Why second-hand cars are getting (even more) expensive in Denmark

Used cars have never come cheap in Denmark, and the last year has seen prices increase even further.

New and used cars at a dealership in Denmark in 2017. The price of used cars in the country has accelerated over the last year.
New and used cars at a dealership in Denmark in 2017. The price of used cars in the country has accelerated over the last year. Photo: Henning Bagger/Ritzau Scanpix

A relative scarcity of used cars on the market in the last year has helped to push up the price of second-hand automobiles.

A consistent upward trend in prices over the last year shows no sign of decelerating. Last month’s average price increase of 3 percent is the highest ever, according to motoring media Bilbasen, which analysed market figures on behalf of national broadcaster DR.

“The market is overheated. There’s simply such a high demand for used cars. When you combine that with a shrinking supply, we see these massively increasing prices,” an analyst with FDM, the association for Danish motorists, told DR.

Using a four-year-old Skoda Octavia as an example, the price has increased by 30 percent in the last year, from 200,000 kroner to 260,000 kroner, according to Bilbasen.

High demand for used cars is partly a result of longer waiting times on orders for new cars, DR also writes.

That is due to a global shortage in microchips used by all manufacturers in new car production. Closures at harbours and other transport issues related to the Covid-19 pandemic also play a role.

As a result, delivery times on new car orders in Denmark, usually 3-4 months, have approximately doubled.

This means that car dealership forecourts across the country have few used cars available. And even the new models on show are primarily ones that have already been sold and are waiting for delivery.

But used cars were already expensive in Denmark before this. Why? 

Road tax, fuel, insurance and maintenance all contribute to the high costs of running a car in Denmark.

In addition, Vehicle Registration Tax (Registreringsafgift) represents an enormous outlay for motorists and must be added to the purchasing price as well as value-added tax (moms in Danish) to find the total cost of buying a new car.

Although this expense may not be payable on used cars (provided they are already registered and have a valid Danish number plate), the knock-on effect of such high prices for new cars can be felt in the used car market.

READ ALSO: Explained: Why is it so expensive to buy a car in Denmark?

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Boligstøtte: Who can claim Denmark’s national rent subsidy?

Residents of Denmark can in some cases apply for ‘boligstøtte’ (“housing support”), a reduction on their monthly rent.

Boligstøtte: Who can claim Denmark's national rent subsidy?

What is boligstøtte? 

Boligstøtte is a tax-free sum which people who live in rented housing can – in some cases – qualify for. It provides a subsidy to rent.

The subsidy is available to anyone who rents their home, provided the home meets certain criteria and the household income is under a certain level.

For example, your rental home must have its own kitchen (which would rule out student housing with shared kitchens, termed kollegier in Danish) and you must live permanently in the property.

Homeowners can also be entitled to apply for boligstøtte under certain circumstances. In such cases, the boligstøtte is a loan and not a subsidy, however.

The size of the subsidy – the amount of money you receive each month – depends on the overall income of the household (the total of the incomes of all wage earners at the address), the number of children and adults who live at the address, the amount of rent and the size of the house or apartment.

Boligstøtte is paid out on the first working day of each month.

How do I know if I’m entitled to boligstøtte?

Most people can apply for boligstøtte if they live in rented housing. There are a few living situations that can disqualify you, such as if you live with the owner of the property (including as a tenant) or if you own the property yourself and rent part of it.

You can, however, apply for the subsidy if you live in a property owned by your parents and pay rent to them (known as a forældrekøb – “parent purchase” – in Danish).

You can also apply for boligstøtte if you are sub-letting your house or flat, although the person sub-letting to you might have to change their address in order to avoid their income being taken into account in your application.

People who own their homes can receive bolistøtte (as a subsidy, not as a loan as detailed above) if they receive the state pension folkepension, or disability pension, førtidspension.

How and where do I apply?

You can submit an application via the website at this link. The application platform will ask you to submit a rental contract and other documentation for your claim to be processed.

If you’re applying after moving to a new address, you must have registered your change of address with the national personal registry prior to applying. This can be done here. If you apply within 30 days of moving, the subsidy will be effective from the date you moved in. Otherwise, it will count from the first day of the following month from when you submit your application.

The processing time for the application can be up to seven weeks. You’ll receive a confirmation of your application via your Digital Mail inbox, and you will also receive notification here once the application has been processed.

By how much can I reduce my rent?

This depends on the various factors on which your eligibility is calculated – for some, you will not qualify to receive any subsidy at all.

There are five criteria upon which your eligibility – and the amount you receive – is calculated. They are the income of the household; the savings or fortune of people in the household; number of children and adults living at the address; size of the home (in square metres) and amount of rent paid.

You will receive more money if you have more children. For example, people who live in rented homes and are not receiving the state pension can get up to 1,039 kroner per month if they have no children; up to 3,654 kroner per month if they have 1-3 children; and up to 4,568 kroner per month if they have 4 children or more.

The website has a tool on which you can estimate your boligstøtte here.