Increasing Child Poverty - The Conservative Think Tank Calls for Market Rents

by bernt & torsten

Do you remember when new properties were to be introduced at market rents? This notion was shut down during a vote of no confidence in 2021. However, the concept of shifting to market rents is undoubtedly not new. It's been a long-standing goal of Swedish business organizations for over 80 years. Since rent regulation was established in 1942, campaigns have been running to allow landlords to set rents at market rates. The situation has been brought back into the limelight thanks to a media campaign.

Various organizations released this year's figures on child poverty in Sweden this week. The data reveal that in the last six months, 4 out of 10 single parents and 3 out of 10 cohabiting parents with lower income have had to borrow money to cover basic expenses. This marks a significant increase from the previous year. One out of every five single parents with a lower income couldn't afford sufficient meals at least once during the period. And three out of every ten such parents struggled to afford public transport in the past six months.

Behind this report are Save the Children, the Swedish Red Cross, the Tenants' Association, and the Majblommanr. If we usher in market rents, child poverty could drastically increase. Advocates argue that market rents spur property movement, creating more vacancies. However, a 2022 report titled, 'Who has to move?' counters this notion, stating that Sweden already has the highest migration rates in the EU's property market.

Despite this logic, in the past few years, there has been an increase in propaganda promoting the introduction of social housing in Sweden. This system is where the state reserves a certain number of apartments and pays the rent for the poorest families. Yet, the introduction of social housing could potentially pave the way for market rents. The more the state pays for those with the lowest incomes, the more private landlords can raise rents for other tenants, leading to a win-win situation for landlords as they can profit from both market rents and government support.

Harking back to the past, property owners were successful in hiking up the price of apartments to millions, thanks to privatization. The fact that issues such as increasing queues were only brought up 70 years after rent regulation was introduced seems immaterial.

Building homes seem to be the most effective solution to the housing shortage. When the conservative budget was passed in 2021, state-building subsidies were among the first to be abolished. This led to the discontinuation of the construction of thousands of properties due to lack of funding. According to the National Board of Housing, Building, and Planning (Boverket), we must build over 67,000 homes annually until 2030. However, according to construction company forecasts, only 23,600 homes will be built in 2024, a deficit of nearly 44,000 homes.

Instead of facilitating construction, for example, by reintroducing support for the construction of rental properties, the government seems to be leaning on think tank organizations and promoting market rents and social housing, all while child poverty continues to increase.