Occupation and use of real property for a limited period of time is governed by the Land Code (jordabalken). The legal framework in the Code differs depending on whether the use is categorised as a i) leases of buildings, ii) leases of land or iii) site-leaseholds.
The Swedish Rental Act (hyreslagen) of 1970 is incorporated as chapter 12 of the Swedish Land Code (jordabalken) and regulates both commercial and non-commercial leases. There are some differences between the rules governing these two different categories of leases. What both categories have in common is that where statutory provisions are in force, restrictions limit the parties' ability to contract out of them.
The same provisions apply to all types of commercial premises, inter alia offices, warehousing, industrial and retail premises.
Different rules apply to leases of land rather than of buildings or parts of buildings. Leases of land are governed by chapter 8-11 of the Swedish Land Code and divided into three categories:
1. Agricultural Leases of Land (jordbruksarrende)
2. Residential Leases of Land (bostadsarrende)
3. Commercial Leases of Land (anläggningsarrende)
The third type of arrangement is a site-leasehold and is governed by chapter 13 of the Swedish Land Code. Site-leaseholds are granted for an indefinite period of time and may only be terminated in very specific situations.
Last modified 13 Mar 2025
Commercial leases can be entered for a specified period of time or an indefinite period until terminated by one of the parties, of which the former is most common. There is no limit on their minimum term, however a term of more than 25 years within zoning plan areas or 50 years outside such areas is not legally binding.
Commercial leases mostly have fixed terms ranging from three to ten years. Hotel and industrial leases are often longer than other leases, and also often grant the tenant more comprehensive rights and responsibilities (particularly concerning maintenance and the interior) than other leases.
Last modified 13 Mar 2025
All leases are governed by the Swedish Rental Act (hyreslagen), which is incorporated as chapter 12 of the Swedish Land Code (jordabalken). Unless explicitly allowed, it is not possible to agree on terms and conditions less favourable to the tenant than those provided for in the Swedish Rental Act.
Last modified 13 Mar 2025
No, commercial tenants have no automatic right to continue to occupy premises when a lease has expired. In case of a termination, a commercial tenant will have to physically vacate the premises, but to claim any possible compensation afterwards. The regulation behind this is statutory, where a commercial tenant enjoys what is called an indirect security of tenure in the event of the landlord's termination, provided that the tenancy has lasted longer than nine months. This means in short that the tenant is entitled to request compensation for damages and vacating costs if the landlord terminates the lease without a legitimate reason or refuses to extend the lease on reasonable terms.
Last modified 13 Mar 2025
Terminating a tenancy is a very formal process, especially when it comes to regulations that landlords have to comply with. Therefore, to avoid the risk of legal action, it is important to seek legal advice before terminating a lease.
To ensure that a tenant is obliged to vacate the premises on the agreed date, it is important to terminate the lease in due time in accordance with the contract. It should be noted commercial tenants benefit from a statutory minimum notice period, which in some cases have the effect the relevant notice period follows under the Rental Act instead of the agreed notice period in the contract.
If the tenant refuses to vacate the premises, the landlord will have to seek an eviction order, either in court or through the Enforcement Authority It can take several months for the landlord to regain possession of the premises.
Last modified 13 Mar 2025
The landlord has a right to terminate the lease immediately if the tenant does not pay the rent, breaches the contract in certain ways set out in the Swedish Rental Act or forfeits the contract by breaching certain provisions of that Act. However, the tenant can rectify rent arrears by paying the landlord within a certain period of time of receiving notice thereof; two weeks for commercial leases.
Last modified 13 Mar 2025
Yes, the lease can be terminated by a municipal authority if the premises cannot be used in accordance with the designated use set out in the lease agreement and this is the result of the condition of the premises. If the poor condition is the fault of the landlord, the tenant can make a claim against the landlord.
Last modified 13 Mar 2025
Parties are free to contract as they wish. The landlord has a right to require a guarantee, such as a bank guarantee, a guarantee from the tenant's parent company or a deposit.
Last modified 13 Mar 2025
The lease document normally states the purpose for which a tenant may use the premises, and prohibits the tenant from using it for any other purpose without the landlord's consent. However, if the landlord refuses consent without reasonable cause, the tenant can apply to the Rent Tribunal for permission for the change of use.
Last modified 13 Mar 2025
Leases generally restrict a tenant's right to alter or improve the premises without the landlord's consent. Normally, alterations to the interior of the premises are permitted. However, on termination, tenants are frequently required to restore the premises to their original condition except for normal wear and tear in a commercial lease relationship.
Last modified 13 Mar 2025
Leases often restrict the right of tenants to transfer the lease without the landlord's consent. If the landlord refuses consent without reasonable cause, the tenant can apply to the Rent Tribunal for permission for the transfer. Also, according to statute, the tenant in a commercial lease that has lasted more than three years has a right to transfer the lease in connection with the sale of a business of which the lease is a part.
Leases also often restrict a tenant's right to sublet the premises without the consent of the landlord. According to statute, the tenant may however, under certain conditions, sublet part of the premises without the landlord's consent, but a sublease of the whole premises requires the landlord's consent or permission from the Rent Tribunal.
Last modified 13 Mar 2025
Market rent controls the setting of rent level for commercial leases. Variable rental arrangements do exist in a retail context, and in this case, rent may be linked to the turnover of the tenant’s business.
With the exception of variable rental arrangements, rents are generally fixed during the term of the lease, although subject to annual review under an index clause or an agreed percentage increase. Most common is that the indexation clause will follow changes in the Consumer Price Index (CPI) if the term of the agreement is at least three years and that the increase will be a fixed percentage for short-term leases.
In order to renegotiate the rent either the landlord or the tenant must terminate the lease by the end of the current term and in accordance with the formal requirements of the Swedish Rental Act. Terminating a tenancy is a very formal process, especially when it comes to regulations that landlords have to comply with. For example, if the landlord terminates with a view to seeking a new rent which exceeds the market rent, this may be considered a wrongful termination and the tenant may be entitled to request compensation for damages and vacating costs. Therefore, it is important to seek legal advice prior to terminating a lease to avoid the risk of having to pay damages.
Last modified 13 Mar 2025
Unless the rent is subject to annual review under an index clause or an agreed fixed increase or decrease, it is not possible to change or increase the rent during the term of the contract.
Last modified 13 Mar 2025
VAT at 25% is payable only if the landlord chooses to charge VAT. Landlords may choose to register for VAT in order to recover VAT on their expenses. Moreover, landlords can choose to register only part of the premises for VAT and leave other parts free of VAT. A prerequisite for the landlord to be able to charge VAT is that the tenant conducts business in the premises that are subject to VAT.
Last modified 13 Mar 2025
There are several options available to the landlord depending upon the specific circumstances and what the landlord wants to achieve.
Forfeiture: Forfeiture is the landlord's right to determine the lease where the tenant is in breach of any of its obligations under the lease, or on the occurrence of certain events specified in the lease, such as non-payment of rent. However, the tenant can rectify rent arrears by paying the landlord within a certain period of time of receiving notice thereof; two weeks for commercial leases.
Court proceedings to recover debt: To recover rent or other sums due under the lease, the landlord will have to seek an eviction order, either in court or through the Enforcement Authority. According to statue, the debt must be recovered within two years of the tenant leaving the premises, otherwise, the debt is time-barred.
Drawdown on rent deposit: The landlord may be able to drawdown from a rent deposit if one exists to recover the rent arrears or other sums due under the lease. A drawdown on the rent deposit may waive the right to forfeit so this will need to be taken into consideration.
Pursue guarantor or former tenant: The landlord may be able to recover rent arrears and other sums due under the lease from any guarantors or former tenants under the lease either by way of a contractual guarantee or under the privity of contract rules, subject to certain limitations.
Last modified 13 Mar 2025
No costs are payable by the tenant other than the initial rent. However, parties are free to contract as they wish and the landlord can sometimes require a guarantee, such as a bank guarantee, a guarantee from the tenant's parent company or a deposit.
Last modified 13 Mar 2025
Either the landlord pays for the maintenance and repair of areas used by multiple occupiers, or the lease provides that the landlord charges the tenants a proportion of common expenses based on the size of their premises in relation to the total rentable area of the property.
Last modified 13 Mar 2025
Under most leases the landlord has an obligation to repair and maintain the exterior, the structure of the building and the common areas, while the tenant is responsible for the interior of the premises. Market practice for most long-term leases is to attach a demarcation list to the lease, which details the maintenance responsibilities between the landlord and tenant.
Last modified 13 Mar 2025
Services such as telecommunications, electricity, water, heating, etc are usually paid by the tenants, either directly to suppliers or to the landlords as a rent supplement.
Last modified 13 Mar 2025
In general, basic building insurance policies are designed to compensate landlords for damage to the property, loss of rent due to damage, and claims for damages to property or person. In addition to this basic coverage, additional insurance can be taken out and it is common practice in Sweden for commercial and residential tenants to take out an additional insurance to cover their property, as well as a commercial tenant's business operations carried out in the leased premises.
Last modified 13 Mar 2025
Are there any specific regulations and/or laws which apply to leases of particular categories of real estate, such as residential, industrial, offices, retail or hotels and what is their impact?
All leases are governed by the Swedish Rental Act (hyreslagen), which is incorporated as chapter 12 of the Swedish Land Code (jordabalken). Unless explicitly allowed, it is not possible to agree on terms and conditions less favourable to the tenant than those provided for in the Swedish Rental Act.
Last modified 13 Mar 2025