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Cases pile up against Danish landlords over rent hikes

Complaints against landlords for increasing rent are becoming increasingly backlogged in Denmark, according to a media report.

Cases pile up against Danish landlords over rent hikes
Extended processing times have been reported for rent appeals against landlords in Denmark. File photo: Asger Ladefoged/Ritzau Scanpix

The waiting time for a case to be assessed by the Danish rent appeals board, Huslejenævnet, has doubled in many areas since 2021, broadcaster DR has reported, based on figures from the Danish Authority of Social Services and Housing (Social- og Boligstyrelsen).

The appeals, which are submitted at municipalities, are piling up with a long waiting list for rent cases to be assessed according to the report.

According to the report, some people are having to wait up to a year and a half for an answer to an appeal after their landlords put up their rents. 

Danish law restricts the amount by which landlords can increase rent, and a 2022 amendment capped this limit at 4 percent due to concerns related to inflation.

But people whose rents have been hiked have to pay the higher rent while their appeal is under process and face economic uncertainty while the outcome is pending. 

Municipalities in which the problem is particularly severe include Frederiksberg, Hillerød and Høje Taastrup, where average processing times went from 190, 193 and 119 days respectively in 2021 to 416, 333 and 490 days respectively in 2022.

A national organisation for tenants, Lejernes Landsorganisation, called the situation in the Greater Copenhagen area “unacceptable”.

READ ALSO: Deposits, landlords and CPR registration: The worst things about renting a home in Denmark (2020)

“It’s important that the appeal boards process the appeals as quickly as possible. It can be a catastrophe for an individual person not to know their rent and it gives a lot of uncertainty about your finances,” the organisation’s chairperson for Greater Copenhagen Claus Højt, told DR.

Højte called for more resources to provide better staffing at municipal level.

Copenhagen Municipality has avoided major additional backlogs with an average processing time of 226 days in 2021 and 260 days last year.

“Cases have become more complex and we have received more of them. We got resources to make more rental appeals boards so we can process more cases and get waiting times down,” a senior official from the municipality, Jesper Hyldal, told the broadcaster.

Meanwhile, the interest organisation for landlords, Danske Udlejere, has advocated for a reduction of case numbers by making it more expensive for tenants to bring their cases to appeals boards. The current fee is 345 kroner.

“Tenants might think they can just as well try it because it has no consequences apart from putting a lot of people to work and straining the system,” the organisation’s chairperson Keld Frederiksen said. “It might be fair if it cost a lot of money, and if the tenant won the case, they get the money back. If the case is lost, so would the money be.”

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RENTING

INTERVIEW: ‘Expats are targeted in Denmark by landlords who charge excess rent’

Alex Dagil, the serial entrepreneur behind the company Rent Hero has helped over a thousand foreigners in Denmark challenge excess rents. He explained to The Local why expats are targeted and why he won't take on every case.

INTERVIEW: 'Expats are targeted in Denmark by landlords who charge excess rent'

Denmark’s system of rent control is complicated, with at least four different sets of rules determining what counts as a fair rent, depending on the age, location and size of the apartment, and on what actions current and former landlords have taken to win the right to levy higher rents. 

But rent is still controlled, meaning anyone who suspects they are being overcharged can submit a complaint to their local rental board (see list here), themselves.

You can also ask Lejernes Landsorganisation (LLO, the Danish Tenants Organisation) and Dankse Lejere (Danish Tenants), two tenants unions who help members win fair rent cases. Then there are the private companies offering help reducing rents, often on a no-win, no-free basis, such as Fair Husleje and Digura. Rent Hero is alone in specialising in helping foreigners. 

READ ALSO: The four ways your rent can be regulated in Denmark

“We saw that expats were being overcharged and that they were not really any companies that tried to specifically cater to the needs of expats,” Dagil told The Local about his decision to launch the company five years ago. 

This was surprising, he said, as foreigners were and still are disproportionately affected by unscrupulous landlords.  

“Landlords who want to rent out housing at above the fair price target expats because they don’t know the rules,” he explained. “And then even if they lose a case, they limit their loss because an expat might stay in an apartment for two to three years, but if you rented out to a Dane, they might be stuck there for ten years.”

This can make a big difference to the financial impact of having excess rents corrected, he pointed out. 

If it’s decided rent should be reduced by 5,000 kroner a month, which is quite common, the landlord faces an annual loss of 60,000 kroner. If the Danish tenant remains in place for 10 years, that’s a 600,000 kroner loss. If an expat manages to get their rent reduced, they might only stay three years, limiting the loss to 180,000 kroner. 

This is why some landlords advertise apartments as available to expats only, or use expats only rental portals like Apartment in Copenhagen

“Those apartments are never available for Danes for the specific reasons which I mentioned before: The rent is super-overpriced, so they’re worried that it could be rented out to a Dane they would stay there for longer and and the likelihood of them being aware of rent control is probably also higher.” 

Some foreigners are of course naive, but others are simply in a hurry to get an address that can provide them with a CPR number, which can into turn allow them to get a bank account, and so start work. 

“They have a job, which they would very much like to start and they need to have a place to register their CPR, so they can get started with their life in Denmark. So they’re much more desperate in a housing market where everybody wants affordable housing,” Dagil explained.

The landlords offering these expat-targeted apartments will often claim that they’re providing a service that makes it easier for expats to settle. 

“They say ‘we’re offering this great product for expats’. Well, that’s fine. You’re doing a product targeted at expats. But there’s no place in the rental law for creative products targeted towards the needs of expats, because rent control is rent control. And they don’t see it that way,” Dagil said.

Rent Hero estimates that expats are charged on average 30 percent more in rent than Danes are for a comparable apartment, but for some expats, that’s a price worth paying. Dagil told The Local he found many expats are unwilling to challenge excess rents, even if they fully understand how much extra they are paying. 

“The primary issue that expats have is that they’re worried that if they start a case they’ll get evicted. What happens with their deposit, if they start a case? Those are the two primary issues. It’s never isolated. People don’t look at rent in isolation. They’re worried about, what if the landlord retaliates? What if they do x? What if I need to have my dishwasher switched? What happens then? It’s not necessarily the lack of information, which is the biggest thing holding people back.” 

Dagil said Rent Hero’s interests are more aligned with those of tenants than the big rental unions, as the rental unions generally want to take all cases to the rental board to challenge the rent, partly to set a precedent keeping rent under control for all tenants, even if it might not be in the interests of the individual tenant. 

Big landlords in Denmark increasingly appeal all decisions against them from rental boards to the higher housing court, largely because a new rule requires them to inform all tenants in a building if they accept a rental board’s decision, meaning they risk other tenants also seeking reduced rent. 

Often, Dagil said, this can mean tenants risk spending more on legal costs than they can get back in rent. 

“There’s a lot of cases we simply do not take – even though the client might win it at the rent board,” he explained. “If the tenant doesn’t have legal insurance, they will have to pay for that cost themselves. If you’re dealing with a case that might save 1000 kroner a year in rent, and you’re left with a potential court case that costs you 50,000 to 70,000 kroner to pursue, no one in their right mind would pursue these cases.”

Dagil argues that the two tenant unions will tend to push members to pursue such cases, whereas Rent Hero is more likely to seek a settlement with the landlord, that might not reduce rent to such a large extent but which will avoid the courts. Rent Hero, he says, will only advise clients to go to the courts if the amount they are being overcharged is sufficiently large, if the landlord is a relatively small landlord who tends not to appeal cases, or if the tenant has legal insurance. 

An article in Vi Lejere, a website run by the Danish Tenants’ Organisation, accuses Rent Hero on the other hand of levying “huge fees”, with one tenant ending up having to pay the company fully half of the excess rent they had recouped.  

Dagil does admit that Rent Hero is “maybe a bit more expensive”, than the other rent reduction companies. “But it’s very easy to get hold of us usually, and we’re also super-specialised,” he said. 

The tenants’ organisations are likely to push people to take their case to the rent board regardless, even though they only have a win rate of about 50 percent, whereas Rent Hero, with its no-win, no-pay structure has to focus on cases with a high chance of a quick win.  

“If they don’t have the conversation beforehand about legal insurance, it’s probable you will end up worse than you were before. And I think that what I try to strive towards is to be as honest as possible.” 

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