How can a transition to market-rent levels be executed in a way that compensates current tenants in Linköpings municipality?

Authors: Ivar Hof and Douglas Hayes Supervisor: Bo Sjö Background: Housing shortage is a heavily debated topic amongst today’s politicians and mainly originates from rent control regulations on today’s housing-market (Kopsch, 2019; Bokriskommittén, 2014). There have been suggestions made about a deregulation of the housing market and to instead impose market-rent (Donner, Englund, Persson, 2017). In the municipality of Linköping, the estimation is that market-rent would increase rent levels in all districts, a consequence of this would be a decrease of tenants’ disposable income. (Ramboll, 2021). Thus, the debate is about whether the deregulation should be implemented and to what extent those who are financially affected should be compensated. Purpose: The purpose of this essay is to research how current tenants in could be compensated during a transition to market-rent levels, based on the rental market in Linköping municipality. Method: To calculate the compensations for each chosen area and answer the purpose of the essay, we have chosen to use Andersson and Söderberg’s method for compensations. The reason for choosing this method is that we consider it to be the most relevant to the theories chosen and the purpose of this essay. Conclusion: Based on the chosen calculation-method (Andersson and Söderberg, 2002), the size of the compensation will vary between tenants, depending on where they live in Linköping municipality. The net present value of the compensation for tenants living in Centrum is 346,205 SEK, in Ryd/Skäggetorp the net present value of the compensation is 65,616 SEK and in Linköping municipality in general, the net present value of the compensation is 236,257 kr. The results are heavily dependent on the approximation of the variables included in the method and it is difficult to estimate exactly how much the rent levels will increase should a deregulation of the housing market be implemented. Key words: Market-rent, utility-value rent, compensation, rent control, deregulatio