Real estate ownershipi Planning
Planning control is mainly the responsibility of the municipalities in Sweden. The municipalities draw up comprehensive plans and local plans. A comprehensive plan covers the entire municipality and stipulates the long-term development of the land but is not legally binding. A local plan is a legally binding document and regulates more specifically how a particular land within the municipality shall be used. A local plan is, for example, required for new densely built areas and new buildings that may have a greater impact on their surroundings. A local plan is of significant importance for the ability to grant permits.
Most developments and change of use of real estate require a permit. The responsibility for granting permits lies with the local building committee in each municipality. A building permit is, among other things, required for new buildings, extension of existing buildings and change of use of existing buildings. Furthermore, a demolition permit is required for demolition of whole or parts of a building and a ground permit is required for excavation and filling that affects the ground level.ii Environment
The liability for contaminated land is primarily based on the 'polluter pays' principle, which essentially means that the operator who caused or contributed to the contamination is responsible for investigating and remedying the damage caused by the contamination.
A real estate owner may be liable in a subsidiary manner for damage caused by contamination if the liable operator cannot be found or is unable to remedy the damage. However, such liability is only imposed if the real estate owner knew of, or should have discovered, the contamination at the time of the acquisition of the real estate (and only applicable on acquisitions effective after 1 January 1999).iii Tax
Sweden levies a real estate transfer tax (stamp duty) on most transfers of real estate. Most legal persons pay 4.25 per cent; natural persons and tenant owner associations pay 1.5 per cent tax on a base that consists of the higher of the consideration paid and the tax assessment value of the real estate. Real estate transfer tax on an intragroup transfer of real estate may usually be deferred provided the real estate, the buyer and the seller remain in the same group. Real estate transferred through a merger, a demerger or real estate re-allotments are currently not subject to real estate transfer tax.
In respect of real estate, deductions for depreciation of buildings are allowed at various rates between 2 and 5 per cent annually, depending on the type of building. Furthermore, as of 1 January 2019, a 'primary deduction' was introduced, which means that an additional annual depreciation of 2 per cent is allowed during the first six years from the completion of a new apartment building. Land is a non-depreciable asset.iv Finance and security
The most common form of security granted over real estate is the pledge of mortgage certificates taken out in real estate. The registered owner of real estate has the right to take out mortgages on the real estate. An application to take out mortgages is made with the Land Registration Authority. Taking out a mortgage is subject to 2 per cent stamp duty based on the face value of the mortgage. When the application is approved, a mortgage certificate in electronic or physical form is issued that evidences the mortgage. To perfect a pledge over a mortgage in real estate, the pledgee must be registered as the holder of the electronic mortgage certificate in a register with the Land Registration Authority, or in the case of a paper mortgage certificate, take physical possession of the certificate.
It is furthermore common to pledge the shares in a special purpose real estate holding company. Such pledges are perfected by the transfer of share certificates to the pledgee, or, in the event that no share certificates have been issued, through noting the pledge in the company's share ledger. Examples of other forms of security are business mortgages, pledges of intellectual property rights such as trade names and pledges of balances in bank accounts.