Landlords

Buying An Apartment To Rent Out: How It Works

Buying an apartment with the intention of renting it out is often referred to as purchasing an investment property. But is it legal, and can you buy a tenant-owned apartment specifically to rent it out? Here’s what you need to know if you’re considering buying an apartment to rent out.

In short, when you buy a tenant-owned apartment in Sweden, you also become a member of the housing cooperative (bostadsrättsförening) that owns the property. If you plan to live in the apartment yourself, this is rarely an issue. However, if you intend to buy an apartment to rent out, it is important to check the association’s rules regarding subletting. If you are unsure, your real estate agent can help you find out what regulations apply.

Valid Reasons May Allow You to Rent Out the Apartment Immediately

Life can change unexpectedly, and situations may arise where you need to leave an apartment you have just purchased. Many housing associations approve subletting if you have a valid reason. For example, you may want to rent out the apartment to a close relative who urgently needs housing, or you may be unable to sell the apartment immediately due to current market conditions.

If you are planning to buy an apartment to rent out as an investment, it is therefore especially important to investigate the association’s rules before completing the purchase.

You Can Appeal a Rejection

If the housing association does not approve your request to rent out the apartment shortly after purchasing it, you may appeal the decision to the Swedish Rent Tribunal (Hyresnämnden). If the Rent Tribunal approves the subletting, you are allowed to rent out the apartment even if the association disagrees.

That said, we strongly recommend checking the applicable rules before deciding to buy an apartment to rent out. There are situations where both the housing association and the Rent Tribunal may reject the application, leaving you responsible for all costs, including monthly fees, interest payments, and operating expenses.

Approved for Subletting – What Happens Next?

Has the housing association or the Rent Tribunal approved your application? Great! However, there are still a few important things to keep in mind when you buy an apartment to rent out.

For example, you are not allowed to charge an unreasonably high rent simply because you own the apartment. You must also comply with the association’s rules and bylaws throughout the rental period. The rent should be reasonable while still covering your costs. Another smart tip is to continue paying the monthly association fee yourself and have the tenant pay rent directly to you. This gives you greater control over both the rental arrangement and your finances.

Curious about how much rent you can charge for your property? Try our Rent Calculator to get an estimated rental price instantly.