Norway: Overview

RENTAL YIELDS

Last Updated: Jun 13, 2006

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

Last Updated: Jan 08, 2008

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%
Click here to see a worked example
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

Last Updated: Nov 09, 2006

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

Last Updated: Nov 29, 2006

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

Last Updated: Jul 16, 2008

Oil reserves and gas lifts the economy

Norway is Europe’s most sparsely populated country, apart from Iceland. Its 4.6 million inhabitants are spread over an area the size of Germany. Income per capita is one of the highest in the world at US$83,922 in 2007 – thanks mainly to its huge offshore oil reserves and natural gas which account for 17% of GDP and 65% 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.’

With the oil windfall, the government adopted an expansionary fiscal policy that boosted economic growth. From 2004 to 2006, the economy expanded by an average of 3% annually. In 2007, GDP growth was 3.5%.

Unemployment dropped to 2.5% in 2007, the lowest rate in almost two decades and much lower that of the European average. Fearing that the economy might overheat, the Norges Bank (the central bank) initiated monetary tightening with gradual interest rate hikes since late-2005.

The Norges Bank’s key rate, the official sight deposit, rose from 2.25% in Oct 2005 to 3.38% in Dec 2006. More aggressive interest rate hikes were implemented in 2007 with the key rate at 5.14% Dec 2007.

Combined with the steady appreciation of the Danish kronor against the US dollar (to a certain extent the euro), inflationary pressures were kept at bay. Inflation in 2007 was only 0.8%, down from 2.26% in 2006.