Boverket

The National Board of Housing, Building and Planning

A history of the Swedish

system of non-profit
municipal housing
A history of the Swedish system of
non-profit municipal housing

Swedish Board of Housing, Building and Planning

October 2008
Title: A history of the Swedish system of non-profit municipal housing
Published by: Swedish Board of Housing, Building and Planning
Month of publication: October 2008
Edition: 1
PDF: ISBN: 978-91-86045-43-2
Author: Eva Hedman
Translated by: Tolkcentralen Gothenburg and author

Keywords: Municipal non-profit housing, municipal housing companies,

non-profit housing, housing policy, Million dwellings programme,
Sweden

Reprint of documentation for the Commission of Inquiry on the

Conditions for Municipal Housing (SOU 2008:38)

© Swedish Board of Housing, Building and Planning 2008

 3

Foreword
This paper was originally written for the Commission of Inquiry on the
Conditions for Municipal Housing, and was included as Annex 11 in the
report "The European Union, Municipal Housing and Rents" (SOU
2008:38).
Knowledge about the history of the Swedish system of municipal non-
profit housing is crucial to the current debate about the role and future
tasks of the municipal housing companies. Boverket (the Swedish Board
of Housing, Building and Planning) therefore took the initiative to make a
reprint of the original paper.
The only addition that was made in the "Boverket version" was a
presentation of the directives to the Inquiry. In this English translation of
that reprint some very minor alterations have been made. These have only
been done for the sake of making the contents of the paper more
understandable for a non-Swedish reader.
The paper was written by Eva Hedman, who was Boverket's expert on
the Commission. She also did the reprint texts.

Karlskrona in October 2008

Martin Hedenmo
Head of Analysis Unit
4 A history of the Swedish system of non-profit municipal housing
 5

Table of Content
Foreword .............................................................................................. 3

Defining characteristics of Swedish non-profit housing ...................... 7

First steps: the state and municipalities enter the housing market ...... 9

Municipally owned and controlled housing

companies become important instruments of housing
policy for both the state and the municipalities .................................. 11

Housing policy as an integrated part of the

post-war welfare programmes and economic policy......................... 12

Continued housing shortage and the

decision to launch a “million dwellings programme” .......................... 14

Changes in the housing market

and criticism of the Million Dwellings Programme’s
large-scale housing estates ............................................................... 15

The 1990s: the reshaping of housing policy,

including the transfer of financial risk from the state
to the municipal housing companies .................................................. 17

During the 1990s some municipalities’ housing

companies began renewing large-scale urban
housing estates in new ways ............................................................. 19

The Swedish non-profit housing sector

– a municipal instrument defined and subsidised by the state .......... 21

The task of the Commission of Inquiry

on the Conditions for Municipal Housing ........................................... 24

The current situation for municipalities

and their housing companies ............................................................. 26

Bibliography........................................................................................ 29
Publications............................................................................................. 29
Official government commissions............................................................ 31
6 A history of the Swedish system of non-profit municipal housing
 7

Defining characteristics of
Swedish non-profit housing
In Sweden the term “allmännytta 1 ” (“for the benefit of everyone”) is
generally the word that has been used when speaking of the Swedish non-
profit housing sector. The Swedish “allmännytta” has four main
distinguishing characteristics: it operates on a not-for-profit basis; it is
almost entirely owned by municipalities; it is open to everyone, i.e. it is
not only directed at specific target groups; and its rents have been given
the role of serving as the main norm for rental levels across the entire
rented housing sector 2 . The origin of each of these four characteristics
may be traced to different historical periods 3 .
Housing production without a profit motive or purposes of personal
gain was something that existed in Sweden, albeit to a very limited
extent, from about the middle of the 19th century. At that time it was
usually a question of various kinds of charitable building in the cities,
initiated by wealthy and socially conscious members of the bourgeoisie
who were aware of and wished to improve the difficult housing situation
of the working class and the poor. It could also, less frequently, be a
question of workers in cities getting together to build their own housing –
a precursor of sorts to the cooperative housing associations of later years.
Non-profit housing companies, however – which are owned or
controlled by municipalities – did not begin to appear, with single
exceptions, until the mid-1930s. This was in connection with the
construction of the so-called “large family blocks”, aimed only at families
with many children. The state introduced special loans, combined with
rent allowances, for the “provision of affordable rental housing to less
well-off families with many children in cities, in city-like and other more
densely populated communities” 4 . This state support was only granted to
the municipality in question or through the municipality to such a
housing company that fulfilled a number of stated conditions. Conditions
for being recognised as such a housing company by the state building
loan bureau included the following 5 : the company’s dividend on owners’
equity must not exceed a sum that the state building loan bureau had

1
According to SABO’s (the Swedish Association of Municipal Housing Companies)
website, the Swedish term “allmännyttig” is a direct translation of the German
”gemeinnützig”. Norstedt’s German-Swedish Dictionary (1994) translates
”gemeinnützig” as “allmännyttig, samhällsnyttig”. The comprehensive German dictionary
Wahrig Deutsches Wörterbuch (Mosaik Verlag, edited 1980/1984) has the following
entry for ”gemeinnützig”: ”zum Wohl der Allgemeinheit, dem Nutzen der Allgemeinheit
dienend, sozial”, in which ”Allgemeinhet” refers to ”die Öffentlichkeit, das Volk, die
andern”. Which translates roughly as “for the good of, to be of service or benefit to, ‘the
general public’, ‘the people’ or ‘the others’. ”Gemeinnützig” is contrasted with
”Eigennutz”, i.e. as the opposite of individual benefit, good, gain, profit or yield.
2
See Chapter 12, Section 55 of the Land Code, SFS 2002:103.
3
In writing this paper I have been greatly helped by a number of presentations and
analyses of the development of both Swedish housing policy and non-profit housing. A
list of these may be found at the end of the paper.
4
SFS 1935:512.
5
SFS 1935:512, Section 12.
8 A history of the Swedish system of non-profit municipal housing

determined as reasonable; financial privileges for managers or

employees, beyond reasonable payment for work done, must not be
offered; and the company, in order to be permitted to manage a building
which had received support, must agree to subject itself to “municipal
control and audits approved by the municipality, as well as state
inspections”.
In some cases, municipalities formed wholly-owned housing
companies. In the main, however, the state loan regulations meant that
many large family buildings were built and managed by private charitable
bodies or by cooperative organisations. As has been mentioned, this was
always on condition that they were run with a limited dividend on
owners’ equity and that they submitted themselves to municipal control.
It was the state, in other words, that defined what should apply in
order for a non-profit housing company that was not municipally owned
to receive state loans, and thereby become an instrument of national
housing policy. The state’s long-held view was that many wholly
municipally owned housing companies, particularly in the many small
municipalities, would not have sufficient resources themselves to be able
to handle the housing policy tasks the state wished to give them.
Therefore help was also needed from non-profit housing companies
which were not municipally owned, but were controlled by
municipalities.
It was only in 1974 that the point was reached where authorisation as
a non-profit housing company, for purposes of special state financing,
required full municipal ownership and control 6 . The gradual process of
merging municipalities had at that point reduced the number of
municipalities in the country from 2 505 in 1948 to 272 in 1974. The
state therefore judged that municipalities had greatly improved their
capacity for shouldering the housing policy responsibilities the state
wished to hand them – independently, in housing companies they wholly
owned themselves 7 . To be recognised as a non-profit housing company
allowed to receive special state financing it would thus, as of 1974, have
to be the municipality that invested the entire initial capital and appointed
all the board members. This in turn brought developments to a point
where, according to the legal wording, a non-profit (“allmännyttigt”)
housing company would be equivalent to wholly-owned municipal
housing company 8 9 .

6
See SFS 1942:569, SFS 1946:551, SFS 1948:587, SFS 1957:360, SFS 1962:537, SFS
1967:552, SFS 1974: 946.
7
SOU 1972:40.
8
SFS 1974:946. The requirement that a non-profit (“allmännyttigt”) housing company be
wholly owned by a municipality applied until 1996, when the possibility of so-called
broadened ownership was introduced (SFS 1996:1435) – however, municipalities were to
continue to exercise the “decisive influence”. Since 2002, however (SFS 2002:102), a
housing company without municipal connections may also be defined as a non-profit
(“allmännyttigt”) housing company (more on this later in the paper).
9
SOU 172:40, “Competition in housing construction”, Ch. 7 contains an overview of how
conditions for authorisation as a non-profit housing company evolved over the period
from 1935 until 1972.
First steps: the state and municipalities enter the housing market 9

If we look at the third defining characteristic of a Swedish municipal

housing company today – i.e. that the housing it administers should be
available to everyone, that access to it should not be means tested and
that it should not be directed exclusively at specific groups – these were
features that would only be added during the second half of the 1940s.
This was done after the Second World War, in connection with the
establishment of the new welfare programmes, which were of a general,
not selective, character, and therefore targeted at the entire population.
The fourth defining characteristic of today’s non-profit municipal
housing in Sweden is that the rents it sets serve as the first-hand norm
within the entire rental sector, i.e. for private housing companies as well.
This was codified in law in 1974, after having been an implicit aim ever
since rent control began to be dismantled in 1968, with the introduction
of the utility value system (more on these connections in the footnote
below 10 ).

First steps: the state and municipalities

enter the housing market
Broadly speaking, it wasn’t until the first years of the 20th century that
municipalities began applying measures of their own in the area of
housing supply. These were usually about supporting charitable housing
activities.
It was also at this time that the state began to take an active role. The
first major state initiative on housing issues was aimed at the provincial
working class. In 1904, the Riksdag (the Swedish Parliament) approved

10
The utility value system, introduced in 1968 (Proposal 1968:91), deals with how a
rental dispute is to be settled in court. In order to assess the reasonableness of the rent, it is
to be compared with the rent for apartments that are equivalent in terms of “utility value”.
When rent control was abolished, the utility value system was introduced to protect
individuals’ right to tenancy, particularly in areas with a housing shortage. Its aim was to
allow for a transition to a market like development of rents.
The comparison rent was to be sought among the highest rents for flats with a similar
utility value in the same area, not taking single examples of very high rents into account.
It was not be sought among average rents as it was believed that this would preserve the
existing rent structure and “counteract a desirable flexibility in the setting of rents”
(Proposition 1968:91, Annex A, pp. 53-54). Thus the utility system as such was not aimed
at curbing rent increases but at safeguarding tenancy rights (ibid., p. 188). Nevertheless,
as the non-profit housing companies were the de facto dominant property developers, it
was expected that the prime cost rents applied in municipal housing would serve as
guidance and thereby serve to control and restrain the general level of rents.
A review later indicated that it was doubtful whether, in legal practice, municipal
housing rents had been given the price-guiding role intended for them, which according to
the Legal Affairs Committee (LU 1973:13, pp. 55-56) had been regarded as a necessary
means of preventing an uncalled-for increase of the general rent level. See Proposition
1974:150, p. 471. See also SOU 2000:33, pp. 33-35. From 1974, therefore, it was
stipulated by law that all rent assessments (not just those in shortage areas) be made
primarily by means of a comparison with (“which should principally take into account”)
rents in the municipal housing stock.
10 A history of the Swedish system of non-profit municipal housing

state loans for the construction of owner-occupied houses in rural areas. It

was an attempt to stem the depopulation of the countryside, and in
particular emigration to America.
This initiative would also affect several of the larger and mid-sized
municipalities, and it was in this connection that many municipalities
took on, for the first time, some responsibility for housing policy. It
wasn’t until the 1930s, however, that municipalities actually formed their
own housing companies. This occurred, as has been mentioned, in
connection with the granting of state loans for the construction of what
have later come to be called “large family blocks”.
Prior to the 1930s, municipal and state intervention had mainly been a
matter of various temporary crisis measures. The outbreak of war in 1914
quickly led to a housing situation which was regarded as untenable.
Housing construction shrank dramatically due to increased material costs
and difficulties in obtaining credit. Rent levels in Stockholm were among
the highest in Europe. In 1917 a divided Riksdag approved measures –
only temporary ones however – to extend state support to new housing
production as well as for a “rent increase law” combined with protection
of tenancy rights. It was also decided that municipalities should be
responsible for promoting housing production by supporting cooperative
or charitable projects, or if this did not help, by initiating municipal
construction projects.
The First World War was followed by recession, with high
unemployment and a housing crisis. At the height of this crisis, the
temporary measures were suspended, i.e. both state support (1922) and
the “rent increase law” with tenancy rights protection (1923). This led to
rent increases and evictions. Municipalities were financially stretched and
could only manage various emergency measures. It was at this point that
both the Swedish Union of Tenants (Hyregästernas Riksförbund, later
renamed Hyresgästföreningen) and HSB the Tenants Savings and
Building Association (Hyresgästernas sparkasse- och byggnadsförening)
were formed. Housing supply was left largely for the market to
determine. HSB came to be the housing market player that was ruled by
other concerns than direct return on capital, or as the provider of
emergency help.
The turning point for the role of both the state and municipalities in
the housing market came in the 1930s. The farming and unemployment
crises of that period became the catalysts for a more systematic state
housing policy. The first measures were passed by the Riksdag in 1933
and consisted of loans and subsidies for the improvement and new
construction of rural housing, as well as of loans for new construction in
urban areas. It has been claimed that the battle against unemployment and
the idea of kick-starting a stagnant economy via housing construction
were the decisive motives behind this policy, and that this applied
particularly to new construction loans in cities. 1933 also saw the
appointment of a commission of inquiry that would become known as the
Inquiry on the Social Conditions of Housing.
 11

Municipally owned and controlled

housing companies become important
instruments of housing policy for both the
state and the municipalities
The main findings of the Inquiry on the Social Conditions of Housing
were only presented in 1945, due to the intervening Second World War.
But even before the war, the commission had recommended state support
for inexpensive rental accommodation for poorer families with many
children, and this was introduced in 1935. That brings us to the
previously mentioned state loans for the construction of what came to be
called “large family blocks”.
As mentioned, the condition for granting these loans was that the
municipality was actively involved. Loans were only granted to
companies which were not-for-profit and which were either owned
directly by a municipality or had been defined as non-profit housing
companies standing under municipal control. The main recipients were
initially blocks of rented flats in urban areas, but after a few years loans
were also granted to families building their own one-family house.
Municipalities were obliged, when necessary, to provide land plots free
of charge.
The latter half of the 1930s was an active period not just in housing
policy. With the end of the Depression, the economy started to grow
again and private construction increased to levels never previously
reached. Towards the end of the 1930s, the housing supply was good on
the whole and some property owners even experienced difficulties in
renting out newly built flats. But the outbreak of the Second World War
in 1939 changed the situation. Housing construction ground to an almost
complete halt, and the housing surplus quickly turned into a housing
shortage.
The war years brought active measures from the state. Construction
costs as well as interest rates rose, and it became difficult to raise enough
capital for construction. This led the state, following a resolution in the
Riksdag, to provide financial support (so-called tertiary loans and
additional loans) to boost housing construction. This support was directed
towards the whole housing construction sector, but conditions were
particularly favourable for the municipal housing sector 11 . State loans
were combined with rent control and in 1942, as a part of the wider
economic policy of price controls and wage freezes, a law of general rent
control was introduced which also contained protection of tenancy rights.

11
SFS 1942:569.
 12

Housing policy as an integrated part

of the post-war welfare programmes and
economic policy
It was during the post-war years and the period up until the 1960s that the
municipal non-profit housing companies went through their real build-up
phase. Along with general state financial support for housing
construction, which continued after the war, it was the municipal non-
profit housing companies that became the main instruments for
implementing the state’s housing policy as it had been defined after the
war 12 .
At the end of the war, housing standards in Sweden were still at a
very low level by international comparison. There was also a severe
housing shortage. The state now stepped in as a real player on the
housing market. Housing policy became a central and integrated part of
state policy as it was now being shaped. This applied both to general
social welfare policy and general economic policy.
“Good housing for all” became the overall goal of housing policy, and
it was also an important goal of social welfare policy. The social welfare
policy that was now developed had a population-wide scope; it was not
selective. It was directed at everyone, not just at special target groups. A
higher level of welfare for everyone was assumed to lead to a higher level
of welfare for the worst off as well. By applying a population-wide
policy, no specific groups would be singled out and negatively branded.
It was also regarded as important that all social groups gained from the
goals and measures of the applied policy. The idea was that a policy that
favoured everyone would make everyone willing to share the costs.
As applied to housing policy, these policy principles meant that
financial support for housing construction should be general. It should be
extended to all types of housing producers, to all forms of tenure and to
housing for all types of households. The municipal and municipally
controlled non-profit housing companies should not be directed at certain
groups with special needs but should be for everyone. It was pointed out
in the debate at the time that some children and families had become
negatively branded as a result of living in the special “large family
blocks”. For poorer families with many children and for poorer
pensioners – the two groups for which the municipal housing companies
had hitherto been built up with the help of special state loans, the state
instead introduced a housing allowance (family allowance).
The importance that the state attached to the municipalities’ role as
builders and administrators of housing became evident in connection with
state housing support, for instance, in which they were specially
favoured. Both municipalities and the non-profit housing companies
under municipal control could be granted loans of as much as 100 percent

12
For an informative history, see e.g. SOU 1972:40, chapters 1 and 7.
The current situation for municipalities and their housing companies 13

of the cost of their initial outlays 13 . Later they would also be given tax
advantages, and later still, the largest interest subsidies 14 .
With the number of municipal housing companies now growing
quickly, the municipalities – with the help of the state – came to have at
their disposal instruments with which they were expected to contribute,
actively and on a non-speculative basis, to the fulfilment of the state’s
goals of doing away with the housing shortage and raising the general
housing standard 15 .
As has been mentioned, however, housing policy was not just a
central part of state welfare policy. It also became an integral part of state
economic policy, including labour market policy. Also this affected the
growth and development of the municipal housing sector. Together the
two areas of policy would become actively applied instruments in the
industrial, economic and geographical transformation of Sweden that
would characterise the decades up until the beginning of the 1970s.
Housing construction was regarded as an important motor of
economic growth, and as an instrument with which to moderate the ups
and downs of the economic cycle. Besides building for social reasons – to
improve the housing standard and end the housing shortage – this also
meant building in a way which made possible the development of an
efficient manufacturing and export industry. This in turn meant building a
sufficient number of dwellings where there was a particular need for
labour to allow for the expansion of industry. It also meant, however, that
construction could not tie up too much labour or capital, as these
resources were needed in other sectors.
The municipal non-profit housing companies became important
instruments for both the state and municipalities in this social, economic
and geographical process of structural change which would define
Sweden for several decades. It may be noted in retrospect that this was a
complex role which it was possible for these housing companies to play
precisely because their accommodation was meant for everyone. It would
have been impossible for them to fill such a complex and key role if the
municipal housing companies’ dwellings had been aimed only at those
who were worst off.
One of the ideas of the Inquiry on the Social Conditions of Housing
had been that the volume of housing construction should be based on
long-term projections for the need of dwellings. Production should then
be kept at as even a pace as possible. Construction workers would thereby

13
SFS 1946:551. For cooperatives, the upper loan limit was 95 percent, while for others it
was 85 percent (90 percent in some cases). The differences between the municipal
housing companies and the others would remain, with certain adjustments of the levels,
until state housing loans were abolished in 1991 (SFS 1991:1932). The differences in loan
conditions for different categories of borrowers for the state loans had been introduced in
1942 (SFS 1942 no. 569), when state loans were no longer directed exclusively towards
municipalities and municipally controlled non-profit housing companies but to the whole
sector.
14
This was a consequence of the fact that their privileges with state loans gave them the
biggest share of loans, and that interest-rate subsidies were calculated on the basis of the
size of the granted loan.
15
See e.g. SOU 1972:40.
14 A history of the Swedish system of non-profit municipal housing

have steady employment and production as a whole could be planned and

streamlined.
In practice, however, one of the main preoccupations of state housing
policy turned out to be how many dwellings it would be possible to build
while also considering the need for labour and capital in other important
sectors. For this reason, the state determined an annual limit for the
volume of housing construction and then distributed this among the
municipalities in the form of construction quotas and loan limits. This
practice went on until the 1970s.

Continued housing shortage and the decision

to launch a “million dwellings programme”
The decades following the end of the Second World War saw a sharp
increase in the need for housing. The general housing standard was still
very low, and many dwellings of inferior quality needed to be
demolished. Households’ increased income meant an increase in demand,
as did the baby boom of the 1940s. A major migration wave was going
on in the country, from the countryside to urban areas. This migration
was largely a result of the mechanisation and rationalisation of farming
and forestry, which reduced their need for labour, and the parallel
increase in labour needs of the expanding industries. It was above all the
export industry’s labour demand which increased dramatically, leading
also to considerable labour immigration from other countries.
The result was that the housing shortage grew greater despite a strong
increase in housing production. By the 1960s, the situation was growing
increasingly politically untenable. The baby boom generation of the war
years had reached adulthood and needed accommodation. It was in these
circumstances that the so-called Million Dwellings Programme was
devised. And this brings us to an era which would particularly affect the
municipal housing companies and whose after-effects may be felt to this
day.
In 1964, the Housing Construction Report had identified a need for
more than a million new dwellings. Annual construction volumes were
already very high at this time: in 1964 almost 90 000 dwellings were
built. But with the decision in 1965 to implement a special “million
dwellings programme” – i.e. that one million new dwellings were to be
built in the ten years between 1965 and 1974 – the government wanted to
point out that it was prepared to guarantee the circumstances for
sustaining an annual construction volume of as much as 100 000
dwellings over such a considerable period of time. The state’s guarantee
would consist of placing the required capital and labour at the
construction sector’s disposal 16 . In this context, municipalities were also

16
It proved rather difficult to reach an agreement about this, however. For example, in
1966 the Riksbank (the Swedish Central Bank) did not release sufficient credit, which led
to a notable drop in housing construction. In the political crisis that ensued, the
The current situation for municipalities and their housing companies 15

given new and increased means of controlling land use. State measures
were further applied to promote the construction of big projects using
industrial methods.
The stated goal was to end the housing shortage and improve housing
conditions. At the same time, the need to increase production in big city
areas and in places with expanding industry was stressed.
It was the municipal housing companies, along with the housing
cooperatives (in particular HSB and Riksbyggen 17 ), that became the key
players in achieving the goals of the Million Dwellings Programme. In
ten years just over a million new dwellings were produced, two thirds of
which were in blocks of flats. It was through the building of the Million
Dwellings Programme that the municipal housing companies became the
dominant manager of Sweden’s blocks of flats.
Those who first moved in to the new large housing estates of blocks of
flats were a mixture of different groups. This was where many moved
when they left old, deficient and crowded accommodation. This was
where many of the young baby-boom households set up their first homes.
This was also where many in the large groups of households that moved
for labour market reasons, from other parts of Sweden as well as from
abroad, took up residence. Finally, this was also where many of those
moved who had difficulties of some kind and needed to be given priority
when it came to housing.

Changes in the housing market and

criticism of the Million Dwellings Programme’s
large-scale housing estates
During the ten years of the Million Dwellings Programme, major changes
took place which particularly affected the municipal housing companies.
Until the end of the 1960s, the housing shortage remained the biggest
problem in the housing market. Demand absorbed just about everything
that was built. But the early 1970s brought a change. It began to be easy
to find accommodation even in areas where the housing shortage had
been particularly severe. The surge of young households was ebbing out.
Industry’s need for new labour grew smaller. Sweden was faced with net
emigration on a considerable scale. An international structural crisis led
to a slump for both the export industry and the domestic consumption
industry. The oil crisis was an important factor in all this.
Vacant flats began appearing in newly constructed housing in many
places, and their number grew quickly over a few years until the mid-
1970s. These empty flats lay mostly in certain specific municipalities and
new housing estates – and were particularly numerous in the

Government forced the Riksbank to reconsider, and in 1967 housing construction was
back at a high level. See e.g. T Erlander’s memoirs, R Johansson/B Karlberg, O Eriksson.
17
In the face of the great housing shortage and the high unemployment rate in
construction, the building workers’ unions, in 1940, took the initiative themselves to
establish the building and housing association Svenska Riksbyggen.
16 A history of the Swedish system of non-profit municipal housing

municipalities’ housing companies. The consequences for these housing

companies were grave. Their financial structure, with a limited capital
base and 100 percent loan financing on many construction projects, had
been established when the aim was to build away the housing shortage.
They now lacked the capital reserve they would have needed to handle
losses in rent income.
An immediate consequence of these market changes was that new
production of multi-dwelling blocks shrank dramatically. This did not,
however, apply to the production of single family houses. There was a
pent-up demand for single family houses, and inflation, favourable
taxation and the subsidy system combined to make it both possible and
particularly attractive for many more people to buy them. This did not
least apply to families who had hitherto made up a considerable share of
the tenants in the municipal housing estates.
In quantitative terms the Million Homes Programme had been a
success. But the fast, large-scale and technically rational construction
projects had also led to a design and finish in many of the housing estates
which had already been severely criticised. The target of much of this
criticism was the monotonous design and technical defects of many
housing estates. Increasingly, those who could chose to move out of, or
not to move in to, these areas. The result was that these estates came to be
more and more disproportionately populated by individuals and
households who for various reasons had an especially difficult life
situation. At the same time it was also to these estates that many of the
refugee groups who were now arriving in growing numbers in Sweden
were referred.
Several national inquiries were held in response to the criticism of the
new, large-scale estates of the Million Dwellings Programme. The 1974
Riksdag resolution on housing policy focused, in addition to issues of
state financing and the rent setting 18 , also to a great extent on tenant
influence and housing democracy. The improvement of the exterior
environment in the criticised estates was made a goal of housing policy.
To this was added the new goal of “household diversity” – a response to
the increasingly alarming signs of social and ethnic segregation in many
of the large-scale housing estates of the Million Dwellings Programme.
For the fulfilment of these goals, the state once again turned to the
municipalities and their housing companies. These companies, however,
had been set up and expanded when the goal was large-scale and rapid
new production. They were strongly centralised organisations focused
entirely on construction. Now, when the task was to manage the estates
they had built and to satisfy their occupants’ varying wishes, the housing
companies found it difficult to deliver. They were widely criticised

18
These included the introduction of interest subsidies (SFS 1974:946) and the
establishment of municipal housing companies’ rent levels as the primary norm (see
proposition 1974:150 and the Rents Act/Land Code). The new financing system which
was introduced in 1975 meant that the principle of subsidy-free loans (but with interest
guarantees) was abandoned. Instead the state set a low so-called guaranteed interest rate.
The difference between this and the actual market interest rate was paid by the state in the
form of interest subsidies. It was in this context that state subsidies for the first time were
accepted as a permanent solution.
The current situation for municipalities and their housing companies 17

during this period, for their inefficiency, their inability to handle

maintenance and their excessive costs. The Swedish Association of
Municipal Housing Companies (SABO 19 ) appointed a development
committee to deal with these issues and launched (in 1981) a new
management policy for municipal housing companies. The cornerstones
of this policy were decentralisation, good financial management and the
establishment of contacts between companies and tenants 20 .
For many of the municipal housing companies, the 1980s was a time
of transition from construction to management, of decentralisation, of
more varied construction and of new financial thinking. With increased
competition and empty flats, the housing companies were forced to
control and reduce their spending to a greater extent than previously.
Physical renewal and energy economy were other major issues for the
municipal housing companies in the 1980s.

The 1990s: the reshaping of housing policy,

including the transfer of financial risk from the
state to the municipal housing companies
The 1990s saw major changes to housing policy 21 , beginning after the
Social Democrats had lost power to a right-of-centre coalition in the 1991
election. The municipal housing companies were also profoundly affected
by this. Reductions, and in some respects suspensions, of state support
were among the most decisive changes 22 . State housing loans were
abolished and interest subsidies were curtailed and reduced. The goal was
to introduce a more market-oriented approach. The state was no longer to
take the large and ultimate financial risks 23 , instead they were to be
transferred to the borrowers, i.e. the housing companies (or the
municipalities, in the case of municipal housing companies) and the
house-owners.

19
In 1950, the non-profit housing companies had formed SABO as their central
organisation.
20
See Lindberg, G & Karlberg, B (1988)
21
See e.g. the 1994 report of the National Board of Housing, Building and Planning:
“Bostadsmarknaden och 90-talets förändringar”, Boverket Rapport 1994:1 (The Housing
Market and the changes of the 1990s, in Swedish).
22
It should be added, however, that there had been widespread political agreement for a
number of years that something had to be done about state subsidies. It was pointed out
that the goal of a high national housing standard had been achieved, while at the same
time ever-growing subsidies and a large public debt threatened to undermine confidence
in the Swedish economy. As an example of the rapid cost developments, housing
subsidies totalled SEK 13 billion in 1987, and by 1992 they had grown to SEK 33 billion.
23
Until then, the interest subsidy system had been specially designed to do precisely that.
In the 1970s and 80s the state had additionally given municipalities and municipal
housing companies special support to cover the rent losses incurred by the many empty
flats. With the changes of the 1990s, financial risk was transferred from the state to
municipalities. See e.g. SOU 1996:156, Chapter 13.2 for a more detailed description.
18 A history of the Swedish system of non-profit municipal housing

For the municipal housing companies this meant an end to the

comparative advantages that they had been given by the state since the
1940s to underline their special role as instruments of housing policy.
The government decided to remove the preferential treatment of
municipal housing companies. In the future, they were to operate under
the same conditions as privately owned housing companies with regard to
subsidies, tax regulations and finance. The possibilities of authorising
new non-profit municipal housing companies were also removed at this
time 24 . When the Social Democrats returned to power in 1996, no
changes were made to the new conditions.
The reduction in subsidies brought particularly severe consequences
as it occurred during a recession with steeply increased unemployment,
low inflation and raised interest-rate levels. Additionally, a wide-ranging
tax reform had been carried out in the early 1990s, in which lowered
taxes to increase disposable incomes were to be financed to a very large
extent by taxing the housing sector. The combined effect of all this was
very much higher rents and a dramatic reduction in housing production to
historically and internationally very low levels.
The term “businesslike” describes the direction of the municipal
housing companies in the 1990s. Besides an even greater focus on
financial efficiency, it also meant that tenants began to be referred to as
customers, to underline the importance of meeting their varied and
individual preferences and needs. An illustration of this shift – from
offering fairly uniform accommodation meant for everyone to offering
more varied accommodation tailored to different types of households –
may be found in the policy of Örebrobostäder (ÖBO), a municipal
housing company. They very consciously reformulated their objective
from “Housing for everyone” to “Housing for you”, an objective that still
applies 25 .
During the first decade of the 21st century this shift to a businesslike
approach – often specified as “market-oriented business-mindedness” –
became even more central. The vast majority of municipal housing
companies had been reorganised into limited liability companies in the
1990s, and had as such become more independent of everyday municipal
activities. Many of them were also part of municipal trusts. The focus
was increasingly on the conditions that municipal housing companies
share with privately owned limited companies. More and more municipal
housing companies had started to talk and act in terms of increased
solidity, profit, yield and dividends 26 . More and more municipalities, it

24
More on this in the final section of this paper.
25
As reported during a visit on 28-29 March 2007.
26
It may be noted that a discussion about turning the municipalities’ housing companies
into limited companies had been held much earlier, albeit from a different perspective. In
SOU 1972:40 it was suggested that the limited company form was preferable to the
foundation form as it would give the companies’ activities greater stability. At the time,
the main concern was about rules for reporting and audits, but also companies’
distribution of responsibility between executive director, board and annual general
meeting. It was even suggested that only limited companies should in future be authorised
as municipel housing companies. However, no decision to this effect was made.
The current situation for municipalities and their housing companies 19

was claimed 27 , had increased dividend payments from their housing

companies using the surplus for other municipal ends. And since the
1990s, more and more municipalities have chosen to sell all or parts of
their housing stock.
The state, however, had adopted various measures (since the 1980s) to
prevent municipalities from selling off their housing stock 28 . Despite the
changes in housing policy of the 1990s, the state continued to regard not-
for-profit municipal housing companies as important instruments in the
rent-setting process. It was keen that the municipal housing companies
should continue having a large enough share of the local rental housing
market to be able to fill the double role they had been given in this
process – i.e. both to protect tenancy rights and to serve as a damper on
rental levels – by means of the utility value system in combination with
their rent-setting role 29 .
However, the right-of-centre government that came into power in
2006 has removed the previous restrictions on municipalities’ rights to
sell off all or parts of their housing stock.
In parallel with the developments described above, the significance of
EC rules on competition and state aid has increasingly emerged, during
the first decade of the 21st century, as a decisive issue for Swedish
housing policy in general and for Sweden’s municipal housing in
particular. This issue came into considerably sharper focus following two
complaints (in 2002 and 2005) filed by the Swedish Federation of
Property Owners with the European Commission, alleging that Sweden
has provided state aid unlawful under EC rules to municipal housing
companies.

During the 1990s some municipalities’

housing companies began renewing large-
scale urban housing estates in new ways
The focus on business-mindedness that emerged in the 1990s was in
many ways a continuation and reinforcement of something which had
begun in the 1980s. One feature of the 1990s that contrasted more clearly
with the previous decade, however – and is highly relevant to the current
discussion about the tasks and future conditions of municipal housing
companies – was the way in which some municipalities began to deal
with the rehabilitation and renewal of certain large-scale housing estates
generally described as “vulnerable” and often built during the Million
Dwellings Programme.
In the 1980s, “turnaround projects” had been carried out in many
areas. These comprehensive physical transformations were aimed
primarily at making the area in question physically attractive and thereby
to change its population makeup by making new and more well off

27
Above all by the Swedish Union of Tenants.
28
SFS 1986:694, SFS 1996:1435, SFS 1999:608, SFS 2002:102.
29
Cf. Note 9. See also Proposition 2001/02:58, Section 4.3.6.
20 A history of the Swedish system of non-profit municipal housing

groups want to move there. In practice, however, what had most often
been achieved were expensive physical transformations and only
temporary improvements.
Around the mid-1990s, however, some municipal housing companies,
supported by their municipalities, began to think and act in radically new
ways – with positive results this time 30 . One of the conclusions
underlying these changes was that it was the housing company’s day-to-
day, ongoing management – not temporary projects – that made
successful renewal possible in a housing estate. Another conclusion was
that when renewal was planned it must start out from the residents’
perspective, not be imposed by the housing company according to its own
predetermined objectives.
The main pioneers in this included MKB in Malmö (in Holma and
parts of Rosengård) 31 , Botkyrkabyggen in the Stockholm region and
Förvaltnings AB Framtiden in Göteborg (in particular Gårdsten and
Hjällbo). In all of these estates, it was clear that the situation was
untenable. Financial losses were mounting due to damage, high occupant
mobility and many empty flats. Earlier attempts with comprehensive
physical alterations and other ways to attract other categories of tenants
had failed. A point had been reached where everyone agreed that
something radical had to be done.
As a starting point, these municipalities decided that their housing
company should not try to replace those living in the estate with
perceived better tenants. Instead the current residents should be the point
from which renewal and change began. Their needs, wishes and – not
least importantly – active participation were to be the basis for renewal.
There would be no more temporary “projects” of renewal, instead
renewal was to be carried out within the framework of the ongoing
management of the estate. All the housing companies involved realised
that this required a new form of organisation, with changed working
methods and a new attitude towards tenants. The earlier approach, which
had been hierarchical and specialised, was abandoned. “House
heads/housekeepers”, managing between 100 and 300 flats with full
personal responsibility for results, became the key staff category. Large
investments were made in their professional development, and recruiting
concentrated on individuals with the right social competence. They were
to be present on the estates, in direct and continuous contact with the
people living in the area 32 .

30
See e.g. conference summaries from the Swedish National Board of Housing, Building
and Planning’s (Boverkets) Planning and Building Days on 27-29 August 2002, the
seminar entitled (in Swedish) “Can the landlord mitigate exclusion?”. For various
descriptions, see also Alenmark (1994), Alfredsson/Cars (1996) (1997),
Alfredsson/Andersson/Cars (1998), Birve (2007), Boverkets Byggkostnadsforum (2007),
Hansson (2007), Olsson et al (2005), Öresjö (1996 and 2006).
31
MKB in Malmö had actually begun in the 1980s already, in the Gullviksborg and
Örtagården/Rosengård estates. See Ahlström et al (1982), Andersson et al (1987),
Örtagården (1987).
32
It may be noted that these companies in their own internal reviews reached similar
conclusions to those underlined in the new management policy launched by SABO in
1981, but that they chose to act on them in much more far-reaching ways.
The current situation for municipalities and their housing companies 21

One important lesson was that it proved necessary also to deal with
issues beyond the scope of traditional property management. This was
expressed as the importance of moving from “managing properties” to
“creating a good housing/living environment”. In order to achieve this, it
proved necessary to set out from the issues that tenants themselves
expressed were most important – even if they went beyond traditional
property management issues.
What the tenants were generally concerned about – besides the basic
issues of having employment and being able to support oneself – was
safety and security in the area, the condition and cleanness of the
buildings and the area, and not having to feel ashamed about where they
lived. They were also concerned about being treated with respect by the
management staff, about good schools, childcare and other facilities for
children, as well as about various types of commercial and public
services.
Many of these were management issues and thus clearly within the
remit of the housing companies. Other issues could be dealt with through
collaboration with municipal and other bodies. In some cases, however,
the housing companies found that if anything was to happen, they had to
apply the measures themselves – despite the fact that they were thereby
dealing with issues that weren’t really within their area of responsibility.
All of these “pioneers” have underlined the importance of receiving
clear owner’s directives from the municipality, which emphasise both the
need for broader-based renewal efforts and the importance of business-
mindedness and sound finances. They have said that clear objectives –
but not political micro-management of the kind where the municipality
intervenes in daily management activities – in combination with
independent financial control creates the kind of freedom that the
company needs in order to be perceptive and act on the basis of what the
immediate situation requires, but also on the basis of longer-term social,
economic and environmental perspectives. Not least importantly, they
have all pointed out that rehabilitation and renewal take time.

The Swedish non-profit housing sector

– a municipal instrument defined and
subsidised by the state
As was pointed out at the beginning of this paper, Swedish non-profit
housing is characterised by the fact that, with very few exceptions, it is
municipally owned and controlled. This is a far from obvious
arrangement, compared with other countries. Denmark and the
Netherlands, for example, have different arrangements 33 . In Denmark, the

33
See e.g. “Den allmännyttiga bostadssektorn i Danmark, Nederländerna och England”
(“The non-profit housing sector in Denmark, the Netherlands and England”) Boverket
(The Swedish National Board of Housing, Building and Planning), 2000. Here it emerges
that neither the Danish nor the Dutch “allmännytta” is publicly owned, but is owned by
private and financially independent housing companies operated on a not-for-profit basis.
22 A history of the Swedish system of non-profit municipal housing

housing stock which corresponds to Sweden’s non-profit housing stock is

owned and managed by independent, not-for-profit companies (“almene
boligorganisationer”). Residents make up the majority of the board
members of these companies and it is up to each company to decide
whether the municipality is to be represented at all on the board. In the
Netherlands, the non-profit housing service is now owned by private,
financially independent housing companies.
Although it is the municipalities that are the main owners of the
Swedish non-profit housing sector, it is not the municipalities themselves
but the state that has defined, and continues to define, what may lawfully
be authorised as a non-profit housing company. Between 1935 and the
early 1990s these definitions were included in the wording of acts and
ordinances that dealt with the state’s financial support of housing
construction. It was in these acts concerning the state´s financial support
that the conditions were formulated according to which the state issued
authorisation of a non-profit municipal housing company – thereby
giving it access to particularly favourable financial subsidies from the
state. Two decisive defining criteria were that the company should be
not-for-profit and that it should be under municipal control.
The background to this long-lasting connection between the state-
approved definition of a non-profit municipal housing company and the
conditions for state financial support can be traced back to the special
role the Riksdag wanted municipalities and their non-speculative housing
companies to have. They were regarded, as has been mentioned earlier, as
some of the most important instruments for achieving the objectives of
national housing policy. However, the principle of municipal autonomy
meant that this role could not be imposed on the municipalities by decree.
Instead, the means available to the state were financial incentives.
The state’s most explicit means of encouraging municipalities was,
from 1935 until the early 1990s, to provide special state financial support
to them and their housing companies. At first this was done by extending
state support, in the form of loans, exclusively to them. As of 1942, when
state support began to be offered for all housing construction, the share
extended to municipalities and their housing companies was always
larger than that given to the others. This only ended in 1992 when, under
a Riksdag resolution from 1991, the special position of municipal
housing companies was abolished and they were placed on a par with
other players on the housing market in terms of state support.
Thus it was via the state support system that the state-approved
definition for authorisation of a non-profit housing company was
introduced. The practical consequence of this connection between the
definition and the state support system was that when the conditions for
the whole support system were radically changed in the early 1990s, and
the special financing conditions for the municipal housing companies
ended, the sector was left without an official definition of what kind of
company could be given state authorisation as a non-profit municipal
housing company. It was no longer necessary, from a state support

In England, more and more of the municipally owned “allmännytta” (local

authorities/council housing) have been transformed, at the state’s initiative, into
independent, private, not-for-profit foundations (housing associations).
The current situation for municipalities and their housing companies 23

perspective, for any new non-profit housing companies to be authorised

as such, since they were no longer entitled to more favourable support
than other housing companies 34 .
Nevertheless, the fact that the definition – and with it the possibility of
authorising new non-profit municipal housing companies – disappeared
from the text of the laws led to difficulties. Many municipal housing
companies, which had previously been non-profit foundations, were, as
mentioned, in an attempt to gain greater control over their finances in the
1990s, turned into municipal non-profit limited liability housing
companies. But under the new rules there was no longer any definition by
which to authorise these “new” housing companies as non-profit
municipal companies. This in turn meant that the “new” municipal
housing companies would lose the special support that they were
receiving and which they had been granted according to the earlier rules.
In order to prevent this from happening, the state had to apply the special
measure of giving them the same status, following a special application,
as other non-profit municipal housing companies in terms of loans and
subsidies. In other words, they were allowed to keep the special support
conditions they had previously enjoyed. This came to apply until 2002.
In 2002, for the first time, a special and separate act on non-profit
housing companies was passed (the Act on Non-Profit (“allmännyttiga”)
Housing Companies, SFS 2002:102). This was an act that only dealt with
the non-profit housing sector and the conditions governing it – it had no
connection whatsoever with the state support systems. It did mean,
however, that criteria for what kind of housing companies the state could
authorise as non-profit municipal companies were again introduced.
Under this act, two conditions had to be fulfilled in order for a housing
company to be authorised as non-profit. First, it must be not-for-profit
(i.e. not pay more than a state defined dividend on that part of the share
capital or paid-up membership contributions that the owner had invested
in cash) 35 . Second, the company’s activities must consist principally of
managing properties in which rental dwellings are provided.
This act does not specify, then, that a housing company must be
owned or controlled by a municipality in order to be authorised as a non-
profit (“allmännyttigt”) company. Also this is a change. It means that a
privately owned or cooperative housing company can also be authorised
as non-profit, if it fulfils the two conditions described above. In cases
where a municipality owns and/or controls the housing company, and it
fulfils the two conditions described above, it is by definition – i.e.
without needing to receive special authorisation – non-profit and is
simply named “a municipal housing company”.
However, according to the act, special rules were to apply for
municipal housing companies. Such a company would have to seek

34
Those municipal housing companies which had already been authorized continued to
receive, under special transitional rules, the more favourable support they had been
granted under the previous acts.
35
Boverkets’s (The National Board of Housing, Building and Planning) study “En studie
av allmännyttiga bostadsföretag som kommunala instrument”, (2006), Part I, pp. 13-15,
presents a brief history of how the concrete content of the not-for-profit requirement has
been reformulated over the years.
24 A history of the Swedish system of non-profit municipal housing

permission (with the county administrative board) if it wished to sell all

or part of its housing stock. Permission would also be required if a
municipality wished to sell such a large proportion of its shares or units
in its housing company that its control of it would cease. This part of the
act came to be known as the “stop law” 36 . Permission was not be granted
if it could be assumed that the municipal housing companies’ rents, as a
result of the sale, would not have sufficient weight when utility value
rules were subsequently applied in connection with rent appeals under the
Rents Act (Ch. 12, Section 55 of the Land Code) or rent negotiations
under the Rent Negotiations Act (1978:304). However, the latest step
with regard to the Act on Non-Profit Housing Companies is, as has been
mentioned earlier, that the Riksdag (as of 1 July 2007) has abolished the
permission obligation for municipalities and municipal housing
companies that wish to sell all or part of their dwellings or shares.
Currently the Act on Non-Profit Housing Companies, from 2002 is, in
its entirety, the subject of a much broader review.

The task of the Commission of Inquiry

on the Conditions for Municipal Housing 37
In October 2005, the government appointed a special commission of
inquiry to look into the circumstances and conditions that should apply
for the municipal housing sector (Commission of Inquiry on the
Conditions for Municipal Housing, M 2005:04). Under the original
directive the commission was to report by May 2007, but after a change
of government and two sets of additional directives, this deadline was
moved forward to April 2008.
The overall task of the commission was to look into what changes
might be necessary to the acts and ordinances that control the conditions
for the rental market in general and the municipal housing companies in
particular (Directive 2005:116). A fundamental issue was to “review the
possibilities for pursuing a national housing policy within the framework
of EU membership, with particular regard to the circumstances and
conditions for municipal housing companies”. In concrete terms, this
meant analysing the Swedish system’s compatibility with EC rules on
competition and state aid, and to propose changes as necessary.
Another central issue for the commission was to formulate a “long-
term cost-price principle that can be applied in a consistent way” 38 .
One important point of departure for the commission was to be that
the rent setting system should continue to include protection against
exorbitant rents and guarantees for real protection of tenancy rights. Any
proposals were to be formulated “with regard to the desire to safeguard

36
Not to be confused with the “stop law” in health care, which was about the sale of
hospitals owned by county councils. See also Note 37.
37
The following section has been added after the report was written for the Inquiry.
38
In place of the hitherto existing unspecified and ambiguous concept being used.
The current situation for municipalities and their housing companies 25

the essence of Swedish housing policy, including the foundations for the
roles played by municipal housing companies.”
The change in government in the autumn of 2006 brought certain
changes to the directives for the commission. The first additional
directives (Directive 2007:18) stated that the commission should assume
that “the regulations requiring permission for the transfer of real estate as
well as shares and units in municipal housing companies will be
abolished during 2007”. Compare that with what has been said above
about the repealing of part of the Act on Non-Profit Housing Companies.
The second set of additional directives (Directive 2007:73) brought a
larger number of changes and additions. It stated that the commission
needed a wider mandate to be able to propose such changes as were
deemed necessary with regard to EC rules.
Under the original directives, municipal housing companies were to
adhere to a long-term cost price principle. This restriction was now
removed, with the explanation that it could limit the commission’s
possibilities for presenting alteration proposals that were compatible with
EC rules.
The new directives specified that the commission should specially
examine both the extent to which EC rules involve rate of return
requirements for municipal housing companies, and the extent to which
limited rate of return requirements for municipal housing companies are
compatible with EC rules. The present limit on dividends paid was a
particular issue.
In the new directives it was specifically stressed that municipal
housing was to continue being a housing form for everyone. It was stated
that Swedish municipal housing “has long been characterised by the
fundamental concept that it is a form of housing available to everyone,
regardless of social, economic, ethnic or other background. It is important
that municipal housing does not change in this respect.” It was
specifically pointed out that “If several models are possible in order to
make necessary changes, the commission shall not propose any model
which implies that the municipal and non-profit housing companies begin
to move towards only providing housing for particular groups or
following special testing, e.g. according to specific income criteria.”
Another special item that was brought out in the directives was that
the rent setting system should be adapted to EC rules. Real protection of
tenancy rights was to be the term of reference in this context. The aim of
proposed changes should be to “create the conditions for a well-
functioning rental market” that can meet the housing demand of
individuals and on which both private and municipal housing companies
can operate under conditions that are neutral as to competition and also
otherwise reasonable. The commission should also consider the need for
guaranteeing the supply of rented accommodation. The directives further
stated that if it appeared suitable, the commission should suggest how the
municipal housing companies’ normative role in setting rents might be
abolished.
The directives point out that the utility value system in itself
constitutes protection against exorbitant rents and guarantees for real
protection of tenancy rights. However, it was especially pointed out that
26 A history of the Swedish system of non-profit municipal housing

the commission was to consider whether there might arise a need for
extra regulations guaranteeing that tenants are not subjected to
unacceptable rent increases.
Among other things highlighted in the directives was the instruction
that the commission should indicate how support could be given to
municipal and private housing companies in municipalities with high
vacancy rates due to a decreasing population, without breaking
Community state aid rules.

The current situation for municipalities

and their housing companies
In summing up the effects of the state subsidy systems which applied
until 1991, it may be noted that Swedish non-profit housing, while owned
by municipalities, to a great extent has been built up through state
funding – through both general, sector-wide support and especially
favourable support.
The way the financial support systems have been designed meant that
for a long time, it was the state and not the borrowers – neither
municipalities and their housing companies nor other property owners –
that ultimately have borne the financial risks. This situation was
drastically changed, however, with the new financing rules that began to
apply in 1992, when state housing loans were abolished and the
fundamental principles for interest subsidies were altered for all
categories of borrowers.
The fact that the financial risks earlier had been relatively low for the
municipalities had meant that they had been able to use their housing
companies as instruments of housing policy without causing themselves
very much economic worry. As long as production of housing remained
the main activity, there had been no difficulties in getting state support.
Not even empty flats had posed a real threat – the state had then stepped
in with special support to ensure that the continued existence of
municipal housing companies was not jeopardised 39 .
Today, when state support no longer specially favours municipal
housing and sector-wide support is subject to gradual reduction and
elimination, the situation is completely different. The state no longer has
at its disposal any financial incentives with which to support and/or
encourage municipalities to keep their housing companies.
Neither does the possibility remain of stopping the sale of all or part
of the municipal housing companies by cancelling interest subsidies or by
withdrawing general government grant to the municipalities. The latter
was a temporary measure that was introduced in 1999 40 , when interest

39
See e.g. SOU 1996:156, Section 13.2.1.
40
SFS 1999:608, often referred to as the “stop law”. This replaced the earlier law from
1996 (SFS 1996:1435) under which not only the interest subsidies for the sold properties
would be cancelled, but also the interest subsidies paid out for the rest of the properties
the housing company owned. Under SFS 1999:608 the general state grant would also be
The current situation for municipalities and their housing companies 27

subsidies had reached such a low level that their cancellation was no
longer considered an effective means of pressure 41 . The Council on
Legislation made it a condition for the application of this measure, which
was not aimed at the housing companies but at the municipalities, that it
be temporary. When the Act on Non-Profit Housing Companies came
into force in 2002, this measure was revoked. After that, no state
sanctions remained for either the sale of municipal housing companies (or
of part of their housing stock) or the payment of excessive dividends to
the municipality. All that remained was that permission had to be sought
from the county administrative board for sales, and that the housing
companies’ dividends should be reported annually to the county
administrative board.
For municipalities the present situation thus means that it is up to them
themselves – more than before – to judge whether they find it meaningful
to have at their disposal a municipal not-for-profit housing company as an
instrument of housing policy. It has become necessary – very much more
so than before – to keep an eye on the housing company’s finances, as
well as on the municipality’s financial conditions. Since the 1990s, the
close intertwining of housing companies’ and municipalities’ finances –
previously almost the rule – has largely been undone. Most municipal
housing companies are now run as limited liability companies. These
may be owned by the municipalities and be controlled by means of
municipal directives, but they have been separated from regular
municipal economic activities in a wholly new way.
The current situation also includes the prospect that financial support
from municipalities to their housing companies may not just be
problematic for reasons of municipal economy, but also – as has been
mentioned – due to the conditions highlighted by EC competition and
state aid rules.
In other words, what remains for the municipalities is the old question,
albeit more “naked” than before: is it worthwhile owning housing
companies, to use as municipal instruments? 42 If the answer is yes: then
for what? Do the municipalities primarily want them in their capacity of
being limited companies that can provide earnings and dividends for the
municipality? Or do the municipalities want to continue seeing them
primarily as the broadly conceived municipal instruments of housing, and
social and economic policies that they have served as since the 1940s –
albeit now within the framework of a necessarily more businesslike
conduct? And if the municipalities choose to see their housing companies
as policy instruments, then what might be, or possibly ought to be, the

reduced if the municipal housing company had paid a dividend that exceeded “reasonable
returns”.
41
See SOU 1997:81. Final report of the Inquiry into Municipal Housing Companies.
42
Against this background, it is hardly surprising that SABO began, in 2006, a
comprehensive study of future conditions (Frambo). The reports from this study, which
was presented in the spring of 2007, formed the basis of the new conceptual programme
that SABO adopted at its congress in June 2007.
28 A history of the Swedish system of non-profit municipal housing

housing and/or sociopolitical issues that municipally owned housing

companies are particularly suited to addressing? 43
History shows that Swedish municipal housing has been actively used
as a political instrument in a number of varied situations where
municipalities and the state have viewed the market as an insufficient
supplier. By virtue of the special form of Swedish non-profit housing –
that of being both owned and controlled by municipalities and of
producing and managing housing that is not means-tested but open to all
– it has been possible to use it for a series of different ends. This broad
range of uses would not have been possible if it had not been owned by
the municipalities, and above all, if it had only been directed at those who
were worst off, i.e. if it had been “social housing”.
As this history has shown, it has been about producing housing to end
housing shortage, reducing overcrowded conditions and improving
housing standards – and about doing this without singling out and
stigmatising certain groups. In addition to these housing and social tasks,
Swedish municipal housing has however also been used as an instrument
for facilitating and encouraging economic development. In concrete
terms, this has mainly been about building sufficient numbers of
dwellings in places where, and during periods when, industry has had a
need for labour. During certain periods, municipal housing companies
have also been used as instruments to moderate the ups and downs of
economic cycles.
A recent addition has been that there are municipalities whose housing
companies have taken on the task of rehabilitating and improving
conditions in depressed, run-down, problem-ridden housing estates, most
often from the era of the Million Dwellings Programme – and of doing
this in new, more proactive and successful ways. In these areas, the
municipal housing company has often been the dominant property owner.
In some cases, municipalities have judged it necessary to instruct its
housing company to buy up private housing stock in the area in order for
the renewal process to be successful 44 . It has been pointed out that the
prerequisites for this type of renewal effort are continuity and a long-term
view – and that it takes as its starting point the needs, wishes and active
participation of the people living in the area.

43
The National Board of Housing, Building and Planning was asked, as a part of the
ongoing inquiry, to study the current ownership directives of 25 municipalities´ housing
companies. This study showed that there was considerable variation in the goals
expressed in these documents and also in what the housing companies themselves
regarded as their goals as municipal housing companies. In the Board’s report, the various
municipalities’ stated goals have been arranged under one or more of the following
headings: formal rules, financial premises, provision of housing, social responsibility,
responsibility for general municipal development, and environmental aspects. For a more
detailed description, see Boverket (2006). See also Bergsten and Holmqvist (2007).
44
Gårdsten in Gothenburg and Herrgården, part of Rosengård in Malmö, are two estates
where this has been the case.
 29

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Box 534, 371 23 Karlskrona, Sweden
Tel: +46 (0)455-35 30 00. Fax: +46 (0)455-35 31 00
www.boverket.se