By Dominic Chopping

STOCKHOLM--Sweden's government collapsed Monday after Prime Minister Stefan Lofven lost a no-confidence vote, leaving him with a choice of either resigning or calling a snap election.

Mr. Lofven last week lost the backing of the country's Left Party --whose support he replies upon to govern-- over proposals to scrap controlled rents in newbuild housing.

The proposals would allow landlords of newly built housing to charge market rates to tenants, sparking the ire of the Left Party who want to maintain the current system of rents set through collective bargaining agreements between tenant associations and landlords.

Mr. Lofven's centre-left minority government was formed in early 2019 after four months of political deadlock following a 2018 election that produced no clear winner.

Mr. Lofven's Social Democratic Party formed a coalition with the Green Party, with parliamentary backing from the Centre and Liberal parties, after signing a joint agreement which set out a policy framework and made concessions to the Liberal and Centre parties in return for them abstaining from voting against his re-election.

One of the concessions was a promise to allow landlords to set rents, a draft of which was proposed earlier this month, and which triggered the Left party to withdraw its support.

The Prime Minister can now either resign and let the speaker task parties with trying to form a new government, or call a snap election.

General elections scheduled for September next year will go ahead as planned either way. Mr. Lofven has a week to decide but has called a press conference for 0930 GMT on Monday.

Write to Dominic Chopping at dominic.chopping@wsj.com

(END) Dow Jones Newswires

June 21, 2021 05:10 ET (09:10 GMT)

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