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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 do foreigners need to know about buying a home in Denmark?

After several years of settling down in Denmark, it’s natural for foreign residents to think about buying a home. What’s worth knowing about getting on the property ladder as a non-Dane?

What do foreigners need to know about buying a home in Denmark?

For some foreign home buyers in Denmark, their first Danish home might not be the first home they have bought, and there will be a few differences in rules to take into account.

For others, Denmark might be the place where you take your first step onto the property ladder.

In either case, there are several rules and facets of the Danish housing market that are worth knowing when you set out.

I have savings, am a permanent resident in Denmark and want to buy a home. What should I do?

Unsurprisingly, the first step is to get approved for a mortgage or, in Danish kreditgodkendt.

“Then the thing to do is go down to a bank and get a købsbevis [mortgage certificate, ed.],” Mikkel Høegh, department director for real estate economics with Jyske Bank, told The Local via email.

“Here you will have a meeting at which you are pre-approved to buy a property up to a certain amount,” Høegh said.

The meeting, which takes place with an advisor from the bank, involves setting out a budget and looking at the applicant’s tax information to get an overview of their personal finances.

“Once you have been (approved) you can start house hunting,” he said.

The certificate is based on a calculation of “what amount you are in a position to buy a property for,” Lise Nytoft Bergmann, real estate economist and senior analyst with bank Nordea, told The Local.

House hunting can initially be done online, while buyers should talk with their families about how the see their future home, Bergmann advised.

“Whether it’s location that’s given highest priority, or the number of square metres, how modern a property… have these thorough conversations with the family about what you see as most important,” she said.

Are there any rules relating to buying a home that apply specifically to foreign nationals?

“There are no special rules for foreigners as such,” Høegh said.

Danish mortgages are based on the prices of the house being purchases, and buyers are approved to buy for that amount, he explained.

“The next step is then to find the property. When it’s been found, the property is what guarantees the loan. This means that the mortgage lender has a guarantee in the property. So it’s the property that is most important here,” he said.

“The buyer must pay at least 5 percent (of the price of the house) upfront,” he noted.

What if there’s a chance I might move back home (or somewhere else) in future? Should I still buy a house in Denmark?

“There some overheads which are connected to buying a house,” Bergmann said.

“They’re not entirely small, and so therefore it’s an advantage to spread these costs out over as many years as possible,” she said.

These include a registration fee which must be paid to the state of 1,750 kroner plus 0.6 percent of the purchasing price; and registration of the mortgage deed (pantebreve) of 1,730 kroner plus 1.45 percent of the purchase price.

Banks and mortgage lenders must usually also be paid for their work related to the purchase. This can include assessing the buyer for the mortgage certificate and for issuing it, valuing the property, and producing documentation as well as for consultancy. These costs can vary between financial institutions.

It may also be necessary to take advice from third parties such as lawyers, architects or electricians. The costs of actually moving, insurance and renovation must also be considered.

“We usually that you should have a timescale of a minimum of five years, and preferably longer,” Bergmann said in relation to staying in Denmark after buying a home.

What can I do to make sure I get the best mortgage offer?

“In Denmark the prices of mortgages are relatively similar and there is no difference between people and the price they are offered,” Høegh said.

“As such, what is important is finding a property that can be turned over, in other words you should keep in mind that another buyer must come after you,” he said.

“In addition to this, the price of the mortgage is related to how much of the loan is in the property. The more money you bring yourself [through the deposit, ed.], the cheaper it is to loan,” he said.

Both fixed and variable interest rate mortgages are available in Denmark, and the terms for these may stand out from what is available in other countries.

“A quite unique thing in Denmark is that you can get a fixed interest rate mortgage for 30 years. There are very few places in the world where you can do that, so when we say fixed rate we don’t just mean five or eight years,” Høegh said.

“Additionally, a mortgage in Denmark is such that the borrower can always go to market interest, so there is also nothing like a penalty interest which you see in other countries,” he said.

“Denmark has therefore an incredibly efficient mortgage system which everyone who buys a property has access to,” he said.

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