The Swedish Rental Act (hyreslagen) of 1970, which is incorporated as chapter 12 of the Swedish Land Code (Sw. Jordabalken), regulates both commercial and non-commercial leases. However, there are some differences between the rules governing these two different categories of lease. Where statutory provisions are in force, restrictions limit the parties' ability to contract out of them.
The same provisions apply to 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 divided into three categories:
Last modified 22 Mar 2024
Commercial leases are normally valid for a specified period of time. There is no limit on their minimum term, however terms of more than 50 years are not legally binding. Furthermore, terms of more than 25 years regarding a premises located within a zoning planned area are not legally binding. Leases can also be valid for an indefinite period until terminated by one of the parties.
Hotel 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 22 Mar 2024
All leases are governed by the Swedish Rental Act, which is incorporated as chapter 12 of the Swedish Land Code. 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 22 Mar 2024
No, tenants have no automatic right to continue to occupy premises when a lease has expired. Instead, the 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. The indirect security of tenure means, in short, that the tenant is entitled to damages if the landlord terminates the lease without a legitimate reason or refuses to extend the lease on reasonable terms.
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To ensure that a tenant leaves on the agreed date, the landlord must terminate the lease in due time in accordance with the contract, or the date stipulated by law, whichever is more favourable to the tenant (since tenants in Sweden benefit from a statutory minimum notice period). Landlords must also terminate the lease in accordance with a highly formal procedure. Therefore, to avoid the risk of legal action, it is important to seek legal advice before terminating a lease. If the tenant refuses to leave the premises, the landlord will have to seek an eviction order, either in court or through the enforcement service. It can take several months for the landlord to regain possession of the premises.
Last modified 22 Mar 2024
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 two weeks of receiving notice. If the tenant refuses to leave the premises, the landlord must seek an eviction order, either in court or through the enforcement service. It can take several months for the landlord to regain possession of the premises.
Last modified 22 Mar 2024
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 22 Mar 2024
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.
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The lease normally states the purpose for which a tenant may use the premises, and prohibits them from using it for any other purpose without the landlord's consent. However, if the landlord refuses consent without reasonable cause, the Rent Tribunal can give the tenant permission for the use.
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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.
Last modified 22 Mar 2024
Leases often restrict the right of tenants to transfer the lease without the landlord's consent. 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. If the landlord refuses, without reasonable cause, the Rent Tribunal can give permission to transfer the lease.
Leases also often restrict a tenant's right to sublet the premises without the consent of the landlord. According to statute, the tenant may sublet part of the premises without the landlord's consent, but a sublease of the whole premises requires the landlord's agreement or permission from the Rent Tribunal.
Last modified 22 Mar 2024
With the exception mentioned below, rents are not reviewed on a market level basis during the term of the lease but are set at a fixed amount, although they may be subject to annual review under an index clause if the term of the agreement is at least three years.
In order to renegotiate the rent either the landlord or the tenant must terminate the lease in accordance with the provisions of the Swedish Rental Act. If the landlord terminates with a view to seeking a new rent which exceeds the market value, this may be deemed a wrongful termination. The procedure to terminate a lease in order to renegotiate rent is very formal. Therefore, it is important to seek legal advice prior to terminating a lease to avoid the risk of having to pay damages.
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.
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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 22 Mar 2024
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 22 Mar 2024
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 22 Mar 2024
The landlord pays for the maintenance and repair of areas used by multiple occupiers. However, there are cases where, by agreement, 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 22 Mar 2024
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.
Last modified 22 Mar 2024
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 22 Mar 2024
Typically the landlord is responsible for the building and tenants are responsible for any business activities in the premises.
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.
Last modified 22 Mar 2024
Can a tenant be forced to leave prior to the date originally agreed and, if so, how long will this process take?
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 two weeks of receiving notice. If the tenant refuses to leave the premises, the landlord must seek an eviction order, either in court or through the enforcement service. It can take several months for the landlord to regain possession of the premises.
Last modified 22 Mar 2024