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MOVING TO SWEDEN

What you need to know before buying a one krona plot of land in Sweden

The municipality of Götene in western Sweden has gone viral for its campaign to attract new residents to the area by selling plots of land for one krona per square metre. Here’s how it actually works.

What you need to know before buying a one krona plot of land in Sweden
Götene's plots might be cheap, but labour costs are high in Sweden, and actually building a home can be quite expensive. Photo: Karin Nilsson/SvD/TT

When The Local spoke to Götene’s mayor Johan Månsson on June 24th, the municipality was happy with the results of its campaign, selling three plots since April after receiving 20 expressions of interest. But as it turns out, that was just the beginning.

Local public broadcaster SVT Väst originally broke the story on June 24th. The same day, it was picked up in Swedish by the TT newswire and Aftonbladet, and in English by The Local. By the time CNN had picked up the story on June 28th, it had gone viral and the municipality had been inundated with thousands of requests, to the extent that they’ve had to pause sales until August 7th to catch up.

But how does the process actually work?

On paper, anyone is allowed to buy a plot – there are no restrictions as far as nationality or residency is concerned. In reality, however, there are a few things you should bear in mind if you are looking to snap up one of the plots.

Buying a plot won’t grant you the right to live in Sweden

You can’t get residency in Sweden just by buying land here, which means that if you want to relocate to Sweden from abroad for the long term, you’ll either need a residence permit if you’re a non-EU citizen, or you’ll need EU right of residence if you’re from the EU. 

The only group of people who can move to Sweden without needing to meet any requirements are Nordic citizens – that’s citizens of Iceland, Denmark, Finland and Norway, and Swedes.

You need a Swedish bank account to pay for the plot

You’ll also need a Swedish bank account to pay for the plot, so you’ll need to sort that out before you buy. There are certain online banks, like Wise and Revolut, which can offer Swedish bank details to people based outside of Sweden, but you may need to meet other requirements with them.

You need to build a permanent residence on it

If you’re successful in getting a plot, you should be aware that you’re committing to building a permanent home on it within two years from the purchase date.

You may be able to buy cheap land, but you’ll need to be able to afford to build a house there, as well as cover any additional fees for connecting electricity, sewage, water and internet.

Here’s a breakdown of the estimated fees provided by the municipality, and this doesn’t afford the cost of actually building the house:

  • building permit fees (about 30,000 kronor, or around 2,850 US dollars)
  • and connection fees for water and sewage (about 170,000 kronor, or 16,000 dollars)
  • electricity (about 40,000 kronor, or 3,800 dollars)
  • and high-speed internet (about 30,000 kronor, or around 2,850 dollars)

If you’re planning on taking out a mortgage to finance the home build, you should contact Swedish banks in advance in order to prove that you have the means to build a house. For non-EU citizens, you should be aware that some banks require you to have permanent residence or even citizenship in Sweden in order to qualify for a mortgage, so make sure to carry out these checks before you commit to buying land.

If you don’t build a home on the land, you’ll have to pay a fine

You have two years to build a home on the plot, and if you don’t do so in time, not only will the plot of land return to the municipality, but you’ll have to pay a 100,000 kronor fine, too – that’s around 9,475 US dollars. You won’t be reimbursed for any work you’ve done on the plot, either.

You can buy a prefabricated home from a number of different suppliers – check sites like hustillverkare.nu, byggahus.se or hus.se for more information on this (in Swedish) – but be aware that even if you do this it can take longer than you expect for your home to be ready. 

If you don’t want to do any work on the house yourself, then the absolute cheapest option available, according to hustillverkare.nu, costs just under 1.4 million kronor (around 132,750 dollars), which will get you a one-bedroom home with an open-plan living room and kitchen, a bathroom and a laundry room.

If you’re willing to get stuck in, you can pay as low as 300,000 kronor (28,500 dollars) for a simple shell of a home, which you’ll need to assemble yourself. There are rules about what you can and can’t do yourself – electrics and plumbing will need to be carried out by a professional, and the cost of labour is expensive in Sweden – so bear that in mind when calculating the cost.

The article below, from The Local’s Nordic Editor Richard Orange, has useful information on the necessary steps needed when building your own home.

High interest in plots could push up prices

International interest in the plots has been “crazy” since The Local was first to report the story in English, Götene’s mayor Johan Månsson told us.

The municipality has had so many applications to buy plots that it has paused sales until August 7th in order to catch up with demand. 

It’s also worth noting that the one krona per square metre price is a starting price, and if there are multiple people interested in a plot, then it will be sold via auction instead.

Still interested? You can take a look at available plots in Götene municipality here, with many listed at a 98 or 99 percent discount. Scroll down and click on Tryck här för att se aktuella tomter i…, with plots of land divided up by town or settlement.

You can contact the municipality if you have any questions regarding the campaign or to express interest in a plot here: miljo-ochbygglovnamnden@gotene.se.

Be aware that it’s summer in Sweden and many Swedes will be on holiday until the end of July at least, so you may not get a response until August.

Götene isn’t the first municipality to offer plots of land at such a discount.

Hylte municipality, around three hours to the south, launched a similar campaign earlier this year, offering 54 plots of land for just one kronor per square metre.

Hylte, like Götene, is a small municipality in need of new residents. Ronny Löfquist, chairman of Hylte municipality, described their campaign to public broadcaster SVT as a “great success”.

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PROPERTY

Should you buy a home in Sweden this summer?

Considering the fickle trends in the Swedish housing market, prospective homebuyers might find themselves at a crossroads this summer.

Should you buy a home in Sweden this summer?

After a period of falling prices driven by increased interest rates, the Swedish housing market is seeing a rebound, particularly in the biggest cities.

However, it’s also taking longer to finalise home sales.

READ MORE:

Recent data from Swedish property listings site Hemnet indicates that while home sales – and housing prices – are on the rise, the time to complete transactions has notably increased.

For instance, the average sale time for an apartment in Sweden increased to 27 days in the first half of the year, up from 22 days during the same period last year. Similarly, houses now take an average of 31 days to sell, compared to 30 days previously.

The slowest market is in the Gävleborg region, where it takes an average of 44 days to sell a home. The fastest transactions occur in Stockholm, with apartments selling in just 16 days and detached homes in 23 days.

This variation in market activity across the country calls for a deeper look into where the best opportunities might lie for homebuyers this summer.

Renewed market confidence in Sweden’s biggest cities

The confidence in the Swedish property market is on its way up in Stockholm, Gothenburg, and Malmö, Erik Holmberg, a market analyst at Hemnet, told The Local.

“I would say that we have seen a weaker market in the last couple of years, almost everywhere in the country, since the Swedish central bank started to increase the interest policy rate, which affected the market a lot,” he said.

“But in the last half of the year or rather in the last year, the confidence has come back in bigger cities – in Stockholm, Gothenburg, Malmö… When we look at price developments last year, in three of Sweden’s biggest cities, we see prices increasing again.”

However, the analyst warned that the opposite is currently true in other areas of the country, which have seen a continued decrease in market activity and flatter developments in the same time interval.

A new trend emerging in Stockholm?

As Hemnet’s analyst explained, in Sweden, housing market trends usually start in Stockholm, when the market begins to change, causing a ripple effect.

“And that’s what we have seen. Now, market activity and prices are increasing again in the bigger cities. Usually, when the market changes, other areas in the country follow, and that could be the case now,” said Holmberg.

“When the rates and inflation situation become clearer, other parts of the country might follow the market in the big cities. Our main scenario is that we will see this spread,” he said, adding that prices in Stockholm have picked up quite fast in the last year but that the demand is still affected by the high interest rates.

“I wouldn’t be surprised if we saw swift price developments in some areas with the highest demand, such as city centres.”

The effect on the rental market

Another aspect to consider is the rental market, which could see significant changes in the short to mid-term.

Holmberg pointed out that properties which fail to sell might enter the rental market.

“What we’ve seen is that it’s harder to sell properties today, so, probably, more people who own homes and can’t sell them will put these unsold homes on the market for a while. This could affect the supply of apartments for rent and, in turn, prices,” the analyst said.

INTERVIEW:

What different types of homebuyers should know

For buyers, the current market presents a mixed bag.

“In Sweden, we often talk of having a seller’s or buyer’s market. Today, it’s good for buyers that they have a lot to choose from; there’s a record-high supply almost everywhere in the country. That means it’s easy to find something,” said Holmberg.

However, he also cautioned that the slow market makes agreeing on terms with sellers challenging, with sales times at record highs.

“Sales take some time in today’s market, and that’s important to understand for both sellers and buyers, especially for homeowners who are changing homes, meaning they’re both buying and selling something; it’s a tough market for them.

“Today, this group often chooses to sell their home before they buy something new. That makes up a big part of record high sales times; we have people waiting for the right bid before moving from the selling to the buying side…” Holmberg said, noting that the market is different compared to two to three years ago when it was “very hot”.

“So, remember that even if prices grow, it’s still a tough or slow market.”

READ MORE:

On the other hand, first-time buyers might find a silver lining in the form of lower prices compared to a couple of years ago, making it a potentially favourable time to enter the Swedish housing market.

“First-time buyers are in another situation, which may be better because the prices are lower than two years ago, of course, and if you’re just buying something, you don’t need to worry about the selling part,” Holmberg told The Local.

“That’s why this could be a good situation to enter the housing market this summer, but even so, despite supply being really high, it could still be tough because many sellers have put down a listed price but don’t necessarily plan to sell at this price.”

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