4 ms·

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-

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).
- epistasis 5y ago
  How does it do that? Are the builders typically the same as the owners in Sweden? If so, I could see that being true. But if housing builders are different than the eventual owners, the have different economic interests, and rent control shouldn't limit housing production.
  - stonemetal12 5y ago
    Doesn't really matter who the owner is. If it costs 1 million to build a new apartment complex, and rent control means it will only return 500K in a reasonable time frame it doesn't get built. If it returns 1.5 million in a reasonable time frame it does. A builder isn't going to build it if no one will buy it, and no one will buy it if they lose money on the rent.
    - epistasis 5y ago
      Rent control doesn't apply to the price of new housing, at least for any the many many versions of rent control I've seen. Rent control only limits the increases on existing housing. The new building can charge whatever they want, they just can't depend on large increases in rent later on after their initial pricing. This same assumption, no huge rise in rents later, is also applied by financiers.
  - sokoloff 5y ago
    Housing is produced because there are buyers are willing to pay an amount $X that makes it attractive to build. Anything that reduces that value $X likely has a negative influence on marginal housing construction.
filleokus 5y ago
In my opinion we need both. Just building more won't help me. If I'm going to live in Stockholm (or any other large city really), I want to live in the city center. I want to walk or bike to the office, and have all the restaurants near by etc. It's very unlikely that the housing stock in the central parts of town will ever increase substantially. I'm willing (and honestly lucky enough to be able) to pay the premium for living downtown, if market rates were imposed. (There's an argument to be made about how abolished rent controls can increase interest by companies to build rental properties and get municipalities to issue building permits. Also that a non-negligible share of attractive rent-controlled housing is under-utilised, e.g people who don't live in them full-time but keep the contract because it's nice to have every once in a while). But yes, we definitely need a lot more housing overall. Cheap and close/with good connections to places where people work.
- deleted 5y ago
  [deleted]
- nivenkos 5y ago
  Fair enough. I just hope they never abolish the restrictions on second hand contracts. That has completely destroyed London, Barcelona, etc. - where your landlord might just be some investor in Zurich or New York. Also allowing for more remote work, so people can do more from smaller cities.
- jrochkind1 5y ago
  It's of course expensive to live in the city center in most large European (or American) cities, this is not particular to Sweden. > I'm willing (and honestly lucky enough to be able) to pay the premium for living downtown, if market rates were imposed. I think this basically points out the trade-off. Right now, difficulty living in the city center of Stockholm or a large city is somewhat more evenly distributed compared to typical European countries, it unusually effects even the rich. Under a more strictly market approach the difficulty would be eliminated for the rich and increased for others. Whether that's a net win depends who you are, of course. > It's very unlikely that the housing stock in the central parts of town will ever increase substantially. So one way or another there are more people who want to live there than there is housing. How is it allocated? It can be allocated by a waiting list, in which you might have to wait 9 years. It can be allocated based on the market, in which those with more ability to pay get to live there. It can be allocated based on some combination of "personal network/nepotism" and "graft", in which leaseholders of rent-controlled apartments rent them out at profit to them, or at no profit to their family and those they know. Based on the article, the current system of course is a combination of all of those. Adjusting the portion of each of them would benefit some people and disadvantage others, depending on how adjusted.
1053r 5y ago
Why isn't there more building? In most places that "need" rent control, it's because there are heavy restrictions on building. And rent control, all by itself, serves as a disincentive to build. Why should I invest in a new building when I can invest in something else that's less hassle, more liquid, etc.? Not to mention historical controls on building, rules about shading out other buildings, onerous permitting processes that take years, potential lawsuits, the annoyance of prostrating oneself before random bureaucrats begging for the ability to spend one's own money, etc. I think I'll just go YOLO into options futures instead, or throw my money in a global index fund. Each of these rules is well intentioned, or at least has a well intentioned sounding justification. (Often, the main force behind them is a monopolist who specializes in navigating them, and doesn't want to have to compete on an even footing in an open market.) Altogether, however, the rules make a sticky web that causes entrepreneurs to throw up their hands and go elsewhere. Rules about building is like dessert. A few desserts is a good idea. A meal constructed entirely of dessert is not so healthy, especially in the long run. Figure out how to make it easy to build, and people will build. And those folks need to be wooed, not with sweetheart deals out of the public purse, but with a clear, easy to navigate regulatory environment. If you make it easy to compete, there will be much competition. Overwhelmingly, though, there's no competition in these kinds of jurisdictions because powerful interests LIKE it that way. Think of those folks who spent EUR 10K on a square meter of condo. Are they going to be happy at your proposed regulatory reform that promises to quadruple the rate of building? Of course not! You are directly attacking their asset, that they strived and scrimped and worked for for years! Are they going to come out and say that? Only rarely. They are going to talk about the character of the neighborhood, or the historical significance of whatever, or the environmental impact of a skyscraper in the downtown, or make overtly racist comments about who might move into these new buildings, or anything that will rally people to their cause to STOP THAT BUILDING!
jlokier 5y ago
Is there really much immigration to Stockholm? According to https://www.macrotrends.net/countries/SWE/sweden/net-migration https://www.macrotrends.net/countries/SWE/sweden/net-migrati... net immigration to Sweden has been consistently dropping since ~2010, and at 0.3368% of the population per year, that doesn't sound like it would move the needle on housing.
Too 5y ago
Build more? Where? Stockholm center is just islands and all of it is already built, at least the areas where everybody wants to live. Same goes for most big cities. Unless you want a skyscraper metropole. If you want something cheap there are plenty of cheap apartments available in the suburbs.

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).
epistasis 5y ago
How does it do that? Are the builders typically the same as the owners in Sweden? If so, I could see that being true. But if housing builders are different than the eventual owners, the have different economic interests, and rent control shouldn't limit housing production.
- stonemetal12 5y ago
  Doesn't really matter who the owner is. If it costs 1 million to build a new apartment complex, and rent control means it will only return 500K in a reasonable time frame it doesn't get built. If it returns 1.5 million in a reasonable time frame it does. A builder isn't going to build it if no one will buy it, and no one will buy it if they lose money on the rent.
  - epistasis 5y ago
    Rent control doesn't apply to the price of new housing, at least for any the many many versions of rent control I've seen. Rent control only limits the increases on existing housing. The new building can charge whatever they want, they just can't depend on large increases in rent later on after their initial pricing. This same assumption, no huge rise in rents later, is also applied by financiers.
- sokoloff 5y ago
  Housing is produced because there are buyers are willing to pay an amount $X that makes it attractive to build. Anything that reduces that value $X likely has a negative influence on marginal housing construction.

filleokus 5y ago

In my opinion we need both. Just building more won't help me. If I'm going to live in Stockholm (or any other large city really), I want to live in the city center. I want to walk or bike to the office, and have all the restaurants near by etc. It's very unlikely that the housing stock in the central parts of town will ever increase substantially. I'm willing (and honestly lucky enough to be able) to pay the premium for living downtown, if market rates were imposed. (There's an argument to be made about how abolished rent controls can increase interest by companies to build rental properties and get municipalities to issue building permits. Also that a non-negligible share of attractive rent-controlled housing is under-utilised, e.g people who don't live in them full-time but keep the contract because it's nice to have every once in a while). But yes, we definitely need a lot more housing overall. Cheap and close/with good connections to places where people work.

deleted 5y ago
[deleted]
nivenkos 5y ago
Fair enough. I just hope they never abolish the restrictions on second hand contracts. That has completely destroyed London, Barcelona, etc. - where your landlord might just be some investor in Zurich or New York. Also allowing for more remote work, so people can do more from smaller cities.
jrochkind1 5y ago
It's of course expensive to live in the city center in most large European (or American) cities, this is not particular to Sweden. > I'm willing (and honestly lucky enough to be able) to pay the premium for living downtown, if market rates were imposed. I think this basically points out the trade-off. Right now, difficulty living in the city center of Stockholm or a large city is somewhat more evenly distributed compared to typical European countries, it unusually effects even the rich. Under a more strictly market approach the difficulty would be eliminated for the rich and increased for others. Whether that's a net win depends who you are, of course. > It's very unlikely that the housing stock in the central parts of town will ever increase substantially. So one way or another there are more people who want to live there than there is housing. How is it allocated? It can be allocated by a waiting list, in which you might have to wait 9 years. It can be allocated based on the market, in which those with more ability to pay get to live there. It can be allocated based on some combination of "personal network/nepotism" and "graft", in which leaseholders of rent-controlled apartments rent them out at profit to them, or at no profit to their family and those they know. Based on the article, the current system of course is a combination of all of those. Adjusting the portion of each of them would benefit some people and disadvantage others, depending on how adjusted.

1053r 5y ago

Why isn't there more building? In most places that "need" rent control, it's because there are heavy restrictions on building. And rent control, all by itself, serves as a disincentive to build. Why should I invest in a new building when I can invest in something else that's less hassle, more liquid, etc.? Not to mention historical controls on building, rules about shading out other buildings, onerous permitting processes that take years, potential lawsuits, the annoyance of prostrating oneself before random bureaucrats begging for the ability to spend one's own money, etc. I think I'll just go YOLO into options futures instead, or throw my money in a global index fund. Each of these rules is well intentioned, or at least has a well intentioned sounding justification. (Often, the main force behind them is a monopolist who specializes in navigating them, and doesn't want to have to compete on an even footing in an open market.) Altogether, however, the rules make a sticky web that causes entrepreneurs to throw up their hands and go elsewhere. Rules about building is like dessert. A few desserts is a good idea. A meal constructed entirely of dessert is not so healthy, especially in the long run. Figure out how to make it easy to build, and people will build. And those folks need to be wooed, not with sweetheart deals out of the public purse, but with a clear, easy to navigate regulatory environment. If you make it easy to compete, there will be much competition. Overwhelmingly, though, there's no competition in these kinds of jurisdictions because powerful interests LIKE it that way. Think of those folks who spent EUR 10K on a square meter of condo. Are they going to be happy at your proposed regulatory reform that promises to quadruple the rate of building? Of course not! You are directly attacking their asset, that they strived and scrimped and worked for for years! Are they going to come out and say that? Only rarely. They are going to talk about the character of the neighborhood, or the historical significance of whatever, or the environmental impact of a skyscraper in the downtown, or make overtly racist comments about who might move into these new buildings, or anything that will rally people to their cause to STOP THAT BUILDING!

jlokier 5y ago

Is there really much immigration to Stockholm? According to https://www.macrotrends.net/countries/SWE/sweden/net-migration https://www.macrotrends.net/countries/SWE/sweden/net-migrati... net immigration to Sweden has been consistently dropping since ~2010, and at 0.3368% of the population per year, that doesn't sound like it would move the needle on housing.

Too 5y ago

Build more? Where? Stockholm center is just islands and all of it is already built, at least the areas where everybody wants to live. Same goes for most big cities. Unless you want a skyscraper metropole. If you want something cheap there are plenty of cheap apartments available in the suburbs.