For six years, the housing association Smyrna in Stockholm's inner city has fought for its cause. Tomorrow morning, the verdict will be announced in the Supreme Court, where the State Property Agency is the other party.
It's clear that it's nerve-wracking, but the feeling is that we've done what we can do, and over the years, I've prepared myself for the worst, namely that the verdict from the Court of Appeal remains, says the association's treasurer Heresh Zaremand.
Dispute over land rent
The dispute between the two parties concerns how the land rent, formally known as ground rent, should be calculated. The State Property Agency (SFV) has wanted to increase it by 190 percent, but two years ago, the Land and Environment Court of Appeal ruled that the land rent should be increased by 163 percent, an annual increase of approximately 3 million kronor.
This is what is now being tested in the Supreme Court.
There are approximately 40,000 ground leases in Sweden, and around 6,300 are apartment buildings. Ground lease essentially means that you rent the land from the public sector that the house is built on, says Johan Kleveland, union lawyer at the Property Owners.
Pending processes
Linna Bjernestedt, company and property lawyer at HSB, explains that she and her colleagues are handling several similar cases around Sweden that have been paused pending tomorrow's verdict.
There are a lot of associations that are waiting for this verdict tomorrow to see how it will turn out in their cases, says Linna Bjernestedt.
An increase in ground rent can hit housing associations hard, and according to Bjernestedt, the cost can increase by 300 percent in some cases.
Often, it's only fees that come in to housing associations as income, and if the ground rent goes up, the fees must be increased. Then it can happen that people can't afford to stay, says Linna Bjernestedt.
Changed situation
The possibility of granting ground leases came into being over a century ago, but in recent years, the situation has changed, which can now have consequences for associations like Smyrna.
The ground rent has essentially been fixed. We are now coming out of a period with very low interest rates that has led to a significant increase in property prices. When you then take the land price driven up by low interest rates and apply the same interest rate as in worse times, it becomes a very high fee that needs to be paid, explains Johan Kleveland.
