Mittuniversitetet

The post-war era housing market in Sweden has been characterized by wealth distributing- and social objectives. Regulation of the rent setting system, has been one of the primary instruments for the authorities in their attempts to achieve those objectives. The extensive shortage of rental apartments in the city of Gothenburg has raised the question whether it is appropriate to eliminate the pricing regulations or not. The general public view is that, at least in the short-run, market pricing will lead to a substantial increase in rents. The advocates of market pricing suggest that a rent increase will stimulate construction while the opponents argue that the regulated rents protects the least wealthy applicants from becoming excluded from the rental market.By studying the statistics from Boplats, the major housing agency in Gothenburg, and setting up a mathematical model, the objectives of this paper was to determine the magnitude of a rent increase, in case of deregulation of the current pricing system. The income requirements, imposed by the public housing companies, served as an upper limit for rising rents. However, an abolishment of these requirements is under investigation, wherefore, an examination of the effects of such abolishment has also been performed.The results from this analysis, suggest that rents in working-class districts, can only rise by 19 %, with income requirements as an upper limit, and 46.5 % with income requirements removed, before more than 79 % of the individuals applying for these apartments can no longer afford the rent. Based on these figures, I came to the conclusion that an abolishment of the income requirements will raise the potential for rent increases in case of deregulation of the rent setting system, bruksvärdesprincipen.