STOCKHOLM (S&P Global Ratings) May 22, 2023--S&P Global Ratings said today that the rent-setting scheme in Sweden provides a sustainable long-term balance between public housing providers' revenues and expenditures (see " Regulatory Framework Assessment: Swedish Public Housing Providers' Rent-Setting Scheme Balances Income And Costs").
We assess the regulatory framework for Swedish public housing providers and cooperative housing societies as very strong. Providers currently in the scope of this framework are municipality-owned housing companies and one Stockholm-based cooperative housing society (Stockholms Kooperativa Bostadsförening), as we think that they share the same public service mission.
A new agreement that the key stakeholders signed in 2022 is an additional pillar of stability and predictability for the regulatory framework. If this agreement is implemented and adhered to, we expect it to strengthen the regulatory framework. This is because it will increase the predictability of the annual rental negotiations and enhance the links between rents and the housing providers' relevant cost drivers.
The rulings of two recent court cases concerning rent-setting on newly built housing support the current rent-setting model. Leases with so-called presumption rents, which apply for 15 years after a property is built, will now be subject to rental increases of 50%-75% of the usual increase enforced on value-in-use leases. While this harmonizes the two types of rent in the longer term, we also believe that it could weaken the housing providers' incentives to initiate new construction projects.
This report does not constitute a rating action.
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|Primary Credit Analyst:||Erik A Karlsson, Stockholm + 46(0)84405924;|
|Secondary Contact:||Carl Nyrerod, Stockholm + 46 84 40 5919;|
|Additional Contact:||Maria Hjukstrom, Stockholm;|
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