The Swedish real estate market is generally regarded as being transparent as well as liquid, and is well known internationally for providing an overall high quality investment environment. The transaction process, with the majority of commercial real estate transfers in Sweden being made through share transfers, allows for a great amount of flexibility as there are e.g., no notarial requirements.

Real estate legislation in Sweden is governed by several key laws and regulations that cover various aspects of real estate ownership, transfer, and use. Statutory provisions entail, for example, that an agreement on asset transfer of real estate must be made in writing to be valid and enforceable and as a consequence option agreements to acquire or sell real estate by virtue of an asset transfer are not enforceable.

Real estate is defined as the actual ground which is divided into properties either horizontally or both horizontally and vertically. Buildings and other fixed installations are typically seen as an integral part of the real estate as further described in item 7 below. The Swedish Mapping, Cadastral and Land Registration Authority (Sw. Lantmäteriet) keeps a register of both real estate and the registered owners of real estate which is available for public inspection as further described in item 4 below. It should be noted that the correctness of the real property register is guaranteed by the state.

Leases for premises are common on the Swedish real estate market, ranging from small offices to large industrial complexes. Swedish lease law is characterized by a strong protection for the tenant. Common terms of Swedish leases are described in item 18 below.

The main legislation relating to real estate ownership includes:

• Swedish Land Code (Sw. jordabalken (1970:994)): The Swedish Land Code establishes rules on ownership and transfer of, as well as third party rights (including, inter alia, site leaseholds, leases for premises, land leases, easements, and mortgages) in relation to, real estate.
• Swedish Planning and Building Act (Sw. plan- och bygglagen (2010:900)): The Swedish Planning and Building Act establishes rules on use and development (including, inter alia, construction, renovation, alterations, and demolition of buildings) of real estate.
• Swedish Real Property Formation Act (Sw. fastighetsbildningslagen (1970:988)): The Swedish Real Property Formation Act establishes rules on formation (including, inter alia, subdivision, partition, and amalgamation) of real estate.

No significant new laws which materially impact real estate investors and lenders have come into force since December 2024.

As for the future, there is a proposal for new legislation under which asset and share acquisitions of real estate, made by non-EES entities or EES entities controlled by non-EES entities, will require prior approval by the authorities. The purpose of the proposed legislation is to protect real estate of significance for the Swedish military and/or civil defence. It is also suggested that the government shall have a pre-emptive right to real estate of significance for the Swedish military and/or civil defence. Furthermore, a new piece of legislation is being proposed that would grant municipalities a pre-emptive right to real estate in instances where an acquisition of the real estate by the municipality could prevent organized crime. The legislation proposed as set out above is suggested to enter into force on 1 July 2026.

The actual ownership is proved by the duly signed real estate transfer documents. In addition, the Swedish Mapping, Cadastral and Land Registration Authority (Sw. Lantmäteriet) keeps a register of the registered owners (Sw. lagfarna ägare) of real estate which is available for public inspection. With a few exceptions the state warrants the correctness of the register.

There are no general restrictions on owning real estate in Sweden. Certain acquisitions of real estate are, however, subject to a requirement for prior approval. As an example, transfers of real estate on which protected operations are conducted, e.g., critical infrastructure or public services, may be completed only upon prior approval by the Swedish Inspectorate of Strategic Products (Sw. Inspektionen för strategiska produkter). In addition, certain transfers of agricultural real estate by private individuals to legal entities require prior approval from the County Administrative Board (Sw. Länsstyrelsen). As described in item 3 above, new legislation as to approvals of certain acquisitions has been proposed.

Proprietary interests in real estate can be created in Swedish real estate by virtue of ownership (freehold) and site leaseholds (Sw. tomträtt). Other rights may, however, be created, as described in item 14 below.

• Ownership (freehold): Ownership grants the real estate owner an exclusive right to dispose of all aspects of the real estate for an unlimited period of time.
• Site leaseholds: Site leaseholds are let by the state or a municipality by virtue of a site leasehold agreement and grant the site leaseholder, subject to payment of a site leasehold fee, a right to use the real estate for a certain purpose. The rights of a site leaseholder are in many aspects similar to those of a real estate owner, and a site leaseholder has inter alia an unrestricted right to assign, mortgage, and grant usufruct rights to third parties in the site leasehold. Site leaseholds are held for a certain period at a time (no less than 20 years as regards non-residential site leaseholds) and may, in limited and unusual situations, be terminated at the end of a term by the real estate owner subject, unless otherwise agreed in the site leasehold agreement, to payment of a compensation to the site leaseholder.

Buildings are, as a main rule, integral parts of the real estate, entailing that the owner of the real estate is also the owner of the buildings located thereon. If a building, however, is erected by, or on behalf of, a third party (e.g., a land lessee by virtue of a land lease), the ownership of the real estate and the building will be separate. Instead, the building will, if erected by, or on behalf of, a third party, constitute personal property of which the third party retains ownership.

Commercial real estate is usually owned by special purpose vehicles in the form of limited liability companies as share transfers of real estate, while not being subject to stamp duty, should generally be possible to carry out without giving rise to any income tax consequences as further described in item 17 below. In order to facilitate transferability, such companies, whose operations generally are limited to owning and managing the real estate without having any employees, typically own only one (1) real estate each. 

The Swedish legal due diligence process is structured around the principle that a buyer, regardless of acquiring real estate or personal property, is not allowed to make any claims for loss based on circumstances which were, or should have been, known by the buyer when entering into the transfer agreement.

When transferring commercial real estate, the seller therefore usually provides information about the target company and the target real estate in a virtual data room whereby such data room will form the basis of the buyer’s due diligence and, consequently, its knowledge. Thus, the buyer is assumed to have full knowledge about, and is unless otherwise explicitly stated not allowed to make any claims for loss based on, circumstances included in the data room (regardless of whether the buyer conducts an actual due diligence of such circumstances).

The scope of the legal due diligence varies from one transaction to the next. The below items are, however, typically found to be within scope when conducting a legal due diligence of a target company and a target real estate:

• Review of ownership of the target company and the target real estate.
• Review of zoning plans and building permits pertaining to the target real estate.
• Review of leases for premises, land leases, easements, and other encumbrances pertaining to the target real estate.
• Review of corporate documentation and business agreements pertaining to the target company.

In addition to the legal due diligence, a buyer will typically retain technical, environmental, tax, and financial consultants to conduct specific due diligence in order to assess the target company and the target real estate. It should be noted that, as a matter of market practice, the technical condition of buildings is generally not warranted by the seller unless the building is newly built, but will have to be addressed specifically in the transfer agreement.

There are no legal issues that cannot be covered by legal diligence. However, depending on the transaction, it may be relevant to exclude certain matters with potential legal implications from the legal due diligence or to consider such circumstances as part of e.g., financial or technical due diligence. This could for example be environmental, tax or insurance matters, which may have also a legal implication.

The process of transferring commercial real estate, which is typically done by virtue of a share transfer as described in item 12 below, is highly tailored on a case-by-case basis considering inter alia who is initiating the transfer process, the number of potential buyers, the timeline for completion of the transfer as well as other preferences of the seller. Following the signing of a letter of intent between the seller and the potential buyer, typical steps in a process of transferring commercial real estate include:

• Step 1 (Due diligence): The potential buyer performs its due diligence. The seller might, in parallel, initiate certain intra-group restructuring measures pertaining to the target real estate.
• Step 2 (Negotiation/Signing): The seller and the buyer negotiate and sign a transfer agreement which could be either a direct real estate transfer agreement or a share transfer agreement. For practical reasons, it is common to have separate signing of the transfer agreement as per this step 2 and closing as per step 3 below.
• Step 3 (Closing): The transfer is completed and the buyer takes possession of the real estate in exchange for inter alia paying the purchase price. Upon closing, liability in its entirety also passes to the buyer. Depending on what has been agreed in the transfer agreement, especially in the risk and insurance provisions, liability may, however, to some extent pass to the buyer already at signing as per step 2 above. As to direct real estate transfers, the transfer is generally completed by the seller’s issuance of a purchase deed on the closing date whereas a share transfer is ultimately completed by registration of the buyer as the owner in the target company’s share register and, as applicable, share certificates.
• Step 4 (Warranty period): The warranty period, i.e., the period during which the seller might be held responsible for any breach of warranties under the transfer agreement, commences. In a commercial real estate transfer, the typical length of the warranty period, save for fundamental, tax, and environmental warranties, ranges between 12–24 months.

Both forms of transfer occur, however, the absolute majority of transfers of commercial real estate are completed by virtue of a share transfer. Share transfers are more common, partly due to that they can generally be carried out without giving rise to any income tax consequences, as further described in item 17 below, and since they are not subject to any stamp duty. 

As for direct transfers of real estate, income associated with the real estate which refers to the period from and including the closing date are, under Swedish law, allocated to the buyer. The parties are, however, free to agree on other principles for allocation of income associated with the real estate in the transfer agreement. As for share transfers of real estate, the parties generally apply the same principles.

The common rights, interests, and burdens that can be created or attach over real estate include:

• User rights: User rights to real estate by way of leases for premises and land leases can be created over real estate. Leases for premises and land leases are protected inter alia by being valid against a new owner of the real estate provided that the lessee has gained access to the premises or land and that the agreement is in writing, or by being reserved for by the transferor at the time of transfer. Although leases for premises and land leases are the most common user rights, other user rights to real estate may also be created.
• Easements: An easement is a legal right that allows an owner of one real estate to use another person’s real estate, or a building or facility situated on that real estate, for a specific purpose. Under Swedish law, an easement is intrinsically connected to the real estate itself. This means that it burdens one real estate (the servient real estate) whilst benefiting another (the dominant real estate). Upon transfer of the real estate, the easement will continue to apply, inter alia, if the easement has been registered in the real property register. Easements may only be established for purposes that are of permanent and of lasting importance to the dominant real estate. Easements can be created either voluntarily through a written agreement, or by the Swedish Mapping, Cadastral and Land Registration Authority (Sw. Lantmäteriet) in a land survey. Easements are often registered in the real property register as they, if registered, remain valid in relation to a new owner of the real estate.
• Utility easement: A utility easement (Sw. ledningsrätt) allows the holder to use someone else’s land to install and maintain utilities such as power lines and water pipes. It can only be granted, as well as, terminated by the Swedish Mapping, Cadastral and Land Registration Authority in a land survey.

In addition, burdens can be created over real estate by the issuance of mortgage certificates as further described in item 24 below. Limitations on transfers are possible under Swedish law, albeit unusual.

A split of legal and beneficial ownership of real estate is not recognised under Swedish law.

The ultimate beneficial owners of real estate are indirectly disclosed as the direct owner of real estate, as described in item 4 above, must be registered in the real property register and the ultimate beneficial owner of an entity, or the absence thereof, must be registered with the Swedish Companies Registration Office (Sw. Bolagsverket).

Ownership of commercial real estate is, with certain exceptions, subject to an annual property tax typically, depending on its use, calculated as 0.5–1.0 per cent of the real estate’s taxable value (which is a value that in theory should correspond to 75 per cent of the real estate’s market value, allocated by the Swedish Tax Agency (Sw. Skatteverket).

An asset transfer of real estate between two (2) limited liability companies should result in a taxable capital gain or loss for the seller on the difference between the purchase price and the tax book value (which is subject to corporate income tax currently at a rate of 20.6 per cent). An asset transfer between such entities is also subject to stamp duty at a rate of 4.25 per cent of the higher of (i) the agreed transfer price; and (ii) the real estate’s taxable value. A share transfer of real estate through a disposal of shares in a real estate holding company should generally be possible to carry out without giving rise to any income tax consequences under the Swedish participation exemption regime. A share transfer of real estate is not subject to stamp duty. It is generally also possible, ahead of an external transfer, to carry out a transfer of real estate to a Swedish limited liability company at tax book value (i.e., generally below market value) without giving rise to any Swedish income tax consequences. In such a transfer, stamp duty should generally be calculated on the real estate’s taxable value.

The terms of commercial leases are to some extent limited by mandatory provisions in Chapter 12 of the Swedish Land Code (Sw. jordabalken (1970:994)) (the Swedish Rental Act) which is construed around the theory that the tenant is a weaker party in negotiations than the landlord and thus in need of statutory protection. The Swedish Rental Act hence includes statutory provisions on leases from which the parties may not deviate if such deviation would have an adverse effect on the tenant. A tenant may, consequently, unless otherwise stated opt to apply the mandatory terms of Swedish Rental Act instead of the terms included in the lease if the former terms are more favourable for the tenant. For example, if the parties agree on a shorter notice of termination period compared to what is set forth in the Swedish Rental Act, such notice of termination period may be applied by the tenant whereas the landlord will have to apply the notice of termination period set forth in the Swedish Rental Act. That being said, common terms of commercial leases include:

• Initial lease period, notice of termination period and prolongation period: The length of the initial lease period as well as termination periods and prolongation periods is usually stipulated in the lease. Commercial leases generally have an initial lease period of at least a couple of years, whereby, as a consequence of the Swedish Rental Act, the notice of termination period is typically 9 months or more. Unless otherwise is agreed by both parties, the terms and conditions of the lease remain unchanged during the lease period.
• Description of the premises and permitted use: Commercial leases typically include a drawing that identifies the premises, as well as provisions regarding allocation of responsibility for potential adaptions to be made to the premises before the commencement date. In addition, the permitted use of the premises, e.g., office or industrial, is stated in the lease.
• Rent and rent adjustment: The rent must be stated in the lease and it is market practice that the rent is subject to annual adjustments in accordance with changes in the Swedish Consumer Price Index.
• Consumption expenses: Commercial leases generally address payment of consumption expenses pertaining to e.g., electricity, and the tenant typically pays for its consumption either directly to the landlord or by having its own subscriptions.
• Provisions on maintenance: Commercial leases generally address allocation of maintenance responsibility. In general, the external maintenance of the building remains with the landlord and internal maintenance of the premises is the responsibility of the tenant.

It could be noted that certain matters are regulated by the Swedish Rental Act, e.g., compensation in the event of termination, and therefore generally not included as terms and conditions of a lease. Tenants under commercial leases have a so called indirect right of tenure (Sw. indirekt besittningsskydd) which in some situations entitles the tenant to financial compensation in the event of termination by the landlord at the end of the lease period.

There are no regulatory controls on the terms of commercial leases. However, if the landlord requests unreasonable conditions for a prolongation, e.g., a rent exceeding market value, the tenant may, with reference to its indirect right of tenure mentioned above, be entitled to financial compensation if the lease as a result thereof is not prolonged and the tenant has to vacate the premises.

In the event of a material tenant breach of a commercial lease, the landlord is, in certain situations stipulated under Chapter 12 of the Swedish Land Code (Sw. jordabalken (1970:994)) (the Swedish Rental Act), entitled to immediately terminate the lease. The breaches that entitle the landlord to immediate termination include inter alia delay in rent payment for more than two (2) business days, subletting the entire premises without landlord’s consent or regional rent tribunal’s approval, neglected maintenance and failure to fulfil a contractual obligation which is considered to be of particular importance to the landlord. Where the tenant is late with rent payments, the tenant may, however, recover the tenancy by paying within two (2) weeks from the landlord’s termination.

Further, if the tenant has neglected its obligations to a severe extent, although not to such an extent it would qualify as ground for immediate termination of the lease, it could result in the landlord being entitled to refuse extension of the lease after the end of the lease period. If so, the tenant is not entitled to compensation under the indirect right of tenure (Sw. indirekt besittningsskydd) as described in item 18 above.

The Swedish Planning and Building Act (Sw. plan- och bygglagen (2010:900)) forms the basis of the public sector’s control of the building development. Use, planning and zoning of real estate are regulated by municipalities in zoning plans. Zoning plans generally set out the permitted use of real estate and building rights, including restrictions on e.g., height of buildings. In addition, the municipalities adopt comprehensive plans that cover the entire municipality and present the basic characteristics of the intended use of land and water areas, how the build environment is to be used, etc. The municipality can also adopt area regulations within limited areas not subject to zoning plans in order to, for example, regulate the principles of land and water use to ensure that the objectives of a comprehensive plan are met.

In Sweden, the “polluter pays principle” applies, meaning that the polluter – i.e., primarily the operator – should bear the costs of decontamination and preventing environmental contamination. Under certain circumstances, inter alia cases involving storage of waste, a real estate owner can also be considered as the operator and thus be liable for decontamination. An acquirer of real estate, that does not contribute to the environmental contamination as such, and is therefore not the operator, can also be deemed liable for the decontamination of environmental contamination on the real estate. This applies if the real estate was acquired after 31 December 1998, and the acquirer was aware of, or should have been aware of, the contamination at the time of acquisition. A real estate owner’s liability is secondary to that of the polluter; a real estate owner is liable only if the polluter cannot be identified or cannot pay for the decontamination.

There is a legal requirement for an energy declaration (i) for certain public buildings; (ii) for buildings that are wholly or partly let under a lease; (iii) for buildings constructed after 2006; and (iv) in connection with transfer of a building. The energy declaration specifies the building’s energy class, ranging from A to G, based on its energy performance compared to the permitted energy performance for a new building. Exemptions apply for e.g., industrial premises. Energy declarations are made by certified energy experts on behalf of building owners.

The Swedish National Board of Housing, Building and Planning (Sw. Boverket) sets minimum requirements for a building’s energy performance in its building regulations through a primary energy figure. This figure also determines the energy class assigned to a building in its energy declaration. These regulations apply to construction of new buildings and, in some situations, renovation, extension, and alterations of buildings.

The Energy Performance of Buildings Directive will be implemented in Sweden by 29 May 2026, at the latest, and will entail new requirements relating to energy performance and energy declarations. Updates to the regulations of the Swedish National Board of Housing, Building and Planning, and other legislation related thereto, is ongoing and will be presented in 2026.

Expropriation of real estate is possible but very unusual in Sweden. The rules governing expropriation are set out in the Expropriation Act (Sw. expropriationslagen (1972:719)) and expropriation is only permitted if made in order to achieve certain public objectives. Compensation equal to the real estate’s market value plus 25 per cent is normally payable.

A municipality may, which is a more common procedure than expropriation although still unusual unless rezoning is at hand, also redeem land under the Swedish Planning and Building Act (Sw. plan- och bygglagen (2010:900)) if inter alia the permitted use under the applicable zoning plan is public use and the municipality is to be the principal of such land. Compensation is payable under the Expropriation Act meaning market value plus 25 per cent.

Furthermore, under for example the Swedish Real Property Formation Act (Sw. fastighetsbildningslagen (1970:988)), compulsory land access for public purposes may in limited situations be accomplished under procedures similar to expropriation, in which case the deprived real estate owner is entitled to compensation.

It is possible to create mortgages over real estate. Following the issuance of mortgage certificate(s) as described in item 25 below, a mortgage may be created by pledging the mortgage certificate(s). A mortgage certificate can be either physical or digital and represents a certain amount.

In order to pledge a physical mortgage certificate, i.e., create a mortgage, the certificate is delivered to the pledgee. In order to pledge a digital mortgage certificate, the pledgee is registered as holder of the mortgage certificate. The mortgages are protected by either physically holding the mortgage certificate or by registration and the pledge may be enforced under the conditions of the pledge agreement.

Issuance of new mortgage certificates, which is vital in structuring a mortgage security over real estate, is subject to stamp duty calculated as two (2) per cent of the amount of the mortgage certificate.

Once issued, mortgage certificates may, without any additional stamp duty being triggered, be reused or transferred by the lender and/or the real estate owner (as applicable) in connection with e.g., a refinancing and/or transfer of real estate.

Creation of a trust structure for mortgage security over real estate is not recognised under Swedish law.