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Proposal for enhanced control of foreign property acquisitions

Real Estate Transactions

In December 2024, the government investigation "Enhanced Control of Foreign Property Acquisitions" (SOU 2024:84) was presented, proposing the introduction of a notification obligation for the transfer and lease of real estate that is of significant importance for national defense.

A new law requiring acquisition permits for buyers outside the European Economic Area (EEA) is proposed to be introduced on July 1, 2026. The law is suggested to apply to acquisitions of real estate as well as certain leases of real estate, such as acquisition of site leasehold, agricultural lease, residential lease, facility lease, and apartment lease. The law is also proposed to cover acquisitions of shares in private limited companies or interests in partnerships or associations, whose assets primarily consist of real estate, if the buyer gains decisive influence over the company or association through the acquisition. The buyer is proposed to be required to apply for an acquisition permit if, for example, the buyer is a natural person with citizenship in a state outside the EEA, a legal entity based in such a state, or a legal entity based in a state within the EEA, if an actor as mentioned above directly or indirectly holds at least 25 percent of the voting rights or exercises equivalent actual influence in the legal entity.

The investigation emphasizes that property ownership and the right to dispose of real estate have security policy implications, particularly concerning real estate adjacent to defense facilities, critical infrastructure, and strategic geographical areas. The proposal aims to prevent non-state actors from acquiring control over such areas through acquisition or right of use, thereby hindering authorities' operational capabilities. The investigation also highlights the risk that property acquisitions can be used for intelligence activities, sabotage, or other security-threatening measures against national defense. Current legislation provides the state with limited means to intervene in such transfers, which justifies the need for enhanced control mechanisms.

Applications for acquisition permits should be submitted to the permit authority, proposed to be the regional county administrative board responsible for the area where the property is located. The application must be submitted no later than one month after the acquisition, and the permit authority should make a decision within a timeframe of three to six months. The permit authority can decide to grant the permit for the acquisition or reject the application. The application should be rejected if the acquisition may harm essential national defense interests. If an acquisition permit is denied, the application is incomplete, or the buyer fails to apply within the timeframe, the acquisition shall be considered invalid. If no application is submitted, the permit authority shall have the right to impose a sanction fee ranging from 25,000 SEK to a maximum of 25,000,000 SEK.

In conclusion, the investigation emphasizes that current legislation is insufficient to protect national defense interests in property transfers and lease agreements, which is why a reform is deemed necessary.