The return of the Swedish slumlord: Analysis of a recent case

The return of the Swedish slumlord : Analysis of a recent case

QS 2011
Purpose: The article tries to explain how long-term mismanagement of a housing estate could arise in a country with a strong legal framework aimed at preventing such situations.Approach: Assuming that both tenants and landlord are rational, the article presents a set of hypotheses that is consistent with the information available.Findings: It is argued that the tenants stayed even though the rent was higher and the quality was lower than in neighboring areas because of a combination of three factors: Rents was paid by different forms of welfare payments, lack of alternatives because of queues to other areas and because some tenants saw an advantage in the “no-question“ asked policy that the slumlord followed. It is further argued that the property owner found this slum-strategy as profitable either because the hoped to find a “bigger fool” to sell to and because the decision makers in the company had not invested their own money. Both tenants and investors were in the end losers, but not the company managers.Practical and social implications: The Swedish legal framework is to a large extent based on the idea that tenants should take action when there are problems. For several reasons the tenants in the area did not do that and it indicates that a more active role for the local authorities is necessary.Originality: The article focus on an interesting case that most people thought could not occur and tries to explain this within a framework of rational actors.

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