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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Denmark uses new method to collect debt from public

Last year saw Denmark’s public debt collection agency Gældsstyrelsen collect a record amount from people with debts to the state.

Denmark uses new method to collect debt from public

A total of 12.6 billion kroner was collected last year according to the agency, which is a part of the Danish Tax Authority (Skattestyrelsen).

A new and more efficient recovery system, termed PSRM, can be credited for the amount, the agency said in a statement.

The system allows the agency to deduct from debitors’ wages and tax rebates in order to clear the debt.

“We have created a collection with strong resources to recover the debt,” Gældsstyrelsen director Anne-Sofie Jensen said in the statement.

“With our new system and our many skilled workers we are moving step by step in the right direction towards bringing down debt to the state,” she said.

Last year the system saw the tax authority bring in 5.2 billion kroner in overdue repayments.

The amount was notably lower in 2020, when it reached 2.2 billion kroner.

“The annual result shows that we are succeeding with our core task,” Jensen said.

“We are recovering a lot of the debt that public creditors have failed to demand from members of the public and businesses before the debt was transferred to us,” she said.

“But we are also aware that there are still challenges we must overcome in the coming years so we keep our working gloves on,” she said.

The amount of debt recovered by the state has increased year-on-year since 2016.

However, the total owed by individuals and businesses has also increased during that period.

That debt was estimated at 152 billion kroner in total in 2022.