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Summer houses in Denmark: What are the rules and when can you live in them?

Many people in Denmark spend their holidays living in summer houses, but what are the rules for staying at the properties around the calendar?

Published: 18 July 2022 16:53 CEST
Summer houses in Denmark: What are the rules and when can you live in them?
Housing in municipal summer house zones cannot generally be lived in year-round. File photo: Henning Bagger/Ritzau Scanpix

Summer houses are properties in which residence is not usually permitted year-round. Rules preventing permanent use are in place to ensure summer house areas remain recreational in nature; to limit new construction in valuable and uninhabited coastal areas; and to protect natural landscapes from wear and tear.

Owners of homes which are not summerhouses (helårsboliger) are generally required to ensure that their properties are lived in for at least 180 days per year, either by themselves or by tenants. This is known in Danish as a bopælspligt, literally “obliged residence”. Although it’s not actually mentioned in Danish law it is practiced due to tax rules.

Local authorities decide through zoning laws (lokalplaner in Danish) which housing within their municipal limits are required to comply with bopælspligt rules.

The purpose of these rules is, in part, to prevent unhindered property speculation.

Summer houses are not generally built with full-time residence in mind. As such, they are less isolated and not as well heated as regular housing. That means energy bills will be higher for the time they are used, especially if this is not during the summer.

When am I allowed to live in a summer house?

As well as being required to live in your regular house for at least 180 days of the year due to the bopælspligt, local authorities do not generally permit residence in summer houses in the winter months, meaning from November 1st-March 1st.

This does not mean that summer houses may not be used at all during the winter, but longer stays are not allowed.

Are there any exemptions?

Some circumstances provide exemptions that allow summer houses to be used as permanent residences. There are three main categories.

These are: 1) the summer house was legally permitted to be used as a permanent residence when the area in which it was located was made a summer house area under a zoning plan, and the right to permanent use has not yet lapsed. 2) The local municipality has given the summer house owner special permission, 3) The owner is retired and has owned the summer house for at least a year.

Special permission can also be given by municipalities in a range of circumstances, including owners or leaseholders at essential local businesses like supermarkets who need to live nearby; or people who find that living in summer houses can ease serious or long term health conditions. Applications for special permission (dispensation) are made with the relevant municipality.

When retired people are given permission to live in summer houses, their close families can live with them and may also continue to do so if the person with the special dispensation passes away. Once the family moves, the special dispensation lapses.

It should also be noted that the summer house must be in reasonable condition for the local authority to permit permanent use. A house in very bad condition can be declared unfit for year-round residence (helårsbeboelse) by the authority. A surveyor’s report is often advisable for people who are considering moving permanently into their summer house.

Sources: Borger.dk, Aarhus Kommune

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PROPERTY

IN CHARTS: How bad is the situation in Scandinavian housing markets?

House prices in the Nordic countries are now down double digits from their peak. How much further have they got to fall and what might that do to the Nordic economies?

Published: 25 January 2023 10:41 CET
IN CHARTS: How bad is the situation in Scandinavian housing markets?

The price of residential property peaked in Sweden and Denmark in June last year, and in August in Norway.

Since then, Sweden has seen the biggest falls, with the price of homes overall dropping by 16.8 percent, detached houses by 18.6 percent, and apartments by 13.8 percent, according to the Booli! price reporting service. 

Norway has seen slightly less steep falls, with the average price of a home falling from 4.6 million kroner in August 2022 to 4 million kroner at the end of December, a fall of about 13 percent. The seasonally adjusted figures used by the country’s national bank indicate a much lower 2.6 percent fall between August and December 14th. 

Denmark has so far come off the most lightly, with the price of apartments down 10 percent and the price of houses down 9 percent.

“It’s really the effect of higher interest rates that is driving down house prices, which is completely by the book,” Las Olsen, chief economist at Danske Bank, told The Local. “Higher funding costs naturally lead to lower house prices. And the increase in interest rates that we’ve seen over the last year is very large and that means that the pressure on house prices is also very high.”

Housing costs in all three Scandinavian countries were high by European standards before rates began to rise, explaining why the region has been relatively hard hit.

An analysis by Eurostat, using 2021 figures, showed that housing costs, including gas, electricity and water, were higher than in most other comparable countries, with housing costs in Denmark beaten only by countries like Switzerland and Ireland. Housing costs in Sweden and Norway were slightly lower.

When Eurostat looked at what percentage of household disposable income was spent on housing in 2021, Denmark and Sweden were also both at the high end. Norway was not included in the study.

Olsen said the situation in the housing market before rates started to go up explained why prices had so far fallen most heavily in Sweden.

“Swedish house prices have dropped quite a bit more than what we see in Denmark and Norway, even though the Swedish interest rate increases are not substantially bigger,” he said. “This reflects, for one thing, the fact that Swedish house prices were probably a bit more highly valued going into this period of higher interest rates.”

A report by the European Systemic Risk Board, published in December 2022 and based on data from the second three months of 2022, estimated that apartments and houses in Sweden were potentially more overvalued than any other country in the European Union apart from Slovakia and Luxembourg. 

The board judged that residential property in Sweden was between about 25 percent and a little over 60 percent overvalued. 

Residential property in Denmark, meanwhile, was only judged to be between 15 percent and a little over 30 percent overvalued. Norway was not included in the survey. 

Source: European Systemic Risk Board

Olsen noted that Swedish households are also “a bit more vulnerable”, as they have not been supported with government money during the pandemic and the more recent inflation crisis to the same extent as households in Denmark and Norway.

Danish households also have an advantage over their Swedish and Norwegian counterparts because more than half of Danish mortgages are fixed for the entire 30-year duration of the loan, whereas variable rate mortgages are much more common in Sweden and Norway.

Up until the middle of 2018 around 80 percent of new Swedish mortgages were only fixed for three months or less, while only a few percent were fixed for more than three years.

“Swedish households are very sensitive to movements in interest rates. They have variable loans, in general, so it’s feeding through very rapidly,” he said.

At the start of 2022, the number of new mortgages fixed for three years or more in Sweden soared to more than 80 percent, but according to the government-owned lender SBAB, a full 80 percent of customers still chose variable rate mortgages in December. 

How many new Swedish mortgages are variable rate?

Purple = fixed for three months or less. Blue = between three months and a year. Green =
fixed for between one and three years. Grey = fixed for more than three years.

Source: Statistics Sweden

Norway also has a large proportion of variable-rate mortgages, but Olsen suggested they were still less vulnerable. 

“Norwegian households have some other strengths: they have received a lot of support during Covid, especially. And also electricity bills are more or less capped in Norway, which they certainly are not in Sweden.”

How indebted are Scandinavian populations? 

Households in Denmark, Norway and Sweden have among the highest level of loans outstanding compared to their gross disposable income of any of the counties covered by The Local’s network, according to a survey by Eurostat.

The high apparent indebtedness of Danish households, however, is partly warped by loans taken out by farmers, which are included in household debt statistics. Olsen estimates that the real level of indebtedness in Denmark, while still high, is closer to that of Sweden.

In addition, household indebtedness as a share of income in Denmark has fallen steadily since it peaked in 2014.

“Households in Denmark have been saving quite vigorously ever since the financial crisis, so the level of debt is high but the direction is down,” Olsen said.

So what will happen over the next year or so? 

The official prognoses are for a soft landing rather than a full-on market crash.

Denmark’s central bank, Nationalbanken, expects house prices to fall by about 5.6 percent in 2023.

Adjusted for the season, Norway’s central bank, Norges Bank, expects house prices to fall in total by about 6 percent from August 2022 to August 2023, before starting to rise again. 

Sweden’s Riksbank central bank, using the Hox Sverige housing index, in a report out in November, predicted that the 11.75 percent annual fall seen at the end of 2022, would be repeated by a further 8 percent fall in the year leading up to the last quarter of 2023. This represents a total fall of about 19 percent.

Some economists are more pessimistic, however. 

“If interest rates go the way everyone expects, then it’s quite reasonable to see housing prices going down 8 percent in 2023,” Tor Borg, head of analysis at CityMark, told The Local, referring to the Swedish market. “But I think it could be worse, as I’m not that convinced that inflation will come down as quickly as everybody thinks and I’m not sure the Riksbank will stop increasing rates as soon as everybody else thinks.”

Las Olsen at Danske Bank said that even if the fall in property prices did turn out to be deeper and more prolonged than currently predicted, Sweden, Denmark and Norway were all “fairly well prepared for such a scenario”.

“We have after all been through the financial crisis and also through the crisis before that and hopefully we have learned something from those events so that the economies are more robust.”

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