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PROPERTY

EXPLAINED: What is Denmark’s co-operative housing system?

Denmark has a unique co-operative housing system called an "andelsboligforening", which doesn't involve landlords or rent but isn't subject to market prices.

Published: 7 July 2023 17:11 CEST
Updated: 29 October 2023 08:15 CET
EXPLAINED: What is Denmark's co-operative housing system?
Around one-third of housing in Copenhagen is co-operative associations. Photo: Niels Ahlmann Olesen/Ritzau Scanpix

Denmark’s housing system consists of three main areas: An owned home (ejerbolig); rented home (lejebolig) and co-operative home (andelsbolig).

What makes this form of housing unique, is that when you buy an andelsbolig, you buy a share in the association that owns the whole building, equal to the value of the apartment. You are then a member of that co-operative association. 

Co-operatively owned housing accounts for around one-third of the housing stock in Copenhagen.

Where can I find an andelsbolig?

There is no central register of co-operative housing associations. Some are sold through newspaper adverts, online sites including DBA and estate agents. Some older co-operative apartments are sold through waiting lists, which can be years long and also hard to find and join. There is also some controversy surrounding the selling of andelsboliger, that some existing tenants choose to sell their share to a friend rather than using the waiting list.

How do I buy an andeslbolig?

The price of the andeslbolig is calculated as a percentage value of the entire co-operative development, and takes into account the building’s outstanding debt and improvements. So the asking price cannot be set by the seller but the board of the co-operative housing association. As andelsboliger are not subject to market prices, you generally don’t make money on your property but you don’t lose it either. 

When you join a housing co-operative, you pay a lump sum to the association like a house deposit, and then pay a monthly charge for your home. Although the lump sum is often relatively large, it is less than buying an owned home (ejerbolig). The monthly charge covers an ongoing housing tax (rent). The housing tax covers the co-operative housing association’s expenses for interest and instalments on the association’s loans, administration, renovation, property taxes and maintenance.

READ MORE: What do foreigners need to know about buying a home in Denmark?

What is the board of co-operative housing association?

In housing co-operatives, there is a board with elected residents, who are responsible for overseeing building maintenance, responding to emergencies, and the administration of new households moving in. All residents can have a say on the board and voice how they think the building and common spaces like the courtyard and laundry rooms are run.

In housing co-operatives, the board also establishes the rules for rental. So if the co-operative’s bylaws state that the apartments can only be used by members, then it is not legal to rent out your apartment, whether on regular long-term leases or through platforms like Airbnb.

READ MORE: What are the rules if you want to Airbnb your home in Denmark?

Where can I find out more?

It is always worth seeking advice before buying property. Estate agents, lawyers and borger.dk can provide more information about joining a co-operative housing association.

It is important to have an overview of the co-operative association’s financial situation before buying. In  particular, whether the property’s value by the board is based on public assessment, private valuation or the acquisition price.

It is also worth asking the size of the association’s debt, in relation to the value of the property. If the property value significantly drops, the monthly housing tax could be raised and if some members cannot afford the increase or are able sell their homes, it could mean costs are imposed on other members. 

READ MORE: The must-have vocab for buying a flat or house in Denmark

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RENTING

INTERVIEW: ‘Landlords who charge excess rent in Denmark target expats’

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.

Published: 21 May 2024 15:53 CEST
INTERVIEW: 'Landlords who charge excess rent in Denmark target expats'

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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