Denmark plans temporary limit on rent increases

Current rules in Denmark allow landlords to increase rents in line with general inflation. The government wants to place a temporary block on such increases.

Denmark plans temporary limit on rent increases
Denmark's government could introduce a temporary rule to prevent inflation from enabling steep rent increases. File photo: Asger Ladefoged/Ritzau Scanpix

The Danish government is to propose a temporary limit on how much private landlords can increase rents.

Under the current Renting Law (Lejeloven), tenants are permitted to let rents follow inflation – which is currently at its highest level for 39 years.

“There is no doubt that with the very extreme inflation that we have at the moment, many groups will be impacted,” interior and housing minister Christian Rabjerg Madsen said.

“We have a situation on the private rental market where some landlords can look forward to very drastic rent increases,” he said.

The limit on rent hikes would be temporary and limit rent increases to a maximum of 4 percent over a two-year period. Inflation in July was calculated at 8.7 percent.

The minister said the measure would take the form of an immediate intervention, meaning it would apply to existing rental agreements and not just those which are signed after the new rule takes effect.

It would also apply retroactively to rents that have been raised in recent months, he said.

“It’s obvious that when there’s a possibility that tenants can put rents up by a potential 8-9 percent, there’s also a risk that some will do that. And that could have drastic consequences,” Madsen said.

In addition to the temporary limit, the government wants to introduce a new, permanent index that would regulate rents.

The index should be independent of increasing energy and food prices, Madsen said.

The government has previously said it cannot compensate the population in general for increasing prices due to concerns this could exacerbate inflation.

“The reason this proposal does not further push inflation up is that we are not pumping more money into society,” Madsen said.

Around 180,000 private tenants in Denmark face possible rent increases at the turn of the year, according to tenants’ interest group Lejernes Landsorganisation.

READ ALSO: EXPLAINED: What is a Danish ‘housing association’?

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Exchange rate: What are your options if you live in Denmark but have income in pound sterling?

The value of the British pound has fallen steeply against the dollar in recent days but also against the Euro – and the krone. So what should you do if you live in Denmark but have income – such as a pension, rental income or a salary – in pound sterling?

Exchange rate: What are your options if you live in Denmark but have income in pound sterling?

Exchange rates might sound like a spectacularly dull topic, but if you live in Denmark (where, naturally, your day-to-day living expenses are paid in kroner) but have income from the UK in pounds, then the movement of the international currency markets will have a major impact on the money that ends up in your pocket.

This is not an uncommon situation – Denmark-based Brits may work remotely as freelancers from British companies and be paid for invoices in pounds, while retired Brits might be receiving a British pension.

Others might have income from rental properties or investments.

So a big loss in the value of the pound against the euro – and by extension, the krone – can have a major impact on Brits in Denmark.

The most recent fall in the value of the pound was sparked by the UK government’s new mini budget and has already seen a relative recovery. 

The pound-krone exchange rate over the last month. Chart:
But while this one-time fall is spectacular, it’s also part of a longer term trend in the fall of the value of the pound, especially since Brexit, that has seen people such as foreign-based pensioners lose a big chunk of their income.
The pound-krone exchange rate over the last 10 years. Graph:

So if you have income in pounds, what are your options?

Income in kroner – obviously this isn’t an option for everyone, especially pensioners, but the best way to protect against currency exchange shocks is to make sure that you’re paid in the same currency that you spend in.

Alternatively, income in euros: the advantage of the euro in Denmark is that its value is pegged to the krone and not sensitive to exchange rate fluctuations.

For those being paid from abroad, billing in euros means you could work in any EU country – including the anglophone ones like Ireland – and get your salary in euros.

Depending on your employer, it might also be possible for you to ask to bill in euros. 

Work in Denmark – if you’re currently not working or want to switch to local currency income, then an obvious option is to take up some work in Denmark.

Depending on your work and residency status, as well as the field you work, the practicality of this option ranges wildly from one person to the next.

READ ALSO: How can you get a work permit in Denmark if you are not an EU national?

Exchange rate – if your income can only be paid in pounds, it’s crucial to ensure that you get the best exchange rate possible and that you don’t waste money on international transfer fees.

The best options here are online banks or money transfer services, which compete on the rates that they offer, so usually have the most advantageous rate.

Some online banks also have the option to set up accounts in both pounds and kroner, so that you can receive money in pounds and spend it in kroner without having to make bank transfers, which can attract fees.