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Indirect security of tenure

When you rent commercial premises, you as a tenant often have security of tenure (besittningsskydd). What does that mean in practice? You may be entitled to compensation if the landlord chooses to terminate the lease. This applies to both primary tenants and subtenants. The rules differ somewhat depending on how the space is let.

What is indirect security of tenure?

Indirect security of tenure gives the tenant a right to reasonable compensation if the tenancy is not extended. This applies under Ch. 12, sections 57–60 of the Swedish Land Code (Jordabalken, “JB”) for as long as the tenancy has lasted more than nine months, provided the tenancy has not been forfeited. The compensation should reimburse the tenant for the economic loss arising because the tenancy was terminated for vacation of the premises or for a change of terms. As a general rule the compensation corresponds to at least one year’s rent, but it may be higher depending on the loss incurred. Security of tenure does not apply when:

  • The tenancy has not lasted more than nine months in a row.
  • The tenant has failed to meet their obligations.
  • The premises are to be demolished or altered to such an extent that they can no longer be used in the same way.
  • The landlord has justified grounds to terminate the agreement.
  • The tenant terminates the agreement themselves under specific rules.
  • Security of tenure has been contractually waived.

Contracting out of the protection

Indirect security of tenure can be waived through a specially drawn-up agreement between landlord and tenant. The agreement must always be set out in a separate document.

If the agreement is entered into before security of tenure has arisen, that is, before the tenancy has lasted nine months, approval from the rent tribunal (hyresnämnden) is required as a general rule. In some situations no approval is needed, for example when the landlord plans to use the premises for their own business or when a sublet depends on the primary lease ending.

For commercial premises, an agreement to waive security of tenure normally applies for at most five years.

Subletting

The rules on indirect security of tenure also apply when commercial premises are sublet. The relationship between the primary tenant and the subtenant is therefore governed by the same basic principles as in an ordinary commercial letting.

If the subtenant has rented the premises for more than nine months in a row, indirect security of tenure normally arises. That can give a right to compensation if the tenancy ends without the agreement being extended.

When a sublease is signed, the parties may agree that security of tenure shall not apply. Such an agreement must be set out in a separate document.

If the agreement is entered into before the tenancy has lasted nine months, approval from the rent tribunal is required as a general rule. No approval is needed when the reason is that the primary lease will end and the premises must therefore be returned to the property owner.

For commercial premises, an agreement to waive security of tenure normally applies for at most five years.

It is also possible to waive security of tenure if the landlord plans to use the premises themselves, for example when the property owner plans to move their own business in later. Even when the premises are sublet and the primary lease is to end, security of tenure may be waived directly.

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