Renting an office: checklist and the commercial lease

Renting an office is one of the bigger decisions a company makes. The lease often runs for three to five years, locks in a large share of your fixed costs and shapes how you can grow. This guide covers what you need to know before you rent office space in Sweden: needs analysis, budget and total cost, what a commercial lease (lokalhyresavtal) and Chapter 12 of the Swedish Land Code actually govern, VAT on commercial rent, security of tenure, notice periods, index clauses, tenant fit-out and deposits. It ends with a checklist for the move itself.

Short answer: Before you sign, make sure you know how much space you need, what the total annual cost will be (including supplements and VAT), how long you are bound and which notice period applies, whether you have security of tenure or have waived it, how the rent is indexed and who pays for adapting the premises.

1. Needs analysis before you rent an office

Start with how you work today and how you expect to work in three years, not with how many desks you had in the old space.

• Occupancy: How many people are in on an ordinary Tuesday, and how many on a full day?
• Spaces: How many meeting rooms, focus rooms and collaboration areas do you need? Do you need a reception, storage or a lab?
• Growth: How many more (or fewer) will you be during the lease? Can you add space in the same building?
• Location: Where do your people live, and how do clients get there? Public transport often matters more than the address.
• Building requirements: Accessibility, bike storage, environmental certification, ventilation, daylight, a separate entrance.

With hybrid work you often need far fewer workstations than employees. We cover how to size the space in our guide to how much office space you need per employee. Also consider whether a flexible office or serviced office suits you better than a lease of your own, especially if you are fewer than 10–15 people or growing fast.

2. Budget: what does it cost to rent office space?

The rent per square metre is only part of the cost. Always compare the total annual cost of each option.

Expect a period of double rent while the old and new leases overlap. What office space actually costs in Stockholm is covered in our overview of Stockholm office prices.

3. The commercial lease and Chapter 12 of the Land Code

A commercial lease is governed by Chapter 12 of the Swedish Land Code (jordabalken), known as the Tenancy Act (hyreslagen). The chapter applies to every agreement where a building or part of a building is let for payment, and under the act a commercial premises (lokal) is simply any unit that is not a dwelling (Chapter 12, Section 1 b).

The key point is that the law protects commercial tenants far less than residential tenants. Many rules can be contracted away, and the lease governs most of day-to-day life. For commercial premises the law covers:

• Term and termination (Sections 3–8): when and how the lease can be terminated.
• How rent is set (Section 19): that rent must be a fixed amount, and when index clauses are allowed.
• Condition and defects (Sections 9–16): the landlord's responsibilities and the tenant's right to a rent reduction.
• Assignment and subletting (Sections 32–40): when you can transfer the lease to someone else.
• Forfeiture (Section 42): when the landlord may terminate early, for example for unpaid rent.
• Indirect security of tenure (Sections 56–60): the right to compensation if the landlord will not renew.

Most of what affects your finances is therefore in the lease itself: rent, supplements, indexation, maintenance responsibilities, fit-out, security and renewal. Many landlords use the standard form from Fastighetsägarna (the Swedish property owners' association), but its terms are negotiable.

What the lease should contain, clause by clause, and a free template are in our guide to commercial leases.

4. VAT on commercial rent and voluntary taxation

Letting property is exempt from VAT as a main rule. The landlord can, however, choose to charge VAT on the rent through voluntary taxation (frivillig beskattning, previously called frivillig skattskyldighet). This requires you as the tenant to carry on VAT-liable business in the premises on a permanent basis (Swedish Tax Agency on letting property and voluntary taxation).

In practice:

• The landlord opts in by invoicing the rent with VAT. The rate is 25 percent.
• If you are VAT-registered you deduct the VAT on the rent as input VAT, so it is usually cost-neutral for you.
• If your business is exempt from VAT, such as banking, insurance or healthcare, the premises normally cannot be covered. The landlord then cannot deduct VAT on its costs for the premises and often charges a higher rent to compensate.

Check whether the rent in the lease is stated with or without VAT, and whether the lease makes you liable if a change in your business means the landlord loses the right to voluntary taxation.

Worked examples and the rules for sublets are in our guide to VAT on commercial rent.

5. Security of tenure for commercial premises

Commercial tenants in Sweden have indirect security of tenure. You have no right to stay if the landlord terminates the lease, but in certain cases you are entitled to financial compensation. The rules are in Chapter 12, Sections 56–60:

• Protection applies once the tenancy has lasted more than nine consecutive months.
• If the landlord terminates and refuses to renew, or demands terms you do not accept, you are entitled to compensation unless one of the exceptions in Section 57 applies. Exceptions include serious breach by the tenant, demolition or major renovation where you are offered acceptable alternative premises, or the landlord's demanded terms being reasonable and in line with market rent.
• The compensation is at least one year's rent under the terminated lease, plus compensation for further loss to a reasonable extent (Section 58 b).
• The landlord's notice must state the terms for renewal or the reason for refusing it. If you want compensation you must refer the dispute to the regional rent tribunal (hyresnämnden) for mediation within two months of the notice (Section 58). Miss the deadline and you lose the right to compensation.
• The tribunal can postpone the move-out date by up to two years from the end of the lease (Section 59).

Waiving security of tenure

The parties can agree to waive security of tenure, but only in a separate document, not as a clause in the lease. If the waiver is signed before the tenancy has lasted nine months it must be approved by the rent tribunal. There are exceptions for leases of up to five years where the landlord will run its own business in the premises, or for sublets (Section 56). Waivers are common for sublets and short leases. Think it through before you sign: without protection you have no right to compensation if you have to leave when the lease ends.

The full walkthrough, with deadlines and exceptions, is in our guide to security of tenure for commercial premises.

6. Notice periods for commercial premises

Notice periods for commercial premises are longer than for homes. Unless otherwise agreed, Chapter 12, Section 4 provides:

A fixed-term lease that has lasted more than nine consecutive months must always be terminated to end (Section 3). If nobody gives notice in time it is extended, indefinitely under the law or for the period stated in the lease. Standard leases often contain a clause extending the lease by three years at a time, so a missed notice date can bind you for several more years. Notice must be in writing if the tenancy has lasted longer than three months (Section 8).

Put the last notice date in the calendar with a good margin. If you want to renegotiate the rent rather than move, you terminate the lease for amended terms under Section 58 a.

How to give notice correctly and how renegotiation works are in our guide to terminating a commercial lease.

7. Index clause

An index clause raises the rent every year, almost always linked to the consumer price index (KPI). For commercial premises, rent may only be set on such a basis if the lease is for a fixed term of at least three years (Chapter 12, Section 19). That is one reason commercial leases are so often signed for three years or more.

Look at:

• Base year and month: From which level is the change measured?
• Share: Is the whole base rent indexed with the full CPI change, or only part of it?
• Floor: Many clauses say the rent never falls, even if CPI does.

With high inflation an index clause can raise the rent more than you planned within a few years. Include it in the budget.

How the index supplement is calculated and what you can negotiate are in our guide to rent indexation.

8. Tenant fit-out

Tenant fit-out (hyresgästanpassning) is the work needed to make the premises suit you: walls, meeting rooms, kitchenette, lighting, finishes, technology. Negotiate three things:

1. Scope: Get a written description and drawing of what the landlord will build.
2. Who pays: The landlord can fund the fit-out and recover it through the rent over the lease, or you pay all or part upfront. A longer lease often gets you more fit-out at no extra cost.
3. Reinstatement: If the lease requires you to restore the premises when you leave, that can be an unexpected cost five years from now.

Fit-out takes time. Design, any building permit and construction can take several months. For how to lay out the space for everyday work, see our guide to office design and furnishing.

Cost models, a worked example and what the lease should say are in our guide to tenant fit-out.

9. Deposit and bank guarantee

Landlords almost always want security for the rent, especially from young companies. Common forms:

• Deposit: You pay an amount that is returned when the lease ends.
• Bank guarantee: The bank guarantees the amount for a fee, often tying up some of your liquidity.
• Parent company or personal guarantee: Common for subsidiaries and smaller companies.

The size is negotiated and is often a few months' rent. Check when the security is returned and whether it is indexed along with the rent.

10. Office move checklist

9–12 months before

• Check the last notice date in your current lease and give written notice.
• Do the needs analysis and set a budget.
• Start searching and attend viewings.

6–9 months before

• Compare options on total cost, not just SEK/sqm.
• Negotiate terms: rent, indexation, fit-out, security, renewal.
• Have someone experienced review the lease and any waiver of security of tenure.
• Sign the lease and order the fit-out.

2–6 months before

• Follow up the fit-out and plan furniture, technology and broadband.
• Book movers, access cards, alarm and signage.
• Notify the Companies Registration Office (Bolagsverket), the Tax Agency, your bank, clients and suppliers of the new address.

Final month

• Move, test the technology and inspect the new premises on move-in.
• Restore and clean the old premises as the lease requires and do a move-out inspection.

If you are looking in Stockholm, there is a step-by-step walkthrough in our guide to renting an office in Stockholm.

Frequently asked questions

What should you consider when renting an office?

Start from your actual need for space and location, calculate the total annual cost and read the lease carefully. The terms that most often surprise tenants are the notice period, automatic renewal, the index clause, reinstatement of the premises and waivers of security of tenure.

How long is the notice period for commercial premises in Sweden?

Unless otherwise agreed, a fixed-term lease of more than nine months must be terminated at least nine months before the term ends. An indefinite lease can be terminated to the turn of the month following nine months. Notice must be given in writing.

Is there VAT on office rent in Sweden?

Commercial rent is VAT-exempt as a main rule, but the landlord can opt for voluntary taxation and charge 25 percent VAT if you carry on VAT-liable business in the premises. If you are VAT-registered you deduct the VAT, so it usually does not affect your cost.

Do commercial tenants have security of tenure in Sweden?

Yes, an indirect security of tenure once the tenancy has lasted more than nine months, unless you have waived it in a separate document. It does not give you a right to stay, but it does entitle you to at least one year's rent in compensation if the landlord terminates without an acceptable reason.

How long does it take to find and move into a new office?

For a smaller office without major building work, three to six months is often enough. If you need fit-out or are more than a couple of dozen people, allow nine to twelve months and start well before your last notice date.

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