The assignment
According to the Swedish Housing Supply Act (Bostadsförsörjningslagen), each municipality is responsible for housing provision at a local level. This means that the municipalities are obliged to create conditions that enable everybody to live in good-quality housing. Most Swedish municipalities choose to organise part of their responsibility for housing supply by means of a housing company owned by the municipality. Such companies are a tool for realising local housing policy and as such they have obligations that private housing companies do not have.
The public housing companies combine commercial aims with social responsibilities. Since companies owned by municipalities are not allowed to do business with the primary object of providing the owners (i e the municipalities) with a profit, the companies reinvest the profit they make in the company to keep it consolidated.
The social responsibility of the municipal housing companies today primarily means that they focus on offering good-quality, safe housing at a reasonable cost. They can also be catalysts in or implementers of activities that benefit the tenants by developing living areas through raising the quality or lowering the costs. The activities are run on business lines and should be well defined in terms of what the companies’ tasks are and the municipality’s general responsibilities.
Organisation
A public housing company is a company where one or several municipalities have a deciding influence, that is, own at least 50 percent of the stock. The vast majority of companies are owned solely by the municipality, but there are other forms of ownership as well, primarily foundations.
The total number of public housing companies in Sweden today is about 330; most of which were founded in the late 1940s or early 50s. Previously there was fairly equal balance between limited companies and foundations, but the changes in the market during the 1990s meant that many municipal foundations were converted to limited companies. Today there are only about 30 foundations left, most of which are small. Almost all of the rest are limited companies that abide by the same rules and regulations as companies in the private sector.
The municipal housing companies’ boards are appointed by the municipality and their composition reflects the results of the local elections held every fourth year. The Managing Director is appointed by the board and the staff takes care of operating the business; in terms of housing maintenance, rental activities, marketing and administration.
Regulation
The legislation for municipal housing companies is to some extent more complex than for private companies. Examples of legislation that apply to municipal housing companies, but other housing companies are exempt from include the:
• Local Government Act (Kommunallagen)
• Public Procurement Act (Lagen om offentlig upphandling)
• Swedish Freedom of Press Act (Tryckfrihetsförordningen)
• Act on Public Housing Undertakings (Lagen om allmännyttiga bostadsföretag)
The public housing companies have to follow the Swedish Local Government Act. Under this act, municipalities may only engage in a business activity if it is conducted without a prospect of profit and is essentially concerned with providing municipal amenities or services for the residents of the municipality.
The rules of the Public Procurement Act, also apply to municipal housing companies. This law is aimed at ensuring competitive and unbiased procurements. Furthermore, the Swedish Freedom of Press Act means that the municipal housing companies have to be more transparent than their private competitors.
There is no specific legislation for all the public or not-for-profit companies in Sweden. However, there is special legislation for public housing undertakings. Under this legislation, the Act on Public Housing Undertakings, all housing undertakings owned by municipalities are per se considered public housing. Under the Act on Public Housing Undertakings, all public housing companies shall every year submit information on dividends to the owner and information on how the dividends have been calculated to the County Administrative Board. Public housing undertakings may also, as a general rule, not sell real estate to private companies without the prior approval of the County Board. Public housing companies shall also aim to offer the tenants the possibility to influence both their housing and their landlord according to this act.
Setting the rent
The rents of the municipal housing companies are set in collective negotiations according to the Rent Negotiation Act, whereby the main responsibility for representing public consumer interest is handed over to the tenant associations. The majority of the negotiations are local and collective, between the municipal housing companies and the local tenants union, but there is also room for individual cases. If the company and the local tenant union reach a deadlock in the negotiations, the case can be referred to SABO (The Swedish Association of Municipal Housing Companies) and tenant association at a central level.
Another part of the rent-setting is the utility value system, which states that apartments of equal utility value should have the same rent level. Public housing companies have a special role in this system. According to the Housing Act, buildings that are owned and operated by public housing companies are to be used as benchmarks in disputes concerning rent levels. This legislation emphasises the tenants’ right to their tenure; among other things the landlord cannot raise the rent to an unreasonable level to force a tenant to move.
