Presumption Rent-System: A Sustainable Rent-Setting System or a "Necessary Pain"?
Independent thesis Advanced level (degree of Master (Two Years)), 20 credits / 30 HE creditsStudent thesis
State of Objectives: This paper addresses the question of how the presumption-rent system has developed during ten years of its introduction to the rental market, with a particular emphasis on the investors’ perspective. The study has three focus areas, firstly an emphasis on how the real estate investors within the private and public sectors reacted to the introduction of the presumption-rents. Secondly, it examines whether the trends have changed during the course of these ten years. Finally, it observes how the presumption-rent system, as a rent-setting method for new residential rental constructions, is perceived and evaluated by the investors.
Methodology: The empirical study focuses on the rent market in Stockholm, and it is articulated through a holistic multiple case-study of six public-and private real estate companies with rental dwellings in Stockholm. In order to examine the developments of the presumption-rent structures in these companies, a numerical analysis of the rent structures through a quasi-experimental design is as well conducted.
Empirical Findings: The results in general prove that the rent-setting within the presumption rent system is unpredictable and subjective, because it is influenced by conflicting interests and different perceptions. The implication of this for the application of the presumption-rents is that it is depended on a complex, ambiguous and vague negotiation structure, rather than being based on a systematized rent-setting procedure. Furthermore, it is noted that the collective bargaining system, which sets the standards for the rent negotiations, is undergoing a slow process of change, as the law amendment in 2011 has caused paradigm-shits within the rental market. One dimension of this is that the rent-negotiations noticeably do not influence the investment decisions anymore, but the rent negotiations certainly have an impact on the rent-setting method. The implication for the application of the presumption-rentsystem, including its negotiation framework, is that it is applied when it meets the criteria for the investment decision, otherwise it is ignored.
Finally, it is showed that nor the public neither the private companies perceive the presumption-system as a long-term and sustainable solution to the prevailing challenges with the Swedish rent-setting system. What is clear is that the system is mainly considered as a temporality solution to a course of disorders that have emerged from prolonged institutional negligence and error that have impaired the rental markets.
Place, publisher, year, edition, pages
2016. , 81 p.
Rent negotiation, presumption-rent, Collective bargaining system, Rental market, New residential rental constructions, Real estate investments, Controlled rent structures, and Utility-value-system
IdentifiersURN: urn:nbn:se:uu:diva-298342OAI: oai:DiVA.org:uu-298342DiVA: diva2:945784
Veidekke Bostad, Fastighetersägarna Stockholm, Evidensguppen
Master Programme in Business and Management