News 21 April 2020

Regulation on state aid for rental discounts

On 16 April 2020, the Swedish Government adopted a regulation that enables landlords to receive compensation from the central government for part of such rental discounts granted to commercial tenants operating in vulnerable sectors. The purpose of the regulation is to promote voluntary agreements on rental discounts between landlords and tenants.

The aid means that the central government covers 50 percent of an agreed rental discount amounting to no more than 50 percent of the agreed fixed rent during the period 1 April – 30 June 2020. Thus, the state aid cannot amount to more than 25 percent of the fixed rent during the aforementioned time period. Should a landlord grant a rental discount of 50 percent of the fixed rent, the central government will compensate half of that rental discount (i.e. 25 percent of the fixed rent). The remaining 25 percent of the fixed rent is covered by the landlord, while 50 percent of the fixed rent is paid by the tenant.

The aid is aimed at tenants within sectors such as durable consumer goods, hotels, restaurants, and certain other business activities. A complete list of the sectors covered by the aid can be found in the regulation. Read more here.

In order to qualify for the aid, the rental agreement must have been concluded no later than on 1 March 2020 and the rent shall be, in whole or in part, set at a fixed amount.

The parties’ agreement on rental discount shall have been concluded no later than on 30 June 2020 and only cover a rental discount. It is a condition for receiving aid that other terms remain unchanged.

The aid is also limited to a maximum amount of EUR 800 000 for “the same tenant”. Thus, aid granted to other landlords with respect to the same tenant shall be taken into consideration.

If aid is paid out and incorrect information was provided in the application, or if the aid was otherwise incorrectly granted or overpaid, the landlord risks becoming liable to repay the aid under certain circumstances.

The landlord must apply for aid no later than on 31 August 2020. The application shall be prepared using a specific form that shall be submitted to the County Administrative Board. Applications may only be submitted after 1 July 2020.

Despite the fact that the regulation has been published in its entirety, there is some uncertainty surrounding the scope and design of the aid, such as how the definition of ”tenant” is used with respect to groups, and what may be included in “fixed rent”. The Government has authorized the National Board of Housing, Building and Planning (Boverket) to issue directions on the enforcement of the regulation on state aid, which will hopefully answer any lingering questions.