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Everything you need to know is included in our Denmark Property Pack
Denmark, with its picturesque scenery, rich history, and hospitable people, attracts many foreigners looking for real estate investment opportunities.
However, understanding the complexities of buying property in a foreign country can be difficult, particularly with regard to the legal framework and regulations.
That's why this guide is here to help! We'll explain how the property market works in Denmark in a straightforward and easy-to-follow manner, covering everything you need to know.
Also, for a more in-depth analysis, you can check our property pack for Denmark.Can you purchase and own a property in Denmark as a foreigner?
If you are American, we have a dedicated blog post regarding the property buying and owning process in Denmark for US citizens.
Buying real estate in Denmark as a foreigner involves navigating a set of specific rules and regulations that differ somewhat from those for Danish citizens.
Understanding these rules is crucial to ensure a smooth property acquisition process.
Firstly, the general rule in Denmark is that foreign nationals who don't reside in Denmark are not allowed to buy real estate.
However, there are exceptions. For instance, EU citizens who are working in Denmark are eligible to purchase property without any special permits. This rule extends to citizens from countries in the European Economic Area (EEA).
For non-EU/EEA citizens, the situation is a bit more complex. If you're from outside the EU/EEA, you generally need to have resided in Denmark for a certain period (usually five years) before you can buy property.
This rule ensures that real estate investment is primarily for those who are contributing to and integrated into Danish society.
Regarding land ownership, there are restrictions. In Denmark, buying agricultural land often requires special permission, particularly for foreigners.
This is to ensure that agricultural land is used for farming purposes and remains in the hands of those who are actively involved in Danish agriculture.
Another important aspect to consider is whether you need a specific visa or permit. If you're from outside the EU/EEA and you haven't lived in Denmark for the required period, you'll typically need a residence permit to stay in the country.
This permit doesn't automatically grant you the right to purchase property, but it's a necessary step in establishing your residency.
In terms of authorization from governmental institutions, foreign buyers often need approval from the Ministry of Justice. This process involves submitting an application where you demonstrate your ties to Denmark, such as work, family, or long-term residency. This approval process is an extra step that Danish citizens do not need to go through.
Regarding investment thresholds, there isn't a specific minimum investment required for buying residential property.
However, the price of real estate in Denmark, especially in cities like Copenhagen, can be quite high compared to other countries
Can you become a resident in Denmark by owning a property?
Denmark does not offer a residency-by-investment program specifically tied to real estate purchases.
This means you cannot become a resident in Denmark simply by purchasing and owning property there. Unlike some other countries that have established "Golden Visa" programs, which grant residency rights based on substantial investments in real estate or other sectors, Denmark follows a different approach.
In Denmark, residency is typically granted based on factors such as employment, family reunification, study, or asylum.
For example, if you are an EU/EEA citizen, you can reside in Denmark if you are working, studying, or have sufficient funds to support yourself.
For non-EU/EEA citizens, common routes include obtaining a work permit, often through job offers in Denmark, or through family connections, such as being married to a Danish citizen.
Regarding the requirements for residency, they vary depending on the basis of your application. For work-based residency, for instance, you would need a valid job offer from a Danish employer, and the job itself often needs to be in a field where there is a shortage of qualified Danish workers.
For family reunification, there are requirements about the relationship and often financial requirements as well.
The length and type of residency also vary. Initially, residency permits are usually temporary and can be extended provided you still meet the criteria.
Permanent residency requires living in Denmark for a certain number of years, demonstrating language skills, and passing a citizenship test, among other criteria.
As for citizenship, holding a residence permit in Denmark is one of the steps towards becoming a Danish citizen, but it's a separate and more lengthy process.
It involves fulfilling residency requirements, demonstrating language proficiency, passing a citizenship test, and showing an understanding of Danish society, values, and history.
Thinking of buying real estate in Denmark?
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Market data
You can find fresh and updated data in our pack of documents related to the real estate market in Denmark.
Based on the the the GDP per capita indicator, it is apparent that Danish people have become 6.3% richer over the last 5 years.
As people's wealth grows, the demand for real estate could rise, resulting in potential price increases down the road.
Looking at the data reported by Numbeo, we can see that rental properties in Denmark offer gross rental yields between 2.9% and 5.6%.
These moderate rental yields indicate a balanced return on investment for property owners or investors
To know more, you can also read our dedicated article: is it a good time to buy a property in Denmark?
How expats live in Denmark
Living as an expat in Denmark can be a very enjoyable experience.
Denmark is a highly developed country with an excellent quality of life. The country has a strong economy, with an impressive standard of living, and a vibrant culture. The people are friendly and welcoming, and there is plenty to do and see in the country.
The cost of living is relatively low compared to other developed countries, so expats will find it easy to make ends meet.
Furthermore, Denmark is a safe and secure country, with a good healthcare system, and plenty of opportunities for work and education.
All in all, life as an expat in Denmark can be very rewarding and fulfilling.
What are the best places to buy a property in Denmark?
This table summarizes some of the best places to buy a property in Denmark.
| City / Region | Population | Average Price per sqm (DKK) | Strengths |
|---|---|---|---|
| Copenhagen | ≈ 600,000 | 35,000 - 60,000 | Capital city, cultural hub, historic sites, vibrant culinary scene |
| Aarhus | ≈ 350,000 | 25,000 - 45,000 | University city, rich cultural offerings, waterfront district, quality of life |
| Aalborg | ≈ 220,000 | 20,000 - 40,000 | Historic city, cultural and commercial center, waterfront promenade |
| Odense | ≈ 200,000 | 18,000 - 35,000 | Hometown of Hans Christian Andersen, vibrant arts scene, green spaces |
| Esbjerg | ≈ 72,000 | 15,000 - 30,000 | Port city, strong economy, North Sea coast, gateway to offshore wind farms |
| Roskilde | ≈ 52,000 | 20,000 - 40,000 | Historic town, UNESCO World Heritage Site, Viking Ship Museum |
| Aalborg | ≈ 110,000 | 15,000 - 30,000 | Coastal city, charming old town, proximity to natural areas |
Do you need a lawyer to buy a property in Denmark?
When purchasing a property in Denmark, engaging a local lawyer can provide valuable assistance in navigating the legal aspects and ensuring a successful transaction.
One crucial document they can help you with is the Purchase Agreement (Købsaftale), a legally binding contract between the buyer and seller that outlines the terms and conditions of the sale.
The Danish lawyer can also assist with conducting a Land Registry Search (Tinglysningsattest) to verify the property's ownership status and identify any potential legal issues or encumbrances.
Furthermore, they can guide you through the process of obtaining necessary permits and approvals, such as approval from the local municipality or relevant authorities.
They will ensure that all applicable taxes and fees, such as the Property Transfer Tax and Notary Fees, are paid correctly and in compliance with Danish laws and regulations.
What are the risks when buying real estate in Denmark?
We've got an article dedicated to the risks associated with purchasing property in Denmark.
When buying a property in Denmark, there are a few risks that are specific to the country.
One of the biggest is the potential for the purchasing process to be complicated and time consuming. Denmark has one of the most complex and bureaucratic systems for buying property in all of Europe, with a lengthy process that can take months to complete. Buyers should be prepared to go through several steps, including obtaining a mortgage, completing paperwork, and dealing with the local government.
Another risk is that of hidden defects. When buying a property in Denmark, buyers should be aware of the potential for hidden defects, which may not be covered by a standard home inspection. Buyers should also be aware that in Denmark, the seller is responsible for any defects that are present in the property at the time of the sale, and the buyer may be liable for any that are discovered after the sale has been completed.
Finally, buyers should also be aware of the potential for high taxes when buying a property in Denmark. The country has some of the highest property taxes in Europe, and buyers should be aware of the potential costs associated with the purchase.
Everything you need to know is included in our Denmark Property Pack
What is the list of documents needed for a real estate transaction in Denmark?
When buying a property in Denmark, the following documents are typically required:
1. Proof of identity (passport, driver's license, etc.)
2. Proof of residence (utility bill, lease agreement, etc.)
3. Proof of financial means (bank statements, pay slips, etc.)
4. A copy of the title deed or the deed of sale
5. An up-to-date property valuation report
6. A copy of the loan agreement, if applicable
7. A copy of the contract of sale
We review each of these documents and tell you how to use them in our property pack for Denmark.
How should you approach negotiations with Danish individuals?
When buying a house in Denmark, be aware of the local culture and customs.
It is best to approach negotiations in a respectful and polite manner, making sure to be understanding of the other person's point of view.
It is also important to be aware of the local customs around bargaining and haggling, as this is not a common practice in Denmark. If possible, it is best to research the local market price before negotiations, and be prepared to make a reasonable offer.
It is also beneficial to be aware of the local tax laws, as this can have a major impact on the overall cost of the property.
Finally, be patient and understanding throughout the entire process, as this will show the other person that you are willing to work together to find a mutually beneficial outcome.
Can foreigners obtain a bank loan in Denmark?
Yes, foreigners can obtain property loans in Denmark. The Danish banking system allows non-residents to apply for property loans, subject to certain conditions and requirements.
Foreigners seeking a property loan in Denmark generally need a valid residence permit, proof of income or employment, and must meet the specific criteria set by the lending institutions in the country.
Some banks in Denmark that can grant mortgages to foreigners include Danske Bank, Nordea Bank Danmark, and Nykredit Bank.
Furthermore, mortgage rates in Denmark for a 20-year term range from 0% to 4%, which are considered highly favorable, providing borrowers with excellent financing opportunities.
What are the taxes related to a property transaction in Denmark?
Here is a breakdown of taxes related to a property transaction in Denmark.
| Tax | Description | Calculation | Who pays |
|---|---|---|---|
| Property Value Tax | Annual tax on the property ownership | 0.92%% or 3% depending on the value of the property | Owner |
| Value Added Tax (VAT) | Tax on the sale of new residential properties | 25% VAT for new properties, exemption for existing properties | Buyer |
| Municipal Real Estate Tax | Local tax imposed by the municipality on property ownership | Between 1.6% and 3.4% of the property value, depending on the location | Buyer |
| Capital Gains Tax | Tax on the capital gain from the sale of a property | From 0% to 35% on the net capital gain, depending on the property holding period | Seller |
For a more detailed calculation, refer to:
- the Danish Tax Authority's website
What fees are involved in a property transaction in Denmark?
Below is a simple breakdown of fees for a property transaction in Denmark.
| Fee | Description | Calculation | Who pays |
|---|---|---|---|
| Registration Fee | Fee for registering the property transfer with the Land Registry | DKK 1,400 plus 0.6% of the purchase price of the property | Buyer |
| Real Estate Agent Fee | Fee charged by real estate agents for their services | Typically around 0.5% to 2% of the property value | Seller |
| Notary Fee | Fee for registering the property transfer with the Land Registry | Varies between 1% and 3% of property value | Seller and Buyer |
| Legal Fee | Fee for legal services related to the property transfer | From 0.1% to 0.5% of the property value, depending on the complexity of the transaction | Buyer |
-Buying property as a foreigner in Germany: the guide
Buying real estate in Denmark can be risky
An increasing number of foreign investors are showing interest in Denmark. However, 90% of them will make mistakes. Avoid the pitfalls with our comprehensive guide.