It is a wonderful fantasy to have a lovely half-timbered house in the Danish countryside or an ultra-modern apartment in Copenhagen. Denmark, and its good life and beautiful architecture, appears to be the ideal place to establish. But to the outsider, the Danish real estate business may appear to be a cocoon of defence with obscure rules and strange traditions. It is a transparent procedure that is carefully regulated, yet this is completely different than in most other nations. To succeed, one needs to have less of a huge cheque book and more of good preparation and cultural awareness.
Limiting factors and the main stakeholders
The property ownership laws in Denmark are the first and the most shocking issue to many non-citizens. In contrast to most European nations, Denmark does not permit the purchase of real estate by non-citizens or non-citizens of a European Union (EU) or European Economic Area (EEA) nation. Or those who have not lived in Denmark for at least five years with a permanent residence permit.
This implies that as long as you are not an EU/EEA citizen, but a US citizen or an Indian citizen. A Chinese citizen, or any other non-EU/EEA citizen, you have little choice but to make as you do not satisfy the five-year residency criteria. As an individual, you can hardly purchase property. Two major exceptions are:
Summer houses
There is a special, and ironic, exemption of vacation houses in the law. Non-EU/EEA citizens are also allowed to purchase summer houses (sommerhuse) without any permission. Nevertheless, these properties are well-controlled; you cannot legally spend much time there all year round to avoid the main law, and you cannot use them as a permanent home.
Corporate purchase
In case you are relocating to Denmark to establish a business company, then there is a possibility of your company buying a commercial property. It is a complicated field which needs professional legal consultation.
In the case of eligible people, the citizens of the EU/EEA or permanent residents, the process starts in earnest. The key, and, in many ways, most Danish participant of this process is the telingning officer.
Tinglysning (meaning registration or notation) is the governmental system by which all property rights and legal charges on real estate in Denmark are registered. The man who carries out the legal transfer is the tinglysningsmanden (the registration officer). A state-approved lawyer, usually employed by the seller. They do this to be sure that the title does not have any undisclosed debts (such as mortgages or other liens) in it. To draw up the contract and to register the new ownership at the Land Registration Court.
The financials: More than the purchase price
Buying a home in Denmark is a far more financially costly affair than the price stated.
The Deposit: You usually deposit 5-10 percent. portion of the purchase price when signing the first, non-binding letter of intent (kobsanvisning). This will be kept in a safe deposit up to the time a contract is signed.
The down payment: The banks of Denmark are conservative. In order to take out a mortgage (realkreditlan), you will usually be required to have a down payment of 5 percent of the value of the property. There is a catch to this, however. On the amount of the loan that is more than 80 percent of the property value, you are obliged to borrow a costly secondary bank loan (banklan). Mortgage terms are most favourable to individuals with the capacity to give a 20 percent down payment.
Mortgages (Realkreditlan): The Danish mortgage policy has a world-famous reputation for stability. The vast majority of mortgages are fixed-rate, interest-only loans, which are sold as bonds through the open market. Such a special system can enable homeowners to refinance their debt more cheaply in case the interest rate increases. This system demands the presence of a good mortgage advisor (radgiver).
The Real process
The process of going through websites to homeowners is an organised one.
The Search: All properties are advertised on websites such as Boligsiden.dk or in a single estate agent. The viewings are usually open houses, which are held at definite times.
The Bid and Letter of Intent you offer, generally by way of the agent. When it is accepted, you sign the kobsanvisning. This is an imperative yet unbinding procedure, which enables you to obtain funding and carry out a construction survey.
Due Diligence: This is your time to get an inspection of the property. Get a certified building surveyor (bygningskonstrukor) to examine the concealed faults, such as damp, rotten or structural problems. The price can be renegotiated or the deal even pulled out without any penalty using their report.
Final Contract (Skode): Around 6 weeks after the letter of intent, you, the seller, and the tinglysning officer come together and sign the final deed of transfer. The rest of the balance is paid, and you get the keys.
Take away
Purchase of property in Denmark is a contradiction. It is a market with severe legislation and is capable of being exclusive, but the procedure of the transaction is one of the safest and most transparent in the world. It presents an opportunity for a desirable and stable market to all the eligible individuals.
The trick is to humbly do it and have a team of local professionals. The loan system will be demystified by a mortgage advisor, the building surveyor will secure your investment, and the tinglyning system will see to it that you get a legally sound title. It is a process that appreciates prudence rather than expedience and planning rather than acting. Honouring its complexity, you will not only be purchasing a house but will be making a successful passage through a rite of entry into Danish society.
You can also view these posts:
Property prices in Denmark
Getting Denmark’s passport
Things to know before immigrating to Denmark
