In Sweden, we have a utility value system that is based on precisely that—that rent levels should reflect how tenants generally value the varying standards and usability of the apartments, which is known as utility value.
How Rent Is Set Based on Utility Value
The basis for all rent setting is what is known as the “utility value.” The exact wording can be found in the Rent Act, Chapter 12, Section 55 of the Land Code. The utility value must reflect the general values of housing consumers and be reasonable. Rent is considered reasonable when it is the same as that of another similar apartment of the same standard and in the same location. This is what the parties then negotiate. The utility value rules are applied both during negotiations and when a rent is reviewed by the Rent Tribunal.
For example, an apartment with a floor plan that makes it easy to furnish has a higher utility value than an otherwise comparable apartment with a less favorable floor plan. It is how tenants generally evaluate an apartment’s characteristics—such as location, floor plan, and standard—that determines its utility value. You can make a difference by responding to tenant surveys from your landlord and the tenants’ association, if you are a member.
The right rent is more important than whether it is high or low
Rent negotiations take place between an individual property owner and the tenants’ association. The Riksdag has determined that it is the responsibility of the local parties to agree on the rent level. Negotiations are conducted individually with each property management company. The outcomes of the various negotiations influence one another if the differences in rent for comparable apartments become too great. The utility value system means it is important that all property owners take responsibility for setting the correct rent—whether it is too high or too low. And Skövdebostäder, in particular, has generally low rents in many areas; if we refrain from raising rents, this will have major consequences for the rental market as a whole, which benefits neither our tenants nor those of others.
Tripartite Agreement
Ahead of the 2022 negotiations, the Swedish Tenants’ Association, the Swedish Property Owners’ Association, and Sweden’s public housing sector agreed on a number of parameters that will influence the rent negotiations. These include the costs of utilities such as electricity, water, and waste disposal; management costs such as operations and maintenance; interest expenses; GDP; and inflation. The agreement is intended to create a more efficient and predictable rental market. It will take into account trends over several years rather than focusing solely on the immediate cost increases a property owner faces. However, there will still be years when rents rise more and years when they rise less.