Sweden's Left Party threatens to topple govt over rent reform

STOCKHOLM (Reuters) - Sweden's centrist government came under threat on Friday after the Left Party vowed to bring it down over the prospective abolition of rent controls on new residential housing.

The Left Party threat came after the government received a report into the reform of Sweden's highly regulated and much debated rent market, proposing that tenants and landlords negotiate rent between them and that rents subsequently follow the consumer prices index.

"This is a disaster for Sweden's tenants," Left Party leader Nooshi Dagostar told news agency TT. "This means sharply higher rents and a paradigm change for the housing market."

Dagostar reiterated a threat to join forces with the right-wing opposition to bring down Prime Minister Stefan Lofven's government if the proposal was brought to parliament.

Sweden's parliament is fragmented and the Social Democrats and the Greens Sweden form a fragile government dependent on the support of two small centre-right parties. General elections are scheduled for next year.

However, Minister for Justice Morgan Johansson dismissed the prospect of raised rents for large numbers of people.

"All the tenants who have become anxious after the recent agitation can breathe a sigh of relief. This does not affect them," Johansson told a news conference, adding he wanted minor changes to the proposals before putting them to parliament.

Rents in Sweden are set in a form of collective bargaining and people opposed to the system claim it makes it unprofitable to build new for-rent apartments. Johansson said the reform would only relate to apartments built after 2022.

Sweden has had a housing shortage for decades and the central bank has repeatedly described the housing market as dysfunctional.

(Reporting by Johan Ahlander; Editing by David Holmes)

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