The road home – buying a residence in Sweden
Buying or selling a home is often the biggest transaction in your life, and it can be difficult to understand all parts of the process. We would like to make it easier for you here to find your way around the Swedish property market and create the conditions for a sound property transaction.
We also have the facility to arrange contact with an interpreter, which may be helpful during certain stages of your property transaction. Feel free to make contact with one of our offices.
In Sweden there are primarily three forms of housing commonly that are used:
- Property – You live in your own house on your own land. If you choose to buy a house on its own land, you will essentially make decisions and assume responsibility for everything to do with your property.
- Housing cooperative apartment – You live in an apartment and have the right to live there. You and the other people living in the building own the property and are members of a communal association, known as a housing cooperative association.
- Rental apartment – You live in an apartment and rent your residence. You can also rent a house, but the most common arrangement is that you rent an apartment and pay a monthly sum.
In addition to the three most common forms of housing, there are other kinds of housing arrangements. There are, for example, owner apartments, a concept where you own your apartment without a housing cooperative association. This is similar to the form of housing found in many other countries, but is unusual in Sweden. Another form is a lease, which means that you own the house but not the land on which the house stands, and you rent from the landowner.
If you choose to live in a housing cooperative apartment, you are at the same time a member of a housing cooperative association and make decisions about the property together with the other members of the association. You only have the right to make decisions about matters within your own walls, but even then the association may have to approve certain renovations or refurbishments.
What is expected of you as a member may vary significantly, depending on how many members and homes are included in the association. Put simply, you can say that the smaller the association is, the more you must be involved as a member. In a bigger association the level of commitment is usually not as high, but there may also be less opportunity to have an influence. It is important to be aware of this before you decide where and how you want to live.
In Sweden, all estate agents are university educated and must be registered with a governmental supervisory authority, the Swedish Estate Agents Inspectorate. The activities of estate agents are regulated in a special law, the Swedish Estate Agents’ Act, and there is therefore no need to involve lawyers or solicitors when purchasing a residential property in Sweden. The estate agent is responsible for creating the documents needed, and legally appropriate, for a property transaction.
In Sweden it is the seller who engages and pays the estate agent. The estate agent often has an exclusive right a property, which is regulated in an exclusive rights agreement. It is therefore extremely unusual for one property to have several estate agents. By law, the estate agent is obliged to safeguard the interests of both parties, so there is therefore no need for a buyer’s estate agent in Sweden.
The estate agent is responsible for conveying the property, bringing together buyer and seller, and must also make sure that the seller tells the buyer everything the buyer needs to know about the property. It is therefore the estate agent’s responsibility to compile all the necessary information and to make sure that the buyer receives it.
In Sweden there are requirements for how much you must repay on your mortgage, a mortgage requirement, and a rule that means that you may not borrow more than 85 per cent of the property’s value, a mortgage limit. One tip is to talk to different banks so that you obtain good information about these rules and what your various options are when planning to buy a property. Also make sure that you obtain a written loan commitment at an early stage of the process. If you need to borrow money to buy the property, the estate agent will ask you about this when the bidding process starts or before you sign the contract.
There are many different ways to look for properties, and finding your future home can be time-consuming. There are many websites online that can make the process easier and more efficient. The most popular sites for those looking for housing are Hemnet.se and Booli.se, but you can also go directly to estate agents’ own websites. These sites provide a lot of price statistics and comparative figures, which can be useful. One good piece of advice is to visit various residential areas and arrange plenty of viewings.
The most common form of property viewing in Sweden is what is known as an open viewing. This means that the estate agent announces when the viewing will take place in the advertisement and invites all interested parties to visit the property on the designated date and time. In most cases there is also an opportunity to book individual viewings with the estate agent.
One pattern that has become increasingly common is that interested parties request an advance viewing of the property, i.e. to be able to go and view the property before the open viewing. In some cases this can result in the property being sold before the open viewing takes place. Interested parties are actually able to submit bids on the property at any time, and the seller can choose to accept a bid and sell the property even before the advertised viewing. If you are very interested in a particular property, it can therefore be a good idea to let the estate agent know about this at an early stage.
During the viewing it is important that you take the time to investigate the property carefully. This is because you, as buyer, have an obligation to investigate the property, what is known as a duty to investigate. This means that once you have signed a contract you cannot invoke the seller’s responsibility for any defects or blemishes in the property that you could have discovered. It can be difficult to perform a detailed investigation during an open viewing, so it can be a good idea to request an individual viewing. You can then investigate the home in peace and quiet before you make up your mind.
It is not unusual to seek the assistance of an inspector to investigate the property. The inspector investigates almost everything, but there are things that are not included in a normal inspection. The inspector tells you which elements are included in the inspection and which things you must investigate yourself.
The seller can also choose to have the property inspected before it is put on the market. As the buyer of such a property, you will have an inspection record to study. This is a simple, convenient approach, but in these cases too it is important for the buyer to study those areas that are not included in the record.
If you are going to buy a housing cooperative property, you must also study the association’s finances. The finances are usually reported in the brochure you receive in connection with the viewing; otherwise you must make sure that you study the latest annual report and the association’s statues. If you are not used to reading annual reports, it can be a good idea to seek advice. If, for example, you have to borrow money for the property purchase, the bank can help you to review the association’s finances.
It is relatively common for there to be a bidding process, which results in the price in the property advertisement being exceeded. However, it may also happen that the closing price is lower than the starting price. For most newly built homes, there is instead a fixed price, in which case the normal rules on priority apply, and the first party to register an interest is given the opportunity to buy the property.
A bid in Sweden is not legally binding for the person submitting it. The bid is not binding until both the buyer and the seller have signed a purchase agreement. Nor is the seller obligated to sell at a certain price, but they can choose to pull out of the sale at any stage of the process up until the signing of the agreement. The seller can also choose to sell the property to a bidder who has not submitted the highest bid.
The estate agent is obligated to pass on to the seller all bids that arrive before the contract has been signed. Under Swedish law, the estate agent must maintain a list of all bidders and the bids placed. This list is made available to buyer and seller in connection with the date of taking possession, when the estate agent hands over his/her record.
The contract outlines the rules that apply to the transaction, for example when payment is to be made. Firstly, it applies to the down payment. In normal cases, you usually have seven to ten days to make a down payment, which is generally 10% of the purchase price. The remainder of the purchase price is paid on the date of taking possession.
The contract also regulates what is to be included in the purchase over and above what is considered normal. It is a good idea to read the section entitled What is included in the property? or to ask your estate agent if you are uncertain.
A purchasing contract also specifies any terms and conditions of purchase. These can involve, among other things, conditions for a mortgage or an inspection. In the case of housing cooperative apartments, there is, for example, always a condition that the buyer must be approved by the association and become a member of it. When you draw up a contract, the estate agent will therefore document the buyer’s identity, which is an obligation under law.
In some cases, signing a contract can seem stressful. It is a good idea to talk to the estate agent if you have any questions before signing the contract. If you still feel uncertain, it can be useful to ask a friend to come along or to engage an interpreter just for the contract signing.
The period between contract and taking possession is a good time to make preparations – for the seller to leave their home and the buyer to move into their new one.
The final cleaning is something that concerns both parties and is regulated clearly and unambiguously in the contract. A final cleaning is very thorough and is difficult to do oneself. As a seller you should therefore find out how extensive the final cleaning is and then make a decision about whether or not you should engage a cleaning firm.
If anything in the property stops working because of normal wear and age between the sale and the date of taking possession, the usual practice is that the buyer meets the cost. If, however, something stops working or deteriorates significantly as a consequence of the seller’s negligence, or because of an accident, the seller is normally responsible for restoring or replacing whatever has stopped working.
The date of taking possession is the day on which you pay the purchase price and receive the keys to your new home. It is now that you have full and complete responsibility for the new home, regardless of whether you actually move in on that date or do so at a later date. You should arrange insurance for your home as from the date of taking possession.
On the date of taking possession, the buyer and seller meet at the estate agent’s office or at the buyer’s bank. During this meeting the estate agent presents the final documents to the seller and the buyer. The estate agent also has contact with the buyer’s and the seller’s bank to make sure that everything proceeds smoothly. Finally, the estate agent hands over a record describing the various tasks the estate agent has performed during the course of the assignment. This documentation also includes the bid list, which states which parties have participated in the bidding process, if relevant.
The elements that belong to a residence and are therefore included in a purchase are governed by law in Sweden. Examples of things normally left in a residence are wardrobes, the cooker, fridge, freezer, washing machine and tumble dryer. Feel free to ask your estate agent for more detailed information. The seller can make exceptions from these rules. In this case it is important that this is made clear at an early stage of the process, ideally before the viewing. The exceptions are then regulated in the contract drawn up between buyer and seller.
Even in the smoothest property transaction, questions can arise along the way. If, for example, something emerges that you the buyer did not expect, you must contact the seller directly. In these cases the estate agent can only offer guidance and inform both parties, without acting on behalf of either buyer or seller. Feel free to ask your estate agent about the rules that apply and how you should proceed to resolve any problems.
If, however, you feel that the estate agent has done something wrong, you must contact the estate agent directly. If you still feel dissatisfied after an initial contact, you can submit a written complaint to the estate agent. Document the process, for example, by sending the complaint by letter or email. If you still fail to reach agreement, as a consumer you can ask to have your case heard by the Swedish Real Estate Industry Board for Consumer Disputes.