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Denmark wants to build 20,000 new affordable rental homes

The government plans to increase the amount of subsidised (almene) housing in Denmark, in a move it says will provide a more diverse population in larger cities.

Prime Minister Mette Frederiksen discussed Copenhagen's lack of affordable housing in her opening speech to parliament.
Prime Minister Mette Frederiksen discussed Copenhagen's lack of affordable housing in her opening speech to parliament. Photo: Liselotte Sabroe/Ritzau Scanpix

The proposal will set out a trebling of current construction of subsidised housing in the four largest cities – Copenhagen, Aarhus, Odense and Aalborg.

That will make it easier for first-time buyers to find rental housing in large cities while saving for a deposit, the government says.

Prime Minister Mette Frederiksen announced the plan during her speech at the reopening of parliament on Tuesday.

“We need more affordable housing. That’s why the government wants to make it possible to build more than 20,000 more subsidised homes over the next 10-15 years. Most will be built in the larger cities,” Frederiksen told parliament.

The PM referred to high apartment prices in Copenhagen neighbourhood Nørrebro in her speech. Three-room apartments in the area are currently listed with estate agents at 4-6 million kroner.

That makes it “very difficult” for first time buyers to get on the property ladder in the area, Frederiksen said.

“Denmark’s capital is a city where people actually still live their lives. That’s good. And when you look around the world that’s in no way a given. But there’s a problem. A big problem. Many people can no longer afford to live in the capital that belongs to all of us,” she said in the parliament speech.

It is important to note the difference between the two main types of rental housing in Denmark: private rentals and almene boliger (literally, ‘general housing’), a form of subsidised housing. Frederiksen was referring to the latter in her announcement of the plans on Tuesday.

For almene boliger, local municipalities put up 10 percent of building costs and in return have the right to decide who is allocated one in four available apartments, enabling them to provide housing to municipal residents who need it. The housing therefore plays a role in the social housing provision.

This type of housing is normally managed by a boligforening or housing association. Rent goes towards costs of running the housing and to pay off the housing association’s loans, which means property owners aren’t profiting from rents and prices are controlled.

Private rental prices are dependent on market forces to a greater extent.

READ ALSO: How the cost of renting an apartment in Copenhagen compares to other cities in Denmark

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EXPLAINED: What is a Danish ‘housing association’?

You might have heard the term ‘boligforening’ or housing association in Denmark. Perhaps you live in an apartment managed by such an association. But what are they exactly and what is their role?

EXPLAINED: What is a Danish 'housing association'?

A boligforening is an association which, according to the Danish dictionary, “owns housing and rents its apartments out to its members”. So while you’d probably translate the word to “housing association” in English, what a boligforening does and its role in the Danish housing landscape takes a bit more explanation.

It is important to note the difference between the two main types of rental housing in Denmark: private rentals and almene boliger (literally, ‘general housing’), a form of subsidised housing.

For almene boliger, local municipalities put up 10 percent of building costs and in return have the right to decide who is allocated one in four available apartments, enabling them to provide housing to municipal residents who need it. The housing therefore plays a role in the social housing provision.

This type of housing is normally managed by a boligforening or housing association. Rent goes towards costs of running the housing and to pay off the housing association’s loans, which means property owners aren’t profiting from rents and prices are controlled.

Aside from housing assigned by the municipality, almene boliger are open for anyone. However, to get one, you must get to the top of a waiting list, which you join by signing up with associations (hence the stipulation of “members” in the dictionary definition) which operate housing in the city where you live (or want to live).

In Copenhagen or Aarhus, it can take years to get to the top of these lists, while in smaller cities you might get an offer in weeks or even days.

As such, newcomers to Denmark must often turn to the private rental market if they are living in one of the main cities.

READ ALSO: Deposits, complaints and registration: Five key things to know about renting in Denmark

People who live in almene boliger can apply to the local municipality for a special loan to pay their deposit when moving in. The deposit is likely to be a significant cost because deposits can be as much as three months’ rent.

Additionally, rental contracts can stipulate up to three months of rent upfront, meaning you can be faced with paying eye-watering costs equivalent to six months of rent before even getting the keys to your flat.

The interest on the loan is very low and it is usually only paid back when you are returned your deposit (or what’s left of it) after moving out.

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