Norway: Overview

RENTAL YIELDS

Yields are low, max of 5

Yields for properties in Oslo range from 3.6% to 5%. Properties in Bergen and Fjords areas have similar yields, at 3.9% - 4.2%.

Properties in Oslo can cost you around €5,000 to €6,700 per sq. m., depending on the size of the property; monthly rents are around €750 to €2,400. Bergen and Fjords’ rental markets offer a cheaper alternative, with properties costing €2,200 to €3,500 per sq. m. and monthly rents ranging from €450 to €1,200.

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TAXES AND COSTS

Taxes are generally high

Effective Tax Rate on Rental Income
Monthly Income	€1,500	6,000	€12,000
Tax Rate	26.9%	30.0%	31.1%
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Source: Disclaimer

Rental Income: Rental income of non-residents is taxed at a flat rate of 28%.

Capital Gains: Capital gains from the sale of real estate property are taxed as ordinary income at 28%.

Inheritance: Norwegian inheritance tax is levied at progressive rates, ranging from 8% to 30%, depending on the relationship between the beneficiary and the deceased.

Residents: Residents are taxed on their worldwide income.

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BUYING GUIDE

Total transaction costs are very low in Norway

Total transactions costs range from 3.75% to 5.7%, according to Global Property Guide estimates. The buyer pays all costs involved, including the 2.5% stamp duty. Real estate agent’s fee is around 1% - 2.5% (plus 24% VAT).

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LANDLORD AND TENANT

Tenant protection laws are neutral

Norwegian law is neutral between landlord and tenant.

Rents: The rental market is free; the Law of Tenancy (2000) removed the last rent controls, with the exception of Oslo pre-war housing. Rents are comparable with that normally obtained in agreements in new lettings of similar properties in similar terms. In practice, this is not onerous to landlords.

Tenant Security: Notice is not required at the end of the contract if the contract was fixed term. However, if the tenant continues to occupy the premises for more than 3 months at the end of the contract and the landlord does nothing about it, then the agreement becomes an unspecified term agreement.

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ECONOMIC GROWTH

Oil reserves and gas lifts the economy

Norway is Europe’s most sparsely populated country apart from Iceland. Its 4.7 million inhabitants are spread over an area the size of Germany. Income per capita is the third highest in the world (at US$65,785) after Luxembourg and the United States – thanks mainly to its huge offshore oil reserves and natural gas which account for 17% of GDP and 45% of exports.

Norway is the only Scandinavian country that is not a member of the European Union (EU). Norwegians voted against membership of the then European Economic Cooperation in 1972 and of the EU in 1994, despite vigorous campaign of the government to vote ‘yes.’

Despite the fluctuations in terms of GDP growth, the Norway never entered into a recession since 1990. Thee economy expanded by more than 5% between 1994 and 1997. Even with a slowdown in 2002 and 2003, GDP growth rate was never below 1% since 2000. Real wages also increased by an average of 4.3% annually 1991 to 2005 with strong increases in 1998 (7.6% real wage growth), 2001 (7.4%) and 1999 (6.2%). 2007 GDP growth is expected to be around 4%.