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HOUSING

What you need to know when buying a home as a foreigner in Denmark

Finding a home to rent in big Danish cities is difficult, bordering impossible. So a lot of foreigners living in Denmark are looking at buying. We spoke to Steffan Reinel, partner at the Njord law firm, about how it works.

What you need to know when buying a home as a foreigner in Denmark
Houses in the Copenhagen suburbs. Photo: Mathias Løvgreen Bojesen/Ritzau Scanpix
Danish lender RealKredit on Monday began offering the cheapest mortgage in Danish history, so until the price of apartments shoots up as a result, this looks an ideal time to buy. 
 
But according to Reinel, foreigners buying property in Denmark should be extra careful, as getting it wrong can mean being forced to sell your property years after you’ve bought it, a fine as much as €3,000 and even a 30-day prison sentence.
 
 
“It’s dangerous to buy property in Denmark if you don’t have the necessary permit,” he said. “You have to be very sure that you are entitled to do it because otherwise it is you who are in trouble, not the seller.” 
 
When a foreigner buys a property, he or she has to make a declaration at the time of the purchase that they are entitled to buy it. Neither the estate agent managing the sale, nor the seller, are required to check that this is in fact the case. 
 
“If you have a seller who is very eager to sell to someone and a buyer is very excited about buying and doesn’t know the rules, there can be problems,” he said. 
 
READ ALSO: 
In every other European Union country, being an EU citizen is enough to qualify you to buy property. But not in Denmark. 
 
When the Danes joined the EU, they were so worried of wealthy Germans snapping up all their beloved cottages on Bornholm and the northern Jutland coast that they exacted an exemption from the EU’s ‘four freedoms’, covering movement of goods, people, services and capital. 
 
The five-year rule
 
As a result, even EU citizens are theoretically subject to a rule that you need to have been a resident in Denmark for five years. So if you are a German eyeing up a Bornholm cottage or a London billionaire looking for a Copenhagen crash pad, you are probably ruled out.
 
 
“It’s not related to citizenship, it’s related to residency,” Reinel explained of the five-year rule. “It doesn’t really matter what citizenship you have. You might be Indian, you might be German, but if you are a resident of Denmark then you are allowed to buy property in DK.” 
 
You also need to intend to continue staying in Denmark. This means that even if you are a foreign businessperson or diplomat posted to Denmark for six years, you might still not qualify as it is written in your contract that you do not intend to stay. 
 
Fancy a Copenhagen crashpad? Photo: Niels Ahlmann Olesen/Ritzau Scanpix
 
In practice, though, it is much easier for EU citizens to buy property, as long as they can demonstrate they are coming to Denmark for the purposes of work or setting up a business. 
 
“Say you came here teach samba, and rented a place to do it and have some income, basically you can do it from day one,” Reinel said of EU citizens. “But if it turns out after one year or more that this was not a real business, then you can be forced to sell your house.” 
 
You also risk a fine and prison sentence. 
 
Alexandra Lo Sardo, a ballerina at the Royal Danish Ballet who is originally from France, Linda Ligori from Italy, and Albertini Jeppe Augusto from Italy all said it had taken less than two weeks to buy a property when they did it. 
 
 
“The lawyer did all the work and the property passed over to me in less than 15 days … I even received the keys five days before the buying transaction had come to an end,” Ligori told The Local. 
 
“Permission is automatic for Europeans (less than two weeks),” Augusto said. “And after five years you can buy a second house too.” 
 
Getting an exception 
 
Even if you’re not an EU citizen, and haven’t been resident in Denmark for five years, it is still possible to buy a property in Denmark. But it requires getting an exemption from the The Department of Civil Affairs, part of the Danish Ministry of Justice. This is where you need expert legal advice, as the system is based on past practice and not on any firm legal criteria. 
 
“The exception is just phrased in law as ‘the ministry can give an exception’ and it does not say in what circumstances and why,” Reinel explained. “There are a lot of factors which could be part of the investigation, but what they evaluate is that you have a very strong connection to Denmark.”
 
That might include speaking fluent Danish, coming from the Danish-speaking minority in the north of Germany, having strong business connections to Denmark, or having Danish ancestors. It might also include marital status, and whether the applicant has children at school or daycare in Denmark. 
 
The guidance in English from the ministry is here on its website
 
Judy Schimper, from South Africa, said she had been able to buy a property in Copenhagen after living just eight months in the country. 
 
“I am non-EU (Africa) and had no issues. My lawyer got permission for me within two weeks. I didn’t have to do a language assessment,” she told The Local. 
 
Relaxing the rules? 
 
Recently, Norwegians, Swedes and Germans have been increasingly successful at buying properties even though they are not resident, leading the Danish People’s Party to call for a total ban on Monday. 
 
In 2007, only 54 permits were granted for foreigners purchasing holiday homes in Denmark, but in 2018, to the ire of many in the Danish media, there were 374 exemptions granted.
 
Karina Søndergaard, a lawyer at HjulmandKaptain who specializes in getting exemptions, said as many as three quarters of her clients were successful. 
 
But Reinel argued that the five-year rule was still quite difficult to get around for non-EU citizens and took at least two months. 
 
“You have to realize that the five-year rule is a very strict rule, and they normally would not give an exemption, so if you’ve been here for two years and you’re not an EU citizen, it’s tough.” 
 
Indeed, if you buy a house as a recently arrived non-EU citizen and find it too easy, you should demand to see the documentation that your lawyer has actually managed to secure the exemption. 
 
It is quite possible to purchase an apartment without having an exemption, simply by declaring that you have the right to do so, but this does not mean that you actually do. 
 
“All you have to do is to give the declaration saying that you are entitled to buy property because you fulfil the residency criteria,” Reinel said. “It is only if you don’t fulfil it that you have to apply to permission, but it could be illegal if it’s not true.” 

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PROPERTY

What you need to know about Denmark’s housing ‘energimærke’

Denmark uses a graded marking system for buildings including houses, indicating energy efficiency and giving important information to homebuyers.

What you need to know about Denmark’s housing 'energimærke'

The energy marking – called an energimærke in Danish – is an indicator of the amount of energy a building uses and is a form guidance that can be used by potential buyers of a property, the Danish Energy Agency (Energistyrelsen) explains.

In addition to being an easy-reference grading that is attached to a property, the system also provides an outline of valuable improvements that could be made to the building’s energy properties.

Houses, public buildings and business properties are all given an energy mark, but people hoping to become homeowners in Denmark are naturally most likely to be interested in how the system works for the first of these three categories.

A building must be given an energy marking whenever it is put up for sale or rented out. You’ll see the relevant letter on listings on estate agents’ websites, allowing you to compare the energy markings of different properties.

The marking given to a building can range from A to G, with A the best rating and G the worst.

The ‘A’ score is further divided into three sub-scores: A-2020, A-2015 and A-2010. The more recent the year, the better the rating. These were introduced after new types of building and low energy houses were developed and are usually only seen on new builds.

What do the letters mean?

The energy markings are based on calculations of the energy consumption of the property, which in turn indicates how efficient it is.

The marking is given following assessment by a consultant who takes measurements and looks at factors including the quality of the insulation, windows and doors and the heating system. Overall energy consumption is then calculated, factoring in standardised values for weather, number of occupants and use patterns.

It’s worth keeping in mind that this calculated energy consumption (beregnet forbrug) on which the energy marking is derived can be different from the actual consumption of the occupants.

For example, some people tend to save on energy use in their homes by switching off lights, taking cold showers and using appliances at night, while others leave windows open when the heating is on or have occupants with high-use habits, such as people who work from home or spend extended hours using desktop computers for gaming.

READ ALSO: How people in Denmark are changing their energy use to keep bills down

This means that the actual energy consumption of the house or building depends on who is using it. The energy marking is based on standardised, assumed consumption values. It provides information on the quality of the building, rather than on how it is used currently.

Additionally worth noting is that the energy used to supply a building is only part of the calculation when assessing the grade it should be awarded. Also factored in are the technical properties of the hardware, such as a water pump, installed in the building.

The type of energy used to supply the building and the way it is produced also plays a role. Electricity, district heating, oil, gas and firewood all have different ‘factors’ which are accounted for in the overall calculation. These values are not static: a building’s energy marking can change if it gets a new energy source as national or regional infrastructures or technology are changed.

These energy factors come from an EU building directive that forms the framework of Denmark’s energy marking system.

You can find the energy marking of any building in Denmark on the Energy Agency’s SparEnergi.dk website.

Why is the energy marking important when buying a home? 

A good energy marking tells you that a house or apartment is relatively cheap to heat and holds in heat well while also holding up to ventilation needs, real estate media Bolius notes.

It can also tell you that a building has efficient heating sources or something like solar panels, which will help give it a better grading.

The current climate of high energy prices mean that the energy marking can make a huge difference in your living costs. The same house heated by an ageing individual gas heater will be much less efficient – and have a lower marking – than one on the district heating network.

READ ALSO: European electricity prices soar as tough winter looms

Homes with good energy markings can often be sold for more than ones with worse ratings, if all other factors are equal.

Potential homebuyers should be interested in the energy rating of a house or building because it gives an idea of the condition of the property in terms of its energy efficiency: how well insulated and economical it is, how much it costs to heat up and how much electricity it is likely to use.

When houses are put on the market, sellers are obliged by law to provide an energy marking (with the exception of properties under 60 square metres, but a report can also be requested in these cases). Energy markings are valid for 10 years and can normally be reused within this timeframe, unless major changes are made to the building.

This means that a report is produced or already exists, telling interested buyers not only what the rating of the house is, but also what potential improvements could be made to make it more efficient.

A report might, for example, state that added roof insulation or switching out an individual gas heater and joining the district heating network would pay off in the long term through saved energy costs.

The report helpfully points out three specific places in the building which are the most suitable for energy improvements, Bolius notes, while also providing information on all other potential upgrades.

In addition to potential savings on energy, you can also see how much you will reduce CO2 emissions by carrying out the recommended renovations.

What should sellers be aware of?

Sellers are responsible for ensuring an energy marking is provided when they put their house on the market.

If the property is being sold using an estate agent, the agency will normally arrange this.

People who own apartments must request the assessment through the association (ejerforening or andelsforening depending on the ownership structure) that manages the building. This is because the energy marking is not calculated based on the individual apartment, but on the entire building within the relevant ownership association.

Sellers may also consider carrying out energy renovations before putting their house on the market. According to Bolius, several studies have shown that a better energy marking results in a better selling price. The average house will net the seller an average 500 kroner extra per square metre for every letter by which the energy marking is upgraded.

A subsidy scheme for energy renovations, ‘Bygningspuljen’, was launched by the Energy Agency in 2020.

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