Who can buy property in Denmark?
Although Denmark is a very liberal country, purchasing property there as a foreigner is quite difficult. The process itself is quite straightforward, but the requirements to be allowed to purchase property are strict.
You can buy property without any special permits if:
- You have been a resident of Denmark for at least 5 years
- You have domicile in Denmark (means having proven ties to Denmark - e.g. you work/study there, you have children who go to school there, etc.)
In other cases, it’s necessary to apply for a special permit from the Department of Civil Affairs. The permit is in most cases only granted if you are legally allowed to stay in Denmark (e.g. are working there) and you are purchasing the property as your permanent residence. Keep in mind that if you wish to vacate the property or not use it as your place of living anymore, the Department of Civil Affairs may require you to sell or transfer the property. If you have lived in the country for more than five years, there is no obligation to sell the property in case you want to move.
An alternative is to go the corporate route and establish a company/branch in Denmark. This requires you to have significant business endeavors in Denmark to be able to legally purchase (and hold) real estate.
Do the research
If you plan to take out a mortgage, it’s best to start your research from the banks. Try to get an understanding of what your budget is like so you can focus on properties that you can afford. Once that is done, it’s time to dig deeper into the various regions and property types of Denmark and its overall real estate market:
- Copenhagen - The capital and most well-known city in Denmark. A cosmopolitan city with a rich culture that is well known for its excellent food scene and welcoming people. It’s also home to the famous Amalienborg Palace and the Tivoli Gardens.
- Aarhus - Located on the Jutland peninsula, Aarhus is a fusion of historic landmarks like the Old Town and modern architecture like the ARoS museum. It offers abundant green spaces and is very committed to sustainability.
- Aalborg - Known for its waterfront, which is full of lively restaurants and contemporary architecture, Aalborg offers a friendly atmosphere. Vibrant nightlife is contrasted by its rich history best represented by the medieval center.
To search for properties online:
Given the hoops most foreigners have to jump through to purchase real estate in the first place, getting a mortgage is reasonably simple. Banks finance up to 80% of the property value with mortgages. In most cases, a 20% downpayment is expected (but in some cases, you can even take out a shorter-term loan for 15% of the property value to take your downpayment down to 5%). As a general rule, banks will offer a mortgage in the size of 4-5 times your yearly income.
Visit properties and make an offer
Once you have established your budget and understood which region you want to focus on, you can start looking at the available properties. Keep in mind that as a prospective buyer, the seller gives you a property report that describes the physical condition of the property, including noticeable defects as well as conditions that may cause new defects. If a suitable property is found, you can make a non-binding offer on it. Negotiating the price is also done at this stage.
If the offer is accepted, the seller’s agent will draft a sales agreement. It’s not required but recommended to consult a local lawyer at this stage to make sure your interests are well represented (as the agent is, after all, representing the seller). The contract must contain bank reservations and lawyer reservations clauses - they are the buyer’s security. If they are not present, the agreement must be amended to include them.
Once the sales contract is completed, the lawyer will check all the documentation regarding the property. If everything is in good order, a notarial act is signed. At this stage, the signing fee is paid. After the act is signed and the fee is paid, the deed is sent to the registry court who will register the buyer as the owner of the property. The possession of the property is then handed over (usually in the presence of all the related parties) to the buyer together with any additional information in regards to how to use the property.
Property Buying Costs and Taxes in Denmark
Transaction Costs and Fees
|Signing Fee||0.6% + 1,730DKK||buyer|
|Mortgage Registration Fee (if applicable)||0% - 1.45% + 1,730DKK||buyer|
|Real Estate Agent´s Fee||1%-3%||seller|
|Costs paid by buyer||0.6% - 2.05%|
|Costs paid by seller||1% -3%|
|ROUNDTRIP TRANSACTION COSTS||1.6% - 5.05%|
|Source: Global Property Guide|