way into your life, so you must be on constant lookout for all suspicious flags and signals. Call out loudly every time you discover a not-nice person, so that every nice person can be alerted, and take proper action. Remember, we must all do our part in being nice!
nivenkos 5y ago

pydry 5y ago

>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. I wonder what metric they use for "not working". It's not like a lack of rent control is creating vast new supplies of housing here in London and as far as Im aware the fastest period of homebuilding in NYC was in the 50-60s when rent control was at its strictest (https://cbcny.org/sites/default/files/media/image-caption/Housing%20Production%20Tables%20and%20Figures-01_2.png https://cbcny.org/sites/default/files/media/image-caption/Ho... ).

marcinzm 5y ago
>It's not like a lack of rent control is creating vast new supplies of housing here in London and as far as Im aware the fastest period of homebuilding in NYC was in the 50s when rent control was at its strictest. They started to remove rent control in the early 50s due to a housing shortage. So by your argument removing rent control helps increase supply. http://www.tenant.net/Oversight/50yrRentReg/history.html http://www.tenant.net/Oversight/50yrRentReg/history.html
- nivenkos 5y ago
  In Sweden it _only_ applies to first-hand contracts. So I don't think NY is a good comparison here. The main issue is that the government doesn't build enough. There are just nowhere near enough first-hand contracts, like not even the same order of magnitude. They've effectively abolished the system by just never building any, much like council housing in the UK.
  - theonlybutlet 5y ago
    Thinking this might have been the case... Good strategy amongst the more extreme neoliberals out there. Can see them doing it with the NHS too, play the long game, dismantle it piece by piece and then when everyone has forgotten what it once was like, the private solution becomes insatiable when compared to a disfunctional system that supposedly "never worked".
- 5y ago

megamix 5y ago

Also common public property was sold during 90s and large amount of property requires now a mortgage. This has not helped the rental market. Instead now people are controlled by the banks instead. You lose your job, you lose your mortgage and life. Oppressive system.

throwawayay02 5y ago

When has it ever.

kaycebasques 5y ago

> In Sweden flat-sharing is uncommon, compared to other European cities Is this a legal limitation or a cultural tendency?

teddyh 5y ago
Not specific to Sweden, but, to paraphrase myself¹: A landlord will need a single legal person to be responsible for the paying of the rent, and own the lease. Most individuals will not have anything close to the sort of documented income or credit history to make any sensible landlord agree to the lease. “My friends will totally chip in to pay the rent!” is just not going to work. 1. https://news.ycombinator.com/item?id=6383809 https://news.ycombinator.com/item?id=6383809

kiklion 5y ago

Isn’t rent control, as a means of addressing housing affordability, one of the things that nearly every economist agrees doesn’t work? If you want to use rent control as a means to ensure individuals of various levels of wealth intermingle… then there is a conversation to be had. But it completely fails to make housing more affordable overall.

RandomNick 5y ago
It's basic economic principle: Price ceiilngs, like rent control, cause a shortage of supply. Price floors, cause surpluses in supply. Everything else is just nonsensical hand-waving people use in an attempt to justify why various schemes they favor are not working yet again.
- Finnucane 5y ago
  Or not. I mean, we used to have rent control in Boston and Cambridge, and when it was eliminated (by statewide referendum) rents just went up. And they went up in surrounding areas, as people went looking for cheaper rent elsewhere.
  - seoaeu 5y ago
    A trend which surely had nothing to do with the tech/biotech boom in the area. When a region gains hundreds of thousands of new jobs and doesn't build housing to compensate, then rents are going to increase
    - Finnucane 5y ago
      There's actually been a fair bit of construction. In fact, a 2400 unit development is under construction here right now.
      - seoaeu 5y ago
        There have literally been hundreds of thousands of new jobs created in the region in recent decades. Cambridge alone added nearly 50,000 new jobs since 1980! So yes 2400 units is a start, but we need dozens more like it before we start to even come close to solving the shortage.

l33tman 5y ago

This is just a bad article, you can always find a couple of people to interview who just HAVE to live in the most central area in the most popular city and then complain that it's difficult to get a cheap apartment. There were new stricter laws on black-market leases recently in Sweden, and if you pay too much for a normal lease, you can go to court and get a refund. My personal opinion is that the system works as well as you could expect (except for the most central parts of Stockholm maybe that the clickbait article seems to focus on).

nivenkos 5y ago
It sucks that you're being downvoted because people don't understand the Swedish housing system and that the main rent controls only apply to first-hand contracts. Stockholm doesn't have the same setup as New York. That said, the 20% YoY increase in property prices is insane.

mc32 5y ago

It doesn’t matter that it’s proven to not do what it’s supposed to achieve. There will always be a contingent that invents reasons why “this time” it will work. “We just haven’t done it right”. And they go on to fail once again.

symmetricsaurus 5y ago

Not working compared to what? From the article: > Despite its complex challenges, Sweden is in a better position on housing than many other EU countries. > 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. > Swedes are also less likely to live with their parents than any other young Europeans. The situation is certainly not good in Sweden but there are no simple solutions. Otherwise it would be much better elsewhere.

radu_floricica 5y ago
If you have a 9 year queue, it just doesn't work. Swedes may find other ways to cope that don't involve this particular mechanism.

nivenkos 5y ago

I live in Sweden, rent control is practically non-existent for most people now. The trick is to buy a place as soon as you can, unfortunately property prices are also going up (20% YoY!) so that's tough too. In Sweden you can't usually privately rent out an apartment for more than 2 years, without returning to live in it for some time (or selling it). So this puts a lot of pressure on to buy a place to live in, as the rental market is a disaster of moving every year. Sweden needs to build far, far more flats and houses. Like 10x current levels at a minimum. The population has increased by 20% in the last 20 years.

pbuzbee 5y ago
Why are property prices skyrocketing in seemingly every western country? Is this a chronic lack of supply? Inflation? Something else?
- rory 5y ago
  Mostly societal accumulation of wealth and consistently low interest rates (which are low in part due to the high ratio of accumulated wealth to productive capacity).
- nivenkos 5y ago
  Housing becoming an investment rather than somewhere to live in. Why is Bitcoin so overvalued? Once it becomes a "store of value" the price just goes crazy.
  - anchpop 5y ago
    That shouldn’t affect the price of rent though. Landlords are largely price takers and have no pricing power. But rents are also going up.

ericyan 5y ago

Based on what I learnt from my economics class back in the day, rent control is never supposed to work. A ceiling on rents would reduce the supply and eventually the quality of housing available will also drop. Rent control is usually a vote-winner, but vast majority of economists would also agree that it is a bad policy.

jdasdf 5y ago

Rent control works just fine in doing what its intended to do. It's just that what its intended to do isn't to provide housing at affordable prices, but to gain votes for those who implement rent control.

daleharvey 5y ago

This is a curiously timed article from the BBC, an outlet generally opposed to Scottish independence given the pro indy SNP and Scottish Greens are currently negotiating a coalition that would have them form a government. Rent control has been has been one of the core things negotiated for by the Greens (https://www.snp.org/nicola-sturgeon-announces-historic-snp-greens-cooperation-deal/ https://www.snp.org/nicola-sturgeon-announces-historic-snp-g...).

deleted 5y ago

[deleted]

filleokus 5y ago

The housing situation in Stockholm (and many other parts of the country) is pretty bleak. Buying an apartment is expensive, and problematic even for well payed young people. In central Stockholm prices are around 1000 USD / sq feet (≈10000 EUR / sq meter), and you need a 15% down payment. For a 400 square feet single room apartment that's a down payment of a full years post-tax salary. If you manage to save 20% of it, then it'll take you five years. Until you can afford it, the best option is market-priced second hand contracts. Which work well enough, but are quite expensive and very insecure. The landlords often bought the apartments with the intention to live in them, so most contracts are semi-temporary. First hand rent-controlled contracts are extremely hard to get and basically not an option. The queues are decades long. There's often a 2-300% difference between second-hand (market) rates and first hand contracts, so once someone gets such a contract, they'll never move out. Of course the lower cost of rent-controlled apartments helps the inner-city be more diverse, allowing people with lower income living there. But there's also a large share of well-of people that have gotten their contracts via connections, or who have just been in the queue for a really long time. I really hope that the rent-controls are abolished in my lifetime, but there's a vocal large public option for them, so I'm not too sure...

nivenkos 5y ago
Would abolishing them really help though? I also rent second-hand and it sucks, but I don't think things will improve just by abolishing the controls on first-hand contracts. We just need to build far, far, far more. Especially with so much immigration.
- throwaway6734 5y ago
  Rent control decreases the incentive to build
  - nivenkos 5y ago
    I'm not a property developer, so I don't know how many flats they are forced to rent out as first-hand contracts when building new blocks. You can definitely buy apartments from new blocks though, and then you're just paying the normal market price. Second-hand contracts and commercial rentals also aren't covered by the rent controls, but I imagine the property developers can't rent them like that directly (only by selling them).

m00dy 5y ago

Stockholm has the worst. I needed to live and work there for a year. There is rent control, housing queues and black market. Everyone that I met had already been in the queue.So, it is definitely not for new comers. Black market roughly 40% of net income. So, Housing in there quite fucked up.

alkonaut 5y ago
The "private market" does work, but regulations mean you typically can't renn a place you own out for more than a year. So you can easily get a contract tomorrow at market rate, and that's what a bartender or software developer will have to do if they move in. If you are a professional, rent should be fairly affordable. If you are a student, it's not affordable. The downside though is the uncertainty. You'll expect to have to move to a new place around every 12 months or so which is a chore, and obviously is out of the question if you have a family. 40% of net income doesn't seem disastrously high tbh.
nivenkos 5y ago
A second-hand contract isn't necessary black market though. Black market is when they are sub-letting illegally so you literally can't register your address - and is mainly an issue for people who want very temporary rentals, or very low rents. But yeah, it is still a disaster.

josephcsible 5y ago

So basically, rent control caused the exact set of problems that every competent economist knows that price ceilings cause?

mathverse 5y ago

Build more units: That's impossible if not initiated by someone actually interested in providing more apartments. * urban planning and approval costs a lot * raw materials reached all time high * labor costs are very high even if we subcontract to Eastern Europe You cant wish building more units into existence the same way you cant implement rent control. Decentralization and not requiring people to work/live in areas with huge demand for housing is just the first step alleviate some of this pain.

fallingknife 5y ago
> You cant wish building more units into existence You really can, though. Just remove building restrictions and new units will "magically" start appearing anywhere that market rent exceeds building costs.

kwertyoowiyop 5y ago

He pays $1260/month and is unhappy because he believes it should be half that?

nivenkos 5y ago
I pay the same roughly. You have to understand that Swedish salaries are far, far lower than US salaries. Like a top-end senior engineer would get $100k here.

mrkickling 5y ago

Number of apartments being built has increased by a multiple of five during the last 10 years (25 000 apartments per year now [1]). During this time, no rent control was removed. Newly built apartments already have (for most young swedes) a high rent (around 10k SEK / 1.15K USD for 50-60m2). If you can accept an apartment 45 min from Stockholms inner city it will be cheaper and easier to get, [2] is the housing queue filtered for newly built apartments. I fail to see why removing rent control would lead to anything else than higher rents. If the housing companies can take a higher rent they will do it, and sure, perhaps build more apartments for a while. But from their perspective, wouldn't it be stupid to build cheap apartments for young swedes outside of the city center when that 1. would lead to less housing shortage (less demand in relation to supply) and 2. give less profit than fancy apartments closer the the city center. In my opinion, the best way to solve the housing shortage is to build apartments, and if the apartments built by the private sector are too expensive for young people, the state has to either subsidize or build their own apartments. [1] https://www.scb.se/hitta-statistik/statistik-efter-amne/boende-byggande-och-bebyggelse/bostadsbyggande-och-ombyggnad/nybyggnad-av-bostader/pong/statistiknyhet/paborjad-nybyggnation-av-bostadslagenheter-forsta-halvaret-2021-preliminara-uppgifter/ https://www.scb.se/hitta-statistik/statistik-efter-amne/boen... [2] https://bostad.stockholm.se/Lista/?cookies=no&s=58.91071&n=59.44501&w=17.62860&e=18.09127&sort=annonserad-fran-desc&nyproduktion=1 https://bostad.stockholm.se/Lista/?cookies=no&s=58.91071&n=5...

jrochkind1 5y ago

> Despite its complex challenges, Sweden is in a better position on housing than many other EU countries. Would be interesting to compare it to the USA too. The struggles people are having finding an affordable apartment in a desirable neighborhood in Sweden's biggest city's seems pretty familiar to struggles people go through in the USA. Which to the extent that's true means that Sweden's attempt to use very different political-economic mechanics to get out of that haven't worked as well as planned, but it doens't necessarily mean they are worse off. There might be different winners and losers and trade-offs between the different approaches, would be interesting to delve into it more than just "people still have a hard time finding affordable housing in Sweden's big cities", which at that general level seems a true statement almost everywhere.

the-smug-one 5y ago

The state/municipality/region should build more rental apartments. If we can vote for rental control then we can vote to build more apartments too. How do you get an apartment in Stockholm as a young person? You ask your parents to take out a loan on their house to pay the downpayment, then you take a loan and buy an apartment. Luxurious and high standard apartments are built all the time in Stockholm! The new Barkarbystaden development in the northern municipality of Järfälla will have added 18000 apartments by 2030, the current population is 80000. Sweden has no issue with building new places to live, as long as they're expensive and luxurious. Miljonprogrammet wasn't a failure.

refurb 5y ago

The alternative to rent control that doesn’t distort the market as much is direct subsidy of rent by the local govt. Rents go up from $800 to $1600? Well, the local govt coughs up $600 to soften the blow. Now that seems egregious right? The govt enriching these rentier landlords? Well yeah. Why is it better? Because the govt will do anything to avoid such payments. I don’t know, things like building more housing? It’s a great arrangement! Make the pain focused on the people who can actually do something about it.

gruez 5y ago
>Why is it better? Because the govt will do anything to avoid such payments. I don’t know, things like building more housing? The other and easier option is "we won't do it anymore lol" (assuming the government wants to get it implemented in the first place).

bjourne 5y ago

Utter garbage. Yes, Sweden has housing problems just like every other country in the Western world so that is no reason to conclude that rent control isn't working. What happened in Stockholm, where I live, and other cities was that apartments owned by the municipality were sold to the tenants. The reason for this sale was ideological; the liberal politicians in charge thought it was "bad" for the municipality to own apartments and want to "privatize" the the housing market. This resulted in the tenants getting to purchase their apartments cheaply and those apartments later rose massively in value so the former tenants made huge profits by reselling them. This naturally reduced the number of rental apartments and made the competition for them much stiffer. The people who couldn't afford to buy their own apartments had to compete with others in the same situation for the remaining rental apartments. Thus the rents for these apartments rose, but since they were rent controlled, they didn't rise as much as they "should have" (according to economists and landlords). Thus, a rental contract became an asset that could be resold for profit. This made it very hard to get hold of rental contracts since they are treated as assets that are always rising in value. If you have contract to an apartment in a nice neighborhood in Stockholm, you are never ever giving it up. If you don't live in the apartment you just rent it out second hand and you make a nice profit by gouging whoever is forced to rent it from you. So "Mr Stark" is complaining about his high second hand rent. What he doesn't understand is that that is the rent he would have had to pay if there was no rent control. The landlord would rent out apartments to the highest bidder and the highest bid, 11 000 kr, happened to be his. The problem is that more people want to live in city centers than there is space in city centers. So either you let landlords charge whatever they want, which quite obviously will lead to only rich people affording to live in city centers (and poor people in bad neighborhoods), or you distribute apartments according to some kind of queuing system, which quite obviously will lead to long waiting times. You can't solve this problem perfectly for everyone. Some people will not get to live in the most desirable areas and some people will have to live in the undesirable areas.

alkonaut 5y ago

As much as the title "doesn't work" is true, it's also just a choice between two things: either you have market rents in a city and you accept that only rich people live there. Or you have rents controlled and a black market, long queues etc - but you have some chance of not gentrifying the city entirely. Neither of these is attractive. Neither really "works". While there could be an effect on construction, the area where there is a lack of supply is central Stockholm, which is also of course an area where you can't possible build any significant number of new houses because there simply isn't any land. Market rents could be a very good idea in some smaller cities where there is a shortage of supply because rents are controlled at a too low level, but at the same time there is land available to build on. In central Stockholm, one could remove the queue over night if rents tripled - but it wouldn't create any supply and therefore not address the underlying problem.

fallingknife 5y ago
I guess I don't understand why having only rich people live in the most desirable areas "doesn't work." Nobody seems to think that it's an injustice that poor people don't get to have houses on the beach, so why is it a big deal that they have to live in the suburbs and rich people get downtown?
- alkonaut 5y ago
  I don’t necessarily think it’s a “right” to live in attractive areas, but I do see the point of having all kinds of people in a city. My point was merely this: housing politics isn’t simply solving an economics/allocation/optimization problem. It’s also the sociological problem of creating a city.
- jlokier 5y ago
  To set the scene, "poor" means middle class and below, but not quite rich enough, to be able to get a mortgage. Or facing any other obstables to a mortgage such as career stability or being self-employed. I think typically "poor" people move in when the prices are just about affordable in the area. There they settle, have families, have their friends, support network, schools, jobs, community, etc. It all seems very reasonable. And then the rents go up, and up, and up, and up... faster than income. So they are forced to move away to a new place where they don't know anybody and have no connections. They settle down in the new place. Children go to a new school. Community programs are scrapped in the old place and re-founded in the new place. Keep in touch with old friends by phone, but in-person friends have to be made anew. Do it all over again. Get really settled in. And then the rents in the new place go up, and up, and up, and up... faster than income again. So they are forced to move again. I think there's a fair moral argument for it being an injustice that "poor" people are not able to settle in any area except the most deprived areas where it's possible to project will stay deprived for decades to come. There's always a substantial chance that wherever they land, if it's a reasonable place that they can afford, conditions will change, and they will be gradually squeezed until they are priced out and forced to reset their lives again somewhere else. Being able to settle long-term in some reasonable place is arguably a significant moral imperative in the design of society. This is one of many possible metrics for evaluating what "works" or "doesn't work". And almost everyone's income drops a lot when they become elderly. Stability of place is really important for the elderly. It's sad when they have to leave to a place where they have nobody.

theonlybutlet 5y ago

Would the government banning subletting for a premium rate on leases going forward not be a good start? (where subtenancy leases signed from today onward be considered legally invalid).

api 5y ago

Rent control is basically California Proposition 13 for renters. It's a wealth transfer from new renters to existing renters and like prop 13 disincentivizes new construction.

dantondwa 5y ago

Well, the lack of rent control in my country, Italy, isn't working either. It has become really, really hard to rent an apartment or even a room in Italian cities (Rome, Milan, Bologna, Turin, at least). The prices are high and there is a lot of demand. Moreover, the quality of the apartments is really, really low. Landlords ask for a lot of guarantees and finding a room in an apartment can take even multiple turns of interviews. Of course, leaving nearby the city center is difficult and public transportation is lacking. It is really hell and I really wish rent control existed.

acd 5y ago

You can find an office to rent in Sweden within a week. An rental appartmeny which has social regulated prices takes years of queing to get. Getting an rental appartment in Sweden is a bit like getting a food item in a previoys socialist state. You have to queue due to price regulation. Price controls in an economy usually does not work that well.

xyzzy21 5y ago

Almost like there are laws of reality (economics) that are stronger than human desires to force things against said laws! At the top are the laws of physics - nothing can beat them. But below those are economics and human nature. And only at the bottom are law, politics and whims/fiats of human imagination and wishful thinking, in that order. The final lowest level: the mad ravings of the individual in his/her own mind which are most powerless in the big picture and long term.

igammarays 5y ago

I am appalled at how many comments in this thread appeal to the "laws of supply and demand" and economic theory as if a theoretical model could apply perfectly to something as complex as housing. The map is not the territory. The invisible hand of the market cannot do its work if it is prevented by the realities of building codes, high capital/safety/aesthetic costs of creating supply, the psychological costs of losing your home and irrational behaviours associated with it, the desirability of having less rich/poor segregation, and the fact that a neighbourhood community cannot form if people keep moving around. Stability in housing is a highly desirable goal even at the cost of efficiency of markets.

ItsMonkk 5y ago
All of those things are just a symptom of the economic problem. Existing owners lobby for those things because those things make them rich. Every building not built leads to everyone in the neighborhood making another dollar. When being a NIMBY makes you money, everyone becomes a NIMBY. When you align incentives and setup a Land Value Tax, not having enough housing in an area raises taxes. Suddenly people come out of the woodwork becoming YIMBYs to get those people housing so that their taxes drop. If people still want aesthetic and other factors, they can have it. But it's going to cost them.
dionidium 5y ago
> Stability in housing is a highly desirable goal even at the cost of efficiency of markets. So just give poor people money. If somebody needs shoes you can buy them a pair of shoes. You don't have to set price caps on shoe sales. (Meanwhile, if you have laws that are artificially limiting the production of shoes, then you should probably get rid of those laws and let people make more shoes if they want to.)
- igammarays 5y ago
  The entire point of my comment was to say that commodity products like shoes cannot be compared to housing. There is no psychological cost to changing shoes. There is no effect on community development. Moving homes, however, has second and third-order destructive effects, on families, communities, and even individual mental health. The point is not the price-cap, the point is stability in housing is a desirable goal.

amai 5y ago

But do cities without rent control in general see sufficient supply in apartments? Somehow I start to believe that with or without rent control we see in many places a shortage in housing. So if the prices are not to blame, what is the real reason?

Hokusai 5y ago

> https://www.reddit.com/r/europe/comments/j19txa/average_age_at_which_europeans_leave_their/ https://www.reddit.com/r/europe/comments/j19txa/average_age_... It has been working really well all these years. > But until recently, getting a well-maintained, rent-controlled apartment straight after school is something some Swedes have just taken "for granted", argues Liza, a 37-year-old tech worker, who didn't want to share her last name. She moved to London from Stockholm last year, and believes Swedes complaining about housing shortages would do well to put their struggles in a wider context. The content just contradicts the title.

nobodyandproud 5y ago
Isn’t this because London is used as a safe place to park dirty money? That is, the supply is artificially low because oligarchs, off-shore billionaires, and others buy up the supply? That is, London’s failure isn’t about free market pricing vs rent control; but about deficiencies in residence and ownership laws?

aaggarwal 5y ago

Most housing discussions seems to avoid one of the main reason driving the prices up, their treatment as an investment vehicle. Residential housing should not be used as an investment vehicle. Period. Its primary purpose is to allow families to own and live in the house. Mandating that can eliminate the rich landlords/foreign investors buying houses just for investment, stabilize the demand and drive down the prices. One way to mandate that could be progressive property tax based on how many properties you already own with a max cap on number of allowed residential properties one can own. This might decrease incentive to build new housing for developers, but can be solved by temporary tax breaks for building new housing. Am I missing some second order effects?

akouri 5y ago
Who will supply the capital to build housing in this world you propose?
- jungturk 5y ago
  Homeowners, coops, collectives, local government, or NGOs?
- aaggarwal 5y ago
  City and state governments can offer temporary tax breaks for building new housing in certain zones to attract capital. This is already done in a way when government is trying to attract capital for new industries via SEZs.
jungturk 5y ago
A high tax on the capital gains at sale could also work well here. I'm also curious whether decoupling housing from investing could be useful in stabilizing prices.
- aaggarwal 5y ago
  One problem with high tax based on capital gains at sale is that it needs the sale to happen and you start running into issues where people never sell and houses will get inherited. This still doesn’t tackle the problem head on.

cloudfifty 5y ago

This is a laughably biased article from my Swedish point-of-view. Really embarrassing from something like the BBC. They established that this is caused by rent control by fails throughout the article to even mention that rent control was _of course_ accompanied by large scale involvement by the government in providing housing. That was however abolished in favour of market based construction. This of course has made the price of housing - those you actually take a mortgage for - to sky rocket and building of rental apartments to crash. That end result is not surprising. But this isn't that rent controls has failed per se, it's that the construction has moved to the marked with rent controls still in place. The best solution for the average Swede would be to have the government involved in building housing again, rather than to throw out the poor through market rents.

tzfld 5y ago

Wondering why companies chose to locate where house prices are so high that their employees cannot afford to buy?

markb139 5y ago

It wasn’t very different 25 years ago when I worked there. I remember going to a viewing for a “2nd hand” apartment. I arrived 5 mins early. Swedes take their shoes off upon entering a place, there were so many people viewing the flat that there was a queue of shoes outside. I turned around and went back to think again. I was close to giving up and coming back to London, when a “friend of a friend” had a place he was leaving was offered to me. I was very lucky

HashThis 5y ago

It didn’t work in San Francisco either.

DavidVoid 5y ago

I really don't think you can look at something like rent control in isolation and say "rent control good" or "rent control bad", because how well it works really depends on what other regulatory decisions you make. Something worth mentioning for example (which the article doesn't), is that between 2007 and 2014, around 26,000 rented apartments (hyresrätter) in Stockholm were sold by the municipality and turned into owned apartments (bostadsrätter). The percentage of owned apartments in Stockholm went from being 44% in 2006 to 55% in 2013 [1]. If you self-sabotage the existing rent control regulations by reducing the supply of rented apartments, then of course the waiting times will increase, which you can then use as an argument to try to abolish rent control. [1] https://www.svd.se/ett-paradigmskifte-pa-stockholms-bostadsmarknad https://www.svd.se/ett-paradigmskifte-pa-stockholms-bostadsm...

beervirus 5y ago
> If you self-sabotage the existing rent control regulations by reducing the supply of rented apartments, then of course the waiting times will increase, which you can then use as an argument to try to abolish rent control. Rent control always self-sabotages by reducing the incentive to build more and better housing.
- DavidVoid 5y ago
  Which is why it shouldn't be done in isolation; you also need to have other regulations in place to increase the incentive to build more and better housing.
  - beervirus 5y ago
    Yes, the solution to bad regulations is more regulations.

mensetmanusman 5y ago

We need to build more cities from scratch.

jollybean 5y ago

'Rent Control' and 'State Housing' are completely different subjects. Quebec and Ontario have province-wide forms of rent control (i.e. max rent increases etc.) and it works well enough. 'State Housing' is for poor people only. State Allocated Housing for 'regular citizens' is probably a bad idea, you end up in a Soviet Style situation with valuable things allocated based on power or other infidelities, long waiting lists, lack of maintenance etc.. Also, 'housing' doesn't mean everyone gets to live posh. If you're 27 and are not earning a whole lot, well, what can you expect really? You get a flat in possibly a not so nice building, that's it. I don't get why people would expect the state to provide for them in the 'poshest' part of Sweden. I wonder if we looked at prices in the more marginal areas, what those would be and if they are more affordable.

kazinator 5y ago

LOL, are those buildings in Sweden? Here is Richmond, BC, Canada: https://goo.gl/maps/TjvH4Js2n9h8Z6uZ7 https://goo.gl/maps/TjvH4Js2n9h8Z6uZ7

kazinator 5y ago

Suppose that the government regulates the price of unobtainium. If a transaction occurs whereby 100 grams of unobtainium are exchanged between two parties, no more than a dollar shall be paid by the receiving party, by law. How does anyone rationally expect that to turn unobtainium into obtainium? I have 50 grams of unobtainium. 300 people want it. What to do? Lottery? One lucky winner who gets a great fifty cent deal, 299 losers. No wait, screw that that; for 50 cents, it's not worth it. I'm not even putting that on the market unless they make that a law.

yawaworht1978 5y ago

--pydry 7 hours ago [–] >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. Hold on, how can they say uk is 15percent, I had banker friends who escaped London because of the housing prices. Sure, Leeds and other regions are cheaper, but the economy is rather limited there. Source, used to live in London and other parts of the UK.

humaniania 5y ago

I think that landlord control might be more effective. Make it extremely undesirable for a person to own multiple single family residences. Hoarding housing shouldn't be a viable business.

anchpop 5y ago
in what way is someone who owns multiple residences and renting them out hoarding them? Why would the number of houses people own affect rents at all?
someelephant 5y ago
Unfortunately that still doesn't increase the supply. If Sweden, like Canada, is experiencing higher population growth than housing growth, prices will continue increasing. There are simply not enough places to live.

WalterBright 5y ago

Governments have been trying to repeal the law of supply & demand for 4000 years. It has never worked yet. It's not just capitalist countries were rent control fails, it fails in communist countries where people are assigned housing, and it fails on military bases where housing is assigned.

tommymachine 5y ago

"in Sweden"

Wolfenstein98k 5y ago

Price controls never work - they just change the currency you pay with from dollars to time, and housing quality. One of the few things Econ 101 is certain about is that price controls never work. This cannot be said too many times. Price controls never work. Not even if you really want them to. The most basic lessons in economics cannot be taught too clearly: https://en.wikipedia.org/wiki/Parable_of_the_broken_window https://en.wikipedia.org/wiki/Parable_of_the_broken_window

anothernewdude 5y ago

Sounds like they need more Rent Control, not less.

timwaagh 5y ago

Letting go of rent control would make some sense. It would push the less educated poor out of the most desirable locations and allow sophisticated city companies to hire well educated tech talent from all over the country. Although obviously it's not so good if you're a poor Stockholm renter. There are definite economic benefits to doing this though. However to enable a boom in private housing construction to fix the supply issue it also needs liberal land use regulation. Which is a measure so controversial nobody in Europe even considers it. Otherwise nothing can be built no matter the potential for profit. I personally wouldn't sell out Swedish egalitarianism for just a bunch of tech corporations. It would probably cause a lot of anger. So I wouldn't do one without the other.

asah 5y ago

Relevant case law, worth reading through: https://caselaw.findlaw.com/ca-court-of-appeal/1771430.html https://caselaw.findlaw.com/ca-court-of-appeal/1771430.html (how hyper-liberal Berkeley, CA balanced the need to maintain properties vs stabilize rents)