The Swedish rent-setting system is complex and has developed over a long period of time. As a result, rents can differ significantly between homes that may appear similar on the surface. For many people, it is difficult to understand why these differences are so large—especially between older and newer housing.
Below is an overview of how the system works and why rents look the way they do.
Bruksvärdessystemet – the foundation of rent setting in Sweden
In Sweden, rents are set according to the so-called use-value system (Bruksvärdessystemet). This means that the rent should reflect the dwelling’s use value—that is, how attractive the home is to an average tenant.
The assessment takes into account factors such as:
Use value is relative. It is determined through comparisons with other dwellings in the existing housing stock, not through market prices or willingness to pay.
Why older homes often have low rents
A large share of Sweden’s housing stock was built during periods when construction costs were significantly lower than they are today. Rents in these properties were set based on the conditions at the time and have since been adjusted gradually through annual negotiations.
Because Sweden lacks a freer market-based pricing mechanism, there is no process that allows rents in older housing stock to “catch up” with new construction over time. As a result, rents per square metre in older homes—sometimes in very attractive locations—can be substantially lower than rents in newly built housing.
The differences largely depend on when the dwelling was built and how the rent has developed historically, rather than on present-day quality or location.
There have also been periods when the state provided investment subsidies for rental housing. These subsidies made it possible to set lower rents in some relatively new buildings compared to comparable new construction without such support.
This means that homes of similar age, standard, and location may in some cases have different rent levels, depending on the economic conditions in place at the time of construction. This is another example of how historical circumstances continue to influence rents over time.
How rents in new construction are set
Rents in newly built housing are assessed at the time of first occupancy and are based on:
Newly constructed homes are therefore assessed based on today’s conditions, not against rents in older housing built under entirely different economic circumstances. This leads to rents in new construction often being higher per square metre than average rents across the housing stock as a whole.
Why the differences may feel unfair
For tenants, it can be difficult to understand why two homes with similar standards and locations can have very different rents. These differences are largely a result of how the Swedish rent-setting system is structured and how rents have evolved over time, rather than of individual decisions made today.
The system is designed to provide stability and predictability, but this also means that historical differences persist for a long time.
Rent negotiations in practice
Rents are set and adjusted through negotiations between landlords and tenants’ organisations.
In recent years, these negotiations have in many cases become more complex, partly due to:
This has made it more difficult in some contexts to reach long-term sustainable rent levels.
New housing forms and the system’s limitations
In recent years, housing models such as coliving, corporate housing, and other arrangements have emerged. These homes may include services, shared spaces, or special contract structures, making them difficult to assess within traditional use-value comparisons.
When housing forms do not fit into existing models, there is a need for adapted ways of negotiating and assessing rents, in order to safeguard both tenant security and long-term sustainability.
Long-term perspective and housing security
A central challenge in rent setting is finding levels that both make it possible to build and manage rental housing and at the same time provide tenants with stable and predictable conditions over time.
For many tenants, the ability to remain in their home is more important than temporarily low rents that are later increased sharply. Long-term perspective and stability therefore play a crucial role in how rents should be set and developed.
How does location affect rent in the use-value system?
Location is a factor that may be included in the use-value assessment under Swedish tenancy law. This means that the surrounding environment, access to services, transport links, and the attractiveness of the area can influence the use value.
At the same time, the use-value system’s view of location differs from how location is valued in a free market. In Sweden, location is assessed relatively, through comparisons with other dwellings in the existing stock, rather than through demand pressure or willingness to pay.
In practice, location has therefore often had limited impact, particularly in older housing stock where rents have developed gradually over a long period of time.
Why is Hyresgästföreningen usually the party that negotiates rents?
In Sweden, Hyresgästföreningen has for a long time been the dominant organisation representing tenants in collective rent negotiations. This has contributed to the perception that it is the natural counterpart in rent setting.
Tenant organisations are, however, non-profit interest organisations. They are not authorities and do not unilaterally set rents. Their role is to represent tenants in negotiations, in much the same way that trade unions represent employees in wage negotiations.
That one actor has taken on a dominant role is mainly due to historical and structural factors, such as long-term organisational development, local presence, and collective affiliations. Other forms of representation are fully permitted under the law.
The role of Hyresnämnden (The Rent Tribunal)
If the parties cannot reach an agreement, the rent may be reviewed by Hyresnämnden. Hyresnämnden is a state body that assesses the reasonableness of rents in individual cases, but it does not negotiate or set general rent levels.
When many negotiations break down and proceed to formal review, the system may be perceived as more legally driven than negotiation-based.
Why is it not possible to build “cheap rental housing” like that found in inner cities?
Many people call for more rental housing with low rents, comparable to older inner-city apartments. This is a reasonable request. At the same time, it is important to understand why such rent levels cannot be recreated in new construction under today’s system.
The low rents in older inner-city housing are historical. They reflect homes built several decades ago, under entirely different construction costs, land prices, and financing conditions than those of today. Since then, rents have developed slowly over a long period.
When new rental housing is built today, rents must cover today’s costs for construction, land, financing, and modern requirements for standards and accessibility. These costs cannot be negotiated away.
The use-value system is designed for long-term stability. It is not a tool for creating low rents at the outset in new construction. Low rents emerge in the system only over a long period of time—not at the time of first occupancy.
How housing queues relate to rents and location
Because rents in older housing stock in attractive locations are often low relative to demand, very long housing queues arise. In practice, this means that homes in inner cities and other attractive areas often require very long waiting times, while people with shorter queue times are primarily offered new construction or housing in outer areas.
This is a direct consequence of how the system works:
The result is that low-rent housing in attractive locations is allocated based on time spent in the queue, not on willingness to pay. This can feel unfair, but it is a consequence of a system that prioritises stability and predictability in rents.
Summary
The Swedish rent-setting system is based on historical comparisons and gradual change. It creates stability, but also leads to significant differences between older and newer housing.
Understanding these differences requires knowledge of how the system works over time.
Only then is it possible to have a constructive discussion about how the rental housing market of the future can function in a way that is legally secure, long-term, and understandable for both tenants and property owners.
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