Trends and prospects
What are the current trends in and future prospects for the real estate market (both commercial and residential) in your jurisdiction?
The Swedish real estate market has been strong for more than 25 years – even through the 2009 global financial crisis – and the commercial real estate market is stable. However, partly due to tightened amortisation requirements for private housing lodges, the housing market has undergone approximately a 10% price slump since Summer 2017, which has led to a decrease in new residential development projects. However, some analysts believe that the housing market will stabilise in the near future. Nevertheless, the Swedish central bank has advertised that interest rates, which have been extremely low for several years, will soon rise; this could have a material effect on the private housing market, which in turn could affect other parts of the economy. The forecast for 2018 is therefore uncertain regarding the private housing market, but there are no signs of stagnation on the commercial market.
Rights and registration
What types of holding right over real estate are acknowledged by law in your jurisdiction?
Introduction to real property and full ownership (freehold)
Swedish land is divided into real property units that are individually identified by name and code. Apart from the land itself, a property comprises buildings and fixtures. As a rule, the property includes both the soil below and the airspace above the property.
Full ownership essentially involves a free right to use, sell, build on, mortgage and transfer the property. However, these rights are limited by legal restrictions in, for example, the Planning and Building Act and the Environmental Code. Further, the legal right of public access (the ‘Everyman’s right’) prevents the owner from excluding people from his or her property (except for a private area in the immediate proximity of the building).
A site leasehold is a right to use and build on publicly owned land for a fixed fee. This is somewhat equal to full property title and the holder is regarded as the owner in most situations. Thus, the site leaseholder can transfer, build and let the leasehold and can also mortgage it. However, ownership of the property remains with the public body.
Site leaseholds can be terminated only at the end of certain periods (generally no less than 20 years and at least 60 years (40 on renewal) if the leasehold is let for residential purposes) and on specific conditions, generally comparable to the legal grounds for expropriation. In case of termination, the landowner is obliged to compensate the leaseholder for the value of the site leasehold at the time of termination of the lease.
Land leasehold/ground leasehold
A land leasehold is weaker than a site leasehold. It grants the holder an exclusive right to use the land, often together with the right to build, own and maintain a building, for a definite period in exchange for a fee. There are three main types of land leasehold (commercial, agricultural and residential) governed by different rules, depending on the purpose of the lease. A fourth type of land leasehold, governed by only a small set of rules, comprises land leaseholds that do not fit into the three main types.
Lease of a building or part thereof
The lease of a building gives the tenant an exclusive right to use a building or part of a building in return for rent. The legislation regarding lease agreements is described further in a separate section.
Easements are rights given to a property (the dominant property) to use another property (the servient property), or typically a part thereof, for specific permanent purposes, such as roads, parking spaces and the right to bury cables. As a rule, the servient property cannot be obliged to perform tasks for the dominant property, with some exceptions (eg, road maintenance).
Easements can be either official (determined by the Land Survey Authority) or agreed (private law) and are usually valid without time limitation unless suspended due to legal proceedings. However, agreed easements are not automatically registered in the Land Registry and therefore not automatically protected against new owners.
Housing cooperatives A housing cooperative is a member-based ownership of private housing, commonly seen in urban areas. The property (or site leasehold) is owned by a housing association, whose members have acquired participation rights that give them unlimited occupancy rights to a specific flat, as long as they fulfil their obligations to the housing association. Participation rights are sold at market value.
Are rights to land and buildings on the land legally separable?
The rights to land and buildings are legally separable if the building does not belong to the landowner. For example, a land leaseholder may own a building, which is regarded as a movable asset.
Which parties may hold and exercise rights over real estate? Are there restrictions on foreign ownership of property?
There are no general restrictions on foreign ownership of property. Acquisitions of agricultural and forest properties may require permission from the county administrative board and acquisitions of rental properties (eg, multifamily real estate) may, under specific circumstances, require permission from the regional rent tribunal.
How are rights, encumbrances and other interests over real estate prioritised?
Priority is set by the date of registration at the Land Registry.
Must real estate rights, interests and transactions be registered in your jurisdiction? What are the legal effects of registration?
The ownership of property and site leasehold rights, and transfers thereof, must be registered in the Land Register. The registration itself has no legal effect between the parties, but non-registration may result in a fine. If the property is mortgaged, the Land Registration Division of the National Land Survey Authority will register the mortgage (amount, date and priority) and issue a mortgage certificate (in digital or printed form) as proof.
Utility easements (rights to bury and use a cable within or across another person's property) and official easements (eg, rights to use roads) must be registered in the Land Register. Agreed easements and usufructs may be registered to secure the right against a new owner, but this does not affect the legal position between the parties.
What are the procedural and documentary requirements for entry into the national real estate register(s)? Can registration be completed electronically?
An application for title deed (ownership) or registration of site leasehold must be sent to the Land Registration Division within three months of the date of completion of the transfer. It may be made both in writing and electronically. Among other things, the application must contain the property’s official designation and a purchase contract in compliance with the formal rules. If the application is made in writing, the original documents must be submitted (which are sent back on completion). If the application is made electronically (which requires a registration as a professional and executing office, typically a bank or a law firm, electronic copies of the documents are permitted.
What information is recorded in the national real estate register(s) and to what extent is such information publicly available?
The Land Register is a reliable source of information for, among other things:
- ownership and boundaries for all real estate;
- addresses and buildings;
- joint facilities;
- plans and regulations that govern the use of land and water;
- tax assessments;
- easements (and other registered rights of use);
- ongoing matters at the Land Survey Authority;
- previous owners; and
- the purchase price of the latest transfer of the property.
Is there a state guarantee of title?
The Land Code protects a buyer that has acquired a property in good faith from a registered titleholder which is proven not to be entitled to ownership. However, the buyer must act in good faith. If all the relevant conditions are met, the purchase will be regarded as valid and the state will compensate the (previously) rightful owner for the loss.
Sale and purchase
How are real estate brokers regulated in your jurisdiction (eg, through caps on commission or disclosure obligations)?
Real estate brokers are regulated by the Estate Agents Act. A real estate broker is an independent counsellor except in respect of the price issue, where the broker has a special obligation to the employer. There is no legal cap on commission. The act applies to both consumer and commercial transactions, but provides more protection to consumers. For example, contractual terms – which, in comparison to the provisions of the act, are disadvantageous to a consumer – are without effect unless otherwise stated in the act.
The broker carries a damages-sanctioned responsibility towards the buyer concerning essential information about the property (or suspicions regarding such information). Moreover, in drawing up transfer agreements, the broker must equally observe the interests of both buyer and seller and formulate the agreement accordingly.
What due diligence should be conducted before conclusion of a real estate sale contract?
Investors typically rely on real estate consultants (eg, lawyers, financial advisers and technical consultants) when evaluating and purchasing property in Sweden. The following types of due diligence are recommended.
Technical/environmental due diligence is crucial and should include a review of an object’s buildings in order to evaluate, for example, the cost of items for maintenance that can materially affect the operation and value of a property.
Legal due diligence is performed by a lawyer in order to investigate the legal aspects that are associated with the property. The legal due diligence typically includes a review of:
- information provided in the Land Register;
- lease agreements and other holding rights;
- zoning plans;
- environmental status;
- ongoing disputes;
- tax and value added tax matters; and
- the property holding company (if the transaction is accomplished via a share transfer).
Financial due diligence clarifies the financial aspects linked to the acquisition of a property. There is no strict boundary with other parts of the due diligence, as all of the legal, technical and environmental aspects tend to be encompassed in the financial section. In commercial real estate transactions this would usually include, at least, a review of the rent roll and other financial data regarding the property in order to verify income.
Are any preliminary agreements typically entered into before conclusion of a sale contract?
It is common for parties to a commercial real estate transaction to sign a letter of intent to give a potential buyer the exclusive right (for a set period) to conduct the due diligence and negotiate the terms of the sales contract under non-disclosure provisions. However, preliminary agreements cannot include a binding obligation to buy or sell real property in the future, since such commitments are not legally binding under the Land Code.
Must sale contracts be concluded in writing? If so, must they be notarised?
Sale contracts on real estate must be concluded in writing and signed by both parties. However, they do not have to be notarised. A transfer of shares in a property holding company is primarily governed by the Sale of Goods Act and is not subject to any formal requirements.
Can sale contracts be concluded electronically?
Sales contracts on real estate cannot be concluded electronically. However, a transfer of shares in a property holding company is not subject to any formal requirements and can thus be concluded electronically.
What provisions are usually included in a sale contract?
A property sale and purchase agreement typically includes:
- formalities (ie, the names of the parties and details of the property);
- purchase price mechanics;
- restrictive covenants;
- conditions precedent (eg, board approval and financing);
- completion deliverables;
- seller’s warranties;
- waiver and disclosures;
- a limitation of liability clause;
- instructions for the seller to carry out before completion;
- the transfer of risk and insurance obligations;
- a confidentiality agreement;
- boilerplate provisions; and
- the governing law and dispute resolution and arbitration clause.
Obligations and liabilities
What are the seller’s disclosure obligations and other liabilities, and what are the consequences of breach?
The Land Code stipulates that a buyer must examine the property, except for items that cannot be detected without damaging the property. The seller is under no obligation to disclose information about the property to the buyer. However, if the seller fails to inform the buyer of any obvious crucial details, the buyer may be entitled to a price reduction or damages and the contract may even be terminated.
What contractual warranties are usually given by the seller?
The contractual warranties given by the seller vary with the type of object and the outcome of the buyer’s due diligence. Standard warranties include:
- no encumbrances;
- taxes (eg, those attributable to the period before the sale);
- lease agreements and rent roll;
- disputes; and
- other information.
Are there any other obligations on the buyer, aside from paying the purchase price?
An application for title deed must be sent to the Land Registration Division of the National Land Survey Authority within three months of the transfer completion date.
What taxes are payable on the sale and purchase of real estate? Are any exemptions available?
Taxes payable by the buyer
As a main rule, transfer of real property triggers a stamp duty for the buyer at a rate of 4.25% for legal persons and 1.5% for private persons.
One exception is the ‘transport purchase’, which is where the buyer transfers the property to a new buyer on unchanged terms within three months. Provided that that title deeds for all transactions are applied for within three months of the first transaction, stamp duty should be paid only for the last transaction.
Heritage and estate divisions of a property do not trigger a stamp tax duty. A gift is also exempt, unless the recipient takes over the loans or payments for the gift.
In 2017 a proposal for new legislation was presented. The proposal aims to make share and property transfers tax neutral. It is unclear when, if at all, the legislation will be passed, but presumably not before 2019.
Taxes payable by the seller
Legal entities selling commercial property are liable to pay corporate tax on 22% of the profit.
A private person selling a housing property is liable to pay 30% tax on 22% to 30% of the profit. A private person selling a business property with profit is liable to pay 30% tax on 90% of the profit.
Transfer of title
When does title in the property transfer?
The transfer of property ownership is gradual (in relation to, for example, the buyer's protection against the seller's creditors, transition of the risk of damage to the property and the grounds for invalidity of the contract). Title passes to the buyer when the parties have entered a valid and binding contract. In relation to third parties, a person or entity that is registered as the owner of the property in the Land Registry is considered to be the rightful owner of the property.
What is the typical duration of a sale transaction?
The duration of a sale transaction may vary depending on its dimension and complexity, but investors can usually expect customary due diligence and negotiation of transfer agreements to take one month.
Must a lease agreement be concluded in writing?
A lease agreement can be concluded either in writing or orally. However, both the landlord and tenant have a legal right to demand a written contract. A written contract is strongly recommended since it grants both parties a stronger position if a dispute arises regarding the agreement.
Are there any regulations setting out mandatory or prohibited provisions in lease agreements?
Swedish legislation regarding lease agreements is complex and detailed. In short, the legal provisions apply as rental terms when a situation is not provided for by the contract. However, due to the social and economic importance of leases and the general assumption that the tenant is the subordinate party, many provisions in the Land Code are mandatory for the benefit of the tenant. If any provisions in a contract violate these rules, a landlord cannot enforce them. Important mandatory provisions include:
- a minimum notice period for termination, which should state the circumstances in which a lease agreement may be terminated and any formal requirements for termination;
- a waiver of the tenant’s right to possession and security of tenancy, which requires compliance with formal requirements and often approval by the regional rent tribunal;
- the requirement for rent to be clearly defined in the lease agreement; and
- the right to recover a forfeited residential lease in certain circumstances.
What provisions are typically included in lease agreements?
There are a variety of different provisions in Swedish lease agreements, depending on the use of the premises. Typical basic provisions in a non-residential lease agreement include:
- the details of the landlord and tenant;
- the address of the premises;
- the intended use of the premises;
- the size and location of the premises;
- the term of the lease;
- any notice periods regarding termination or extension;
- the rent;
- the rent supplements (eg, electricity, water and sewerage, heating, cooling and ventilation);
- the responsibilities and rights to reduce rent in relation to maintenance and repair;
- unforeseen costs;
- the requirements imposed by relevant authorities;
- whether value added tax (VAT) should be charged;
- indexation; and
- the responsibility for property tax.
What are the standard forms of lease agreement used in your jurisdiction?
The most common standard forms of commercial lease agreements are created by the Swedish Property Federation, in consultation with the Swedish Association of Public Housing Companies, the Swedish Trade Federation and Visita. The forms include both landlord-friendly and tenant-friendly options.
Length of term
Are there any regulations on minimum and maximum terms of leases?
There is no minimum term for a lease agreement. However, with a minimum rental period of three years, the parties to a non-residential lease agreement are free to decide on variable additions to the rent, such as index clauses or property tax clauses.
The maximum term is 25 years if the premises are located within a zoning plan (detailed development plan) area and 50 years if there is no zoning plan. Commercial lease agreements usually have a lease term of at least three years, but can be much longer depending on the type of premises.
Are long-term tenants accorded any special rights as to extension or renewal of leases?
If a lease has lasted for more than nine months, non-residential tenants attain indirect security of tenancy which, in certain circumstances, means a right to be economically compensated if the lease agreement is terminated. Moreover, it is common for parties to agree on specific extension terms for long-term lease agreements.
What regulations (if any) govern rent increases?
As a main rule, a rent increase during the lease term must be included in the lease agreement as a clear and specified provision. If the lease term is at least three years, the parties can also agree on flexible additions to the rent, such as index clauses or property tax clauses.
If the rent is increased at the end of the lease term, the landlord must terminate the lease and request the increased rent by the end of the applicable notification period. Should the tenant not accept the new rent, the tenant must move. However, if the tenant moves out of the premises and the rent exceeds the market rent, the tenant is entitled to compensation corresponding to at least one year’s rent, or if higher, the actual loss.
Residential lease agreements
Residential rents are normally determined through negotiations between landlord and tenant organisations once a year. The negotiations are conducted between the landlord and a tenant organisation, usually a local section of the Swedish Union of Tenants.
What regulations (if any) govern rent security deposits?
There are no regulations on rent security deposits.
Can the tenant withhold rent payments on any legal grounds?
The tenant can withhold rent under certain circumstances, for example where they are entitled to:
- a rent reduction (eg, if the landlord is in default of maintenance);
- damages according to the lease agreement;
- compensation for remedied deficiencies at the tenant’s expense;
- a counterclaim on the landlord; or
- a disagreement about the amount of rent (if not determined in the lease).
To minimise the risk of withholding rent incorrectly, a deposition should be made at the county administrative board.
Under what circumstances is sub-letting typically allowed?
Sub-letting is prohibited without the landlord’s consent or approval from the rent tribunal. Partial sub-letting is permitted without consent, as long as it is not detrimental to the landlord.
Obligations and liabilities
What are the general obligations and liabilities of the landlord in respect of the property and what are the consequences of breach?
The landlord’s primary obligation towards the tenant is to maintain the premises such that it is fully usable for the intended purpose and to carry out and pay for required maintenance. This provision may be modified in a lease contract regarding non-residential premises.
Depending on the nature and severity of a breach, consequences may include rent reduction, damages and immediate termination. Residential properties may be subject to injunctions in the case of neglected maintenance or similar.
What are the general obligations and liabilities of the tenant in respect of the property and what are the consequences of breach?
The tenant’s primary obligation under Swedish law is to pay the rent and take proper care of the premises, but there are a variety of additional contractual obligations. On material breach of the lease agreement, the landlord may terminate it without liability to the tenant.
Are any taxes payable on rental income? If so, are any exemptions available?
The corporate tax on income is 22%. There is a legislative proposal to reduce the income tax to 20.6% as of 1 January 2019.
As for private persons renting out their home, the tax rate is 30% after a deduction of Skr40,000, plus:
- 20% of the rent (for a house); or
- the housing association or landlord fees (for an apartment).
Leases are usually exempt from VAT. However, if the premises are used for business which is subject to VAT, the landlord can choose to charge VAT (voluntary tax liability).
Are the landlord and tenant bound by any insurance requirements?
There are no mandatory legal insurance requirements under Swedish law. However, there are usually contractual obligations for the landlord and tenant to have sufficient insurance for their respective area of responsibility (the real estate versus the premises and the business).
Termination and eviction
What rules and procedures govern termination of the lease by the landlord and the tenant’s eviction from the property?
Chapter 12 of the Land Code specifies the situations in which the landlord may terminate the lease. The rules differ depending on the nature of the lease (residential tenants have more extensive rights than commercial tenants), as well as on whether the lease agreement is terminated by the end of the lease term or immediately (due to forfeiture).
In general, the lease is forfeited where there is:
- a delay in payment;
- illicit sub-letting;
- dilapidation or pests; or
- a material violation of contractual obligations.
However, there are several procedural rules for the landlord – especially regarding a residential lease – where the tenant has the right to regain the tenancy on payment.
Termination of a non-residential lease agreement by the end of the lease term must be preceded by a notice of termination, clearly stating the reasons for terminating the contract (which must meet certain requirements); if the tenant does not accept the termination, it has two months to apply for mediation with the regional rent tribunal.
If the tenant does not leave the property, the landlord must apply for an eviction order with the enforcement authority. However, the dispute must be dealt with by the courts if the tenant opposes eviction.
What are the typical providers of real estate financing in your jurisdiction? Are there any restrictions on who may provide financing?
Real estate financing is typically provided by local, pan-Nordic and international banks; however, non-bank institutions, such as direct lending funds and other alternative debt providers, are increasingly active. Institutional investors tend to participate through the public debt capital markets, but there has also been some activity by, for example, insurers in the direct lending space.
Lending itself is not a regulated activity unless it involves consumers. However, if the entity extending loans also accepts deposits from the public, this constitutes a regulated financial activity which requires a permit (either directly from the Swedish Financial Supervisory Authority (FSA) or through EU passporting rules). Further, if the lending activity is considered regular, the entity may be regarded as conducting a permanent financing business in Sweden, in which case the FSA must be notified. Although the regulations are not entirely clear, less frequent lending to Swedish borrowers does not usually require notification.
What are the most common structures used to secure real estate financing and how are these security interests perfected?
Security over real estate is created by way of mortgage registration and the provision of mortgage certificates. On application by the legal and registered owner of a real estate, the Swedish Land Registration Authority issues mortgage certificates (in either printed or digital form), which, when pledged and handed over to a creditor (or a third party representing the creditor), represent a security right with a certain value and priority. A digital mortgage certificate is considered as officially handed over to the creditor when it has been transferred to the creditor’s account on the mortgage register (or to the account of a third party representing the creditor) administered by the Swedish Land Registration Authority. The digitalised mortgage system is available to local banks only. The issuance of a new mortgage certificate is eligible for a stamp duty of 2% of the amount secured (ie, the face value of the mortgage certificate). However, any mortgage certificates already issued can be pledged again without incurring any additional stamp duty. In essence, the security interest created by a mortgage entitles the secured creditor to payment from the proceeds from a sale of the relevant real estate up to an amount equal to 115% of the amount of the mortgage certificates issued in that real estate and held by that creditor as security. If a real estate is disposed of at a value that exceeds 115% of this amount, the difference will be allocated to the pledgor.
Security over shares is created by way of a pledge. If the relevant shares are in the form of certificates and share certificates have been issued, the share pledge is perfected by transfer of possession of the relevant share certificates (blank-endorsed) to the creditor (or a third party representing the creditor). If the relevant shares are not in the form of certificates or no share certificates have been issued, the share pledge is perfected through notification to the company’s board of directors, the relevant custodian or account bank and/or the Swedish Central Securities Depository, as applicable.
Security over cash deposits on bank accounts is created by way of a pledge, which is perfected through notification of the pledge to the bank. The pledgor cannot withdraw funds standing to the credit of the pledged account without the express consent of the secured creditor. For practical reasons, it may be undesirable to block certain bank accounts; therefore, the parties may agree that the pledge will not be perfected unless by an event of default (or similar event). However, non-perfected securities are subject to a three-month hardening period from the date of perfection and could be retrieved in the event of bankruptcy.
Security over intercompany receivables is created by way of a pledge, which is perfected through notification to the receivable debtor or, if the receivable is in the form of a bearer promissory note (or similar), by transfer of possession of the relevant promissory note (blank-endorsed) to the secured creditor (or to a third party representing the secured creditor). Proceeds should be paid directly to the secured creditor and the pledgor may not have control over any account to which payments are made.
Security over insurance proceeds is created by way of a pledge, which is perfected through notification to the insurance company with which the relevant insurance policy was placed. Insurance proceeds are to be paid directly to the secured creditor.
What covenants are typically made in financing agreements?
Typical financial covenants include loan-to-value ratio and interest cover.
Enforcement of security
How are security interests enforced in the event of default?
Market practice in Sweden is that a secured creditor becomes entitled to enforce a security following an event of default or similar under the credit documentation. Typical events of default include:
- financial covenant breaches; and
- other non-compliance with the terms of the credit documentation.
Usually, the security documents become enforceable only once the secured creditor (or an agent on its behalf) has accelerated the loan by declaring it immediately due and payable. In some cases, the relevant security document stipulates a notice period before enforcement action can be taken. There are no specific requirements under Swedish law that an event of default which constitutes a breach must be of a certain nature in order for a secured creditor to be entitled to accelerate outstanding loans and enforce security, unlike certain European jurisdictions which require that a payment default must be outstanding.
The process for enforcement depends on the type of security being enforced. A security interest created over real estate mortgage certificates can be enforced only through certain public authorities and requires an enforcement order or the commencement of formal insolvency proceedings. Other types of security can generally be enforced by public or private sale. The timing of and precise procedure for enforcement will most likely be stipulated in the relevant security documents. The market standard enforcement provision in, for example, a Swedish-governed share pledge agreement usually gives the secured creditor the right to sell the security assets (eg, pledged shares) by private or public sale, auction or in any other way and on such terms as the secured creditor deems fit (including the right for the secured creditor to purchase the assets itself or withdraw, make claims for, demand or collect payments of any amount or proceeds, as applicable, and offset them against the outstanding debt).
A secured creditor is considered to have a duty of care over the security and therefore may not enforce the pledge or realise the security assets to the detriment of the pledgor. Therefore, the secured creditor must, as a fiduciary duty, take into consideration and protect the interests of the relevant pledgor regarding enforcement, including obtaining a fair sales price at market level for the security assets. Further, if the sales price exceeds the debt for which the security was granted, any surplus must be distributed to the pledgor following the sale of the assets. There are special provisions in the event of bankruptcy and such provisions override any contractual provisions in Swedish-governed security documents.
What is the typical timeframe for the enforcement of security?
There is no typical timeframe for enforcement of security over the types of assets mentioned above, as it depends on the individual circumstances, including any preparations required or desirable, the preferred outcome and the current market conditions. It is possible to arrange for the swift enforcement of security over assets such as shares, bank accounts, intercompany receivables and insurance proceeds, whereas the more formal procedures involved in real estate security enforcement may require additional time.
What is the general climate of real estate investment in your jurisdiction?
Sweden offers a good climate for real estate investments with its transparent market and few barriers for investors looking to enter the market. Historically, price levels have increased steadily over the last 10 years and there are few vacancies within office and residential properties (office rents in Stockholm increased by 13% during 2017). During quarter four of 2017 and quarter one of 2018, prices in the housing market have decelerated (and dropped in some areas) – this has affected the appetite for investment in residential properties and residential development projects.
Who are the most common investors in real estate?
The most active investors comprise well-established real estate companies, together with pension funds (both private and buffer funds within the Swedish pension system). Foreign investors are active – in 2017, 36% of the transaction volume constituted cross-border transactions, as well as small and medium-sized private investors, which have been increasingly active in recent years.
Are there any restrictions on foreign investment in real estate?
No, there are no general restrictions on foreign investment in real estate.
What structures are typically used to invest in real estate and what are the advantages and disadvantages of each (including tax implications)?
Real estate transactions in Sweden are usually carried out as share transactions. This is to avoid stamp duty and so that corporate sellers can avoid tax on capital gains on the sale of shares, as a gain on a direct sale of real estate is subject to corporate tax. In 2017, a proposal for new legislation was presented, with the aim of making share and property transfers tax neutral. It is unclear when, if at all, the legislation will be passed, but presumably not before 2019.
Planning and environmental issues
Which government authorities regulate planning and zoning for real estate development and use in your jurisdiction and what is the extent of their powers?
Zoning plans (detailed development plans) are exclusively decided by Swedish municipalities. However, developers may cooperate with the municipality in the preparations of a new zoning plan required for a land developing project.
What are the eligibility, procedural and documentary requirements to obtain planning permission?
When a person intends to carry out a measure that may require the adoption, amendment or repeal of a zoning plan, the municipality must disclose its intentions.
A request for planning notification or planning permission must be in writing and must include a description of the principal purpose of the intended use, as well as a map of the affected area. If the request is for construction works, it must also include a description of the nature and approximate extent thereof.
After receiving a request, the municipality must issue its planning notification within four months. If it is approved, the municipality must state when it estimates that it will issue a final decision regarding the zoning plan. If the municipality does not intend to initiate planning preparations, it must provide its reasoning.
A decision regarding a planning permission is associated with a cost as per the relevant municipality’s set tariff.
Can planning decisions be appealed? If so, what is the appeal procedure?
Municipal decisions may not be appealed where they relate to planning notifications or planning permissions.
Municipal decisions to adopt, modify or repeal a zoning plan (detailed development plan) or similar may be appealed to the Land and Environment Court within three weeks of the decision being announced on the municipality’s notice board.
However, as a rule, a decision to adopt, amend or repeal a zoning plan may be appealed only by someone who, before the expiration of the review period, made objections in writing that were not accommodated.
The county administrative board has the right to re-examine a new zoning plan. It must decide within three weeks whether it will re-examine the municipality’s decision. The plan is subject to re-examination or even repeal if the Environmental Code is not complied with.
What are the consequences of failure to comply with planning decisions or regulations?
Chapter 11 of the Planning and Building Act states the consequences of a failure to comply with planning decisions or regulations, the most frequent of which are outlined below.
If, on a property or with regard to construction works, a measure has been taken in conflict with the Planning and Building Act, the Building Committee may issue a restriction order to be fulfilled within a certain period.
If an action has been taken without the relevant building or demolition site improvement permit, the Building Committee must provide the owner of the property or construction work the opportunity to apply for a permit, if it is likely that one can be issued.
Construction sanction fees and other consequences of illicit building
Construction sanction fees can be charged for certain violations of the Planning and Building Act, such as the requirements for construction works, building permits and starting clearance.
The fee is based on the relevant area and may vary depending on the severity of the violation. Unless a building permit is granted retroactively (ie, due to non-compliance with the relevant zoning plan), the building must be demolished.
What regime governs the protection and development of historic and cultural buildings?
The county administrative board is responsible for some buildings which are protected by the Cultural Environment Act. However, most cultural historic buildings in the country are protected at a municipal level, under the Planning and Building Act.
What regime applies to government expropriation of real estate?
The Swedish Constitution provides basic protection from expropriation, by providing that expropriation or other such dispossession may occur only if it is urgently in the public interest. Further, the Expropriation Act governs the procedure of an expropriation. Permission is granted primarily by the government or by the county administrative board (after delegation). However, ‘real’ expropriation is seldom used in Sweden; instead, acquisitions comparable to expropriation may be made with support of other legislation, such as the Planning and Building Act (eg, in the planning of future public spaces in a zoning plan, which the municipality will be in charge of) or the Environmental Code (eg, in the creation of a nature reserve).
In cases of expropriation measures under regulations other than the Expropriation Act, compensation is determined in accordance with the Expropriation Act.
What is the required notice period for expropriation and how is compensation calculated?
There is no notice period provided by law.
The rules on compensation can be complicated when it comes to details such as expectation values, but in general the compensation is the calculated market value plus an additional compensation of 25%.
If the expropriation affects any business conducted on the real estate, the subject being expropriated may be entitled to additional compensation.
What environmental certifications are required for the development of real estate and how are they obtained?
Real estate development may involve environmentally hazardous activities. To ensure compliance with the Environmental Code, many such activities are subject to licensing. A permit states the conditions under which an activity may be carried out. The licensing authority may refuse a permit if it finds that the activity is not permissible under the Environmental Code.
The relevant licensing authorities are the land and environmental courts and the county administrative boards. The applicant is obliged to consult the county administrative boards or the local Environmental and Public Health Committee before applying for a permit. The Environmental Protection Agency is consulted in, and active in some, licensing procedures.
An environmental impact statement must be submitted together with the permit application.
What environmental disclosure obligations apply to real estate sales?
There are no general disclosure obligations in real estate sales. However, if the seller fails to inform the buyer of important details, the seller can be held liable for negligence.
What rules and procedures govern environmental clean-up of property? Which parties are responsible for clean-up and what is the extent of their liability?
According to the ‘polluter pays’ principle, those responsible for the environmental impact have the primary obligation to remedy or prevent damage. However, the buyer of a polluted property may also be liable where the polluter is unable to perform or pay for the clean-up and the buyer knew (or ought to have known) about the pollution at the time of the transaction.
Are there any regulations or incentive schemes in place to promote energy efficiency and emissions reductions in buildings?
Sweden has set several environmental objectives with the aim that the country’s major environmental problems will have been solved by 2020. Even if the objectives are not achievable, the government and authorities are continuously working on developing improved tools to achieve the best possible result. The government has, for example, decided on grants for measures that promote innovative and sustainable housing construction with reduced climate and environmental impact. The National Board of Housing, Building and Planning will administer the grants. The regulation will come into force on 1 July 2018.
The government has also adopted new legislation in order to reduce energy use in buildings – for example, the Act on Energy Measurement in Buildings and the Act on Energy Mapping in Large Companies.