The Property Banks Buyers Guide to Denmark
Denmark is the most southerly of the
Scandinavian countries, with a climate similar to Scotland. Unlike
the other Scandinavian countries of Finland, Norway and Sweden it is
not mountainous and is fairly flat. It is has close links with
Sweden, having a similar language and has recently built a toll
bridge between the two countries spanning the Baltic Sea. 70% of the
Danish population speaks English and this is as high as 95% amongst
the younger and higher educated populations.
Capital Gains tax on the proceeds derived from the sale of property
and real estate is exempt from tax unless you sell within three
years of purchase or are buying and selling on a professional,
commercial basis.
There are some restrictions on Foreign Ownership in some areas,
especially when buying summer holiday homes (sommerhuse). This is
particularly prevalent when buying holiday homes along the coast.
However, the purchase of "all year round" homes which are not on the
popular parts of the coast is possible.
Property and Real Estate Prices in Denmark
Range Varies, for example:
From around £240,000 / $350,000 for a 3 bedroom town house in
Copenhagen.
From around £120,000 / $175,000 for a 3 bedroom house in provincial
town or rural location.
From around £90,000 / $130,000 for a 2 bedroom apartment in
Copenhagen.
From around £50,000 / $75,000 for a 2 bedroom apartment in
provincial town or rural location.
Locations to buy property and real estate in Denmark
The capital of Denmark, Copenhagen, is popular and becoming
increasingly so with the new bridge that has opened connecting
Denmark and Sweden, thus making access to all parts of Scandinavia
easier. The city has a mix of quaint, old fishing village charm and
the cosmopolitan feel of a large city. Popular areas to buy are the
apartments near the harbour and docks. The rest of Denmark is much
more rural, with the most popular areas being the coastlines,
particularly along the west and northern coasts of Jutland, with
Rungsted, Valleroed and Oderup to the North and areas in the Danish
mainland also being popular.
Living Costs in Denmark
The standard of living in Denmark is high, and there is a very low
unemployment rate. Everyday necessities and clothes are below the
European average and property is also relatively cheap. However,
alcohol and luxury items such as cars, are expensive due to high
taxation. Utility services such as electricity are also expensive.
Buying Property and Real Estate In Denmark
When you have found the right property for you, it is advisable to
get a surveyor to check for damp or building construction errors
before you advise the Real Estate Agent to draft "purchase
agreements". It can be useful to pre-empt any mortgage requirements
by obtaining an approval or "mortgage certificate". A
solicitor/lawyer will correspond with the Real Estate Agent in
negotiation of the purchase price before the buyer and seller sign
the final document contracts. The solicitor/lawyer will notarise
them on your behalf and issue the official owner document. It is
usual to negotiate a better purchase price when cash buying.
Solicitor / Lawyer
A solicitor/lawyer should be used to check through the sale
agreement ("Skoede"), run checks with the local council and read
survey reports and sign for completion of contracts.
Fees
The seller would normally cover Real Estate agent fees of around 6%
of the property sale value.
Legal fees for supplementary finance like mortgage deeds can be 1.5%
+ £115 / $170.
The buyer bears half the cost of fees for final contracts, which
total 0.6% + £115 / $170.
Solicitor/lawyer fees will be between £250-£650 / $365-$950.
Other costs would include stamp duty, which will be 0.6% - 1.5%.
Property Tax
There are various property taxes in Denmark. A real estate tax to
the state which is 1% of the property value. A local tax based on
the value of the land belonging to the property, which varies
between 0.5 - 2.5% depending on location. A county tax based on the
value of the land belonging to the property, which is about 1%.
You only have to pay property tax ("Ejenfomsskat") if you live in
the house yourself.
Mortgages
There are no legal or administrative restrictions on foreign
investors access to sources of local finance and mortgages.
Most long-term finance in Denmark is provided through mortgage
institutions.
You can normally borrow up to 80% of the buying price, with
repayment periods typically from 10 to 30 years. The lending
activities are financed through issuing of bonds, which are sold on
the open market. You can get fixed mortgages or mortgages variable
with the bond market prices. When the bond price goes up the
interest rate goes down.
Mortgages registered on the borrower's real estate serve as security
for the loans. In the event of a sale of property, the new owner
must obtain permission to take over the loan, but this is in most
cases a formality. If you will be taxed abroad it would normally
benefit you to consider cash payment in full.