Buying real estate in Copenhagen Denmark
When the right property presents itself to you, it is advisable to get legal aid from your lawyer (solicitor) right away and BEFORE signing of the purchase agreement. The reason for this being, that it is – unfortunately - quite complex to buy property in Denmark – even more so when you are a foreigner. If contacted before the agreement is signed, your Lawyer will be able to pre-empt any mortgage requirements by obtaining approval or a “mortgage certificate”. In addition, your lawyer will be able to assist negotiating the purchase price based on area knowledge, price statistic and countless previous transactions. Your lawyer will usually be able to negotiate a better purchase prize for you, after all information is made available.
If you feel a need to secure the purchase to prevent anyone else from buying the property and therefore need to sign the purchase agreement before contacting your Lawyer, you can do so, just remember to tell the estate agent to add a LAWYERS RESERVATION. Your signature will need “validation” from your Lawyer, which happens when the documentation of the property is thoroughly put forth. Usually the estate agent admits a 5 days deadline for reservations to be given. If the reservations are not met, you – the buyer – can decide to be released from otherwise binding contractual obligations without damages to be paid to the seller. Damages will otherwise amount to 1 % of the value agreed upon usually 10-50.000 DKK in the greater Copenhagen area.
Your lawyer will provide all information needed from legal or official parties regarding the estate. The total information needed for proper valuation is usually not provided in full extend from the estate agent. To name a few, the buyer will usually need a building report, energy report, electrical report, taxation report, insurance information, pollution report, mortgage information, third-parts rights to the property etc. etc. Information usually provided by and paid for by the seller.
After sales are completed your Lawyer will notarize your rights to the property. In this transaction the purchase agreement is finalized. The buyer gets ownership (title) to the property and the purchase price is hereafter released to the seller. This process is purely expedition in nature and contains no legal advice. The end to this effort is to legally register the buyers exclusive property rights in the national register of property in Denmark.
Non-Danish residents must consider, whether purchase is possible. “Statsforvaltningen” usually grants an EU Residence document (registration certificate) for any EU citizen (not summer vacation property) unless special conditions apply. When resided in Denmark for at least five years – uninterrupted - the EU citizen can apply for a certificate of right to permanent residence. For further information call The Justice Department (jm.dk) or “Statsforvaltningen” (statsforvaltning.dk).
Fees & Finance
Fees are covered by both parties. The seller covers real estate agents fees, which is usually around 100.000 DKK including marketing expenses. The buyer covers lawyers fee, mortgage deeds and stamp duty. Stamp duty will be DKK 1,400,- (2013) in addition to 0.6% of the principal amount of finance within 80 % of property value. Legal fees for supplementary finance can be up to 1.5% of the principal amount.
Various property taxes apply in Denmark. Real estate tax @ 1 % of property value. Local tax @ 0.5 – 2.5 %. Capital Gains tax on the proceeds derived from the sale of property is exempt from tax unless you sell within three years of purchase or are buying and selling on a professional, commercial basis.
There are no legal or administrative restrictions on foreign investors accessing the source of Danish finance and mortgage. Most real estate finance is covered through mortgage institutions like Nykredit, BRF Kredit and Realkredit Danmark.
For residential housing it is possible to fund the purchase with up to 80 % of the value in relatively cheap real estate mortgage with a repay period ranging from 10 to 30 years. The purchase is financed though the issue of bonds provided by the mortgage institution. The financial products vary and why it is advisable to keep a keen eye on both interest rate as well as the bond market price regardless of any initial advice from your financial consultant.
Any mortgage will be registered on the real estate which then serves as security toward the loan.
Denmark – Copenhagen area
Denmark is the most southerly of the Scandinavian countries, with a climate similar to the UK. Unlike the other Scandinavian countries of Finland, Norway and Sweden, it is not mountainous and fairly flat. With close links to Sweden, a similar language - not to mention the recently built bridge spanning the Baltic Sea - Copenhagen is moving to be the centre of Scandinavia. Approximately 70% of the Danish population speaks English with highs around 95 % amongst younger educated adults in Copenhagen.
Currency: Danish Kroner (DKK)
Weather information: DMI @ http://www.dmi.dk/eng/index/forecasts.htm
Medical advice is provided by the National Health Services
Real Estate Prices in Denmark ranges from 2.500 EUR – 5.000 EUR pr. square meter (m²) for a 3 bedroom townhouse on the outskirts or a central city apartment.
The capital of Denmark, Copenhagen, is popular and becoming increasingly so with the new bridge “Øresundsbron” connecting Denmark to Sweden, thus providing easy access to the northern parts of Scandinavia. Another humongous bridge connecting Denmark to Germany is seriously considered scheduled 2020 and will provide quick and easy access to northern Germany.
Copenhagen inner city is a mixture of medieval charm and the cosmopolitan feel of a modern city complete with Metro. Popular areas to buy apartments are near the docks and the outskirts.
The rest of Denmark is largely rural, with the most popular areas being the coastlines, particularly along the west and northern coasts. In this regard Denmark is not dissimilar the layout of Greater Britain.
Hellerup, Gentofte and Rungsted to the North are popular cities providing easy access to Copenhagen, while maintaining a rural feel with detached housing with gardens. Prices are high.
Living costs especially in Copenhagen is fairly high - as is the overall standard of living. Employment rate is high. Everyday clothe is priced above European average. Cars in particular are expensive – mostly due to extreme taxation.
There are unfortunately some restrictions on foreign ownership in some areas, especially when buying summer holiday homes. This is particularly prevalent when buying holiday homes along the coastlines (The Westcoast). However, the purchase of an "all year round" home, which is not on the popular parts of the coastline, is usually possible.