How Much Rent Can You Charge?

When you rent out a condominium/housing cooperative (bostadsrätt), different rules apply compared to rental apartments, primarily through the Law on Private Housing Rentals (Privatuthyrningslagen). This law is more favorable to you as a landlord, especially regarding rent setting and termination. This guide will help you navigate the specifics of renting out your bostadsrätt in Sweden.

Here are the most important points that are specific to condominiums/housing cooperatives:

1. Rent Setting (Most Important Difference!)

Unlike rental apartments (where rent is set according to "use value" - bruksvärde), for a condominium/housing cooperative, you can charge a cost-based rent. This means you can include both operating costs and a capital cost for the value of the property. This is a significant advantage for bostadsrätt owners.

Here's how to calculate a "reasonable rent" according to Swedish law:

• Operating Costs: The monthly fee to the bostadsrättsförening (housing association), electricity, broadband, insurance, etc. Make sure to keep records of all these costs.

• Capital Cost: The property's market value (not what you bought it for, but what it's worth today). You can get an appraisal from a local real estate agent to determine the current market value. Multiply this by a "reasonable rate of return" (often the Riksbank's reference rate + approximately 2%). The Riksbank's rate fluctuates, so check their website for the current rate.

• Furniture Surcharge: The Rent Tribunal (Hyresnämnden) often accepts a surcharge for wear and tear on furniture if you rent out furnished. A common standard is 10-15% of the total rent. Be prepared to document the condition of the furniture before and after the rental period.

Formula: (Market Value × Rate of Return) / 12 months + Operating Costs = Reasonable Monthly Rent.

Important to know: If you charge too high a rent ("excessive rent" - ockerhyra), the tenant can contact the Rent Tribunal (Hyresnämnden) and have the rent reduced. However, unlike renting out a regular rental apartment, the tenant cannot get back overpaid rent retroactively when renting a bostadsrätt. This is a key difference under the Privatuthyrningslagen.

Example for Expats:

Let's say your bostadsrätt in Stockholm has a market value of 3,500,000 SEK. The monthly fee to the bostadsrättsförening is 3,500 SEK, and you estimate other operating costs (electricity, broadband) at 1,200 SEK per month. The Riksbank's reference rate is currently 4%.

1. Capital Cost: (3,500,000 SEK × (0.04 + 0.02)) / 12 = 17,500 SEK/month
2. Operating Costs: 3,500 SEK + 1,200 SEK = 4,700 SEK/month
3. Reasonable Rent: 17,500 SEK + 4,700 SEK = 22,200 SEK/month

In this example, you could reasonably charge 22,200 SEK per month. Remember to factor in the furniture surcharge if applicable.

2. Permission from the Board (Styrelsen)

You must have the bostadsrättsförening's board (styrelsen) approval to rent out your bostadsrätt. This is a legal requirement in Sweden.

• Easier to get approval: The law is slightly more generous for bostadsrätter compared to rental apartments. It's sufficient that you have "reasons" (skäl) for renting out (e.g., cohabitation trial, studies/work in another location, or even a poor market for selling during a period). For rental apartments, "considerable reasons" are required.

• Time Limitation: The board usually grants permission for 6–12 months at a time. Ensure the rental agreement's duration matches the permission. Renewing permission is usually straightforward if your reasons remain valid.

How to apply for permission (for expats):

1. Contact the board: Find out who is responsible for second-hand rentals within the bostadsrättsförening. This information is usually available on the association's website or bulletin board.
2. Submit a written application: The application should include:
   • Your name and address
   • The reason for renting out the bostadsrätt
   • The name and contact information of the proposed tenant
   • The rental period
   • The proposed rent
3. Wait for a decision: The board will review your application and make a decision. This process can take a few weeks, so apply well in advance.

3. The Rental Agreement (Hyresavtal)

It is crucial to have a written rental agreement. This protects both you and the tenant.

• Standard templates: You can find standard rental agreement templates online (search for "hyresavtal mall bostadsrätt"). Make sure the template is updated and compliant with current Swedish law.
• Key clauses: Include the following in the agreement:
  • Names and contact information of both parties
  • Address of the bostadsrätt
  • Rental period (start and end dates)
  • Rent amount and payment schedule
  • Terms of termination
  • Inventory list (if renting furnished)
  • Condition of the apartment
• Deposit: It is common to charge a deposit (usually one to two months' rent). Specify the terms for returning the deposit in the agreement.

4. Taxes (Skatt) on Rental Income in Sweden

Rental income is taxable in Sweden. You need to declare the rental income on your annual tax return (inkomstdeklaration).

• Deductions: You can deduct certain expenses from your rental income, such as:
  • The monthly fee to the bostadsrättsförening
  • Interest on your mortgage
  • Depreciation of furniture (if renting furnished)
• Tax rate: The tax rate on rental income is the same as your regular income tax rate.
• Consult Skatteverket: The Swedish Tax Agency (Skatteverket) has detailed information on how to declare rental income. Check their website or contact them directly for guidance.

Example: If you earn 100,000 SEK in rental income and have deductible expenses of 30,000 SEK, you will be taxed on 70,000 SEK.

5. Rights and Responsibilities

Both you and the tenant have certain rights and responsibilities under Swedish law.

• Your responsibilities:
  • Providing a habitable apartment
  • Maintaining the apartment
  • Respecting the tenant's privacy
• Tenant's responsibilities:
  • Paying rent on time
  • Taking care of the apartment
  • Respecting the neighbors
• Disputes: If disputes arise, try to resolve them amicably. If you cannot reach an agreement, you can contact the Rent Tribunal (Hyresnämnden) for assistance.

6. Insurance (Försäkring)

Make sure you have adequate insurance coverage.

• Home insurance: Your home insurance (hemförsäkring) should cover damage to the apartment and your belongings.
• Liability insurance: Your home insurance should also include liability insurance, which protects you if someone is injured on your property.
• Tenant's insurance: The tenant should also have their own home insurance to cover their belongings.

7. Moving Out

When the rental period ends, you and the tenant need to agree on a move-out date and time.

• Inspection: Conduct a thorough inspection of the apartment together with the tenant. Document any damage.
• Return of deposit: Return the deposit to the tenant, minus any deductions for damage.
• Change of address: The tenant needs to register their new address with Skatteverket.

FAQ: Renting Out Your Bostadsrätt in Sweden as an Expat

Q: Can I rent out my bostadsrätt without the board's permission? A: No. It is illegal to rent out your bostadsrätt without the bostadsrättsförening's board's approval. If you do, you risk losing your right to live in the apartment.

Q: How long can I rent out my bostadsrätt? A: The board typically grants permission for 6-12 months at a time. You can apply for an extension if you still have valid reasons for renting out.

Q: What happens if my tenant damages the apartment? A: The tenant is responsible for any damage they cause to the apartment. You can deduct the cost of repairs from their deposit. If the damage exceeds the deposit amount, you can pursue legal action.

Q: Can I increase the rent during the rental period? A: Generally, no. The rent is fixed for the duration of the rental agreement. However, you can include a clause in the agreement that allows for rent increases based on changes in the Riksbank's reference rate or other factors.

Q: What if my tenant doesn't pay rent? A: If the tenant doesn't pay rent, you can send them a payment reminder. If they still don't pay, you can terminate the rental agreement and evict them. This process is regulated by Swedish law and can be complex, so it's best to seek legal advice.

Q: Where can I find a reliable rental agreement template in English? A: While most standard templates are in Swedish, some English resources provide guidance and translated clauses. Consult with a legal professional to ensure your agreement is compliant with Swedish law.

Conclusion

Renting out your bostadsrätt in Sweden can be a good way to generate income, especially if you're an expat temporarily relocating. Understanding the rules and regulations surrounding rental agreements, taxes, and tenant rights is crucial. Always prioritize clear communication with the bostadsrättsförening and your tenant to ensure a smooth and positive rental experience in Sweden. Remember to consult with legal and financial professionals for personalized advice.