A Comprehensive Guide on How to Buy an Apartment in Copenhagen
20 April 2023
A Comprehensive Guide on How to Buy an Apartment in Copenhagen
This article is intended to provide a detailed guide for anyone looking to buy an apartment in Copenhagen. Whether you’re a first-time buyer or an experienced investor, this guide will help you navigate the complex process of buying a property in the Danish capital.
How to start your search for an apartment in Copenhagen
Copenhagen is a beautiful city that has become increasingly popular among foreigners who want to buy property in Denmark. However, buying an apartment in Copenhagen can be a challenging task, especially if you're not familiar with the Danish real estate market. In this section, we'll provide you with some useful tips on how to start your search for an apartment in Copenhagen.
Determine your budget
The first thing you should do when searching for an apartment in Copenhagen is to determine your budget. This will help you narrow down your search and ensure that you only look at properties that are within your price range. It's important to keep in mind that Copenhagen is known for being an expensive city, so you may need to adjust your expectations or consider financing options. Read more about financing the property purchase further down the page.
Identify preferred neighbourhoods
Once you've determined your budget, the next step is to identify the neighbourhoods you prefer. Copenhagen is divided into several districts, each with its unique character and charm. Some of the most popular neighbourhoods among foreigners include Frederiksberg, Østerbro, Nørrebro, Vesterbro, and Christianshavn. You may want to consider factors such as proximity to public transportation, shops, and restaurants when selecting a neighbourhood. Read more about some popular neighbourhoods in Copenhagen here.
Utilise online resources
One of the easiest and most convenient ways to search for apartments in Copenhagen is to use online resources. This is especially useful if you haven't relocated to Denmark yet. There are several websites and portals that list properties for sale in the city, including Boligsiden, EDC and Nybolig. You can also use social media platforms like Facebook and LinkedIn to find properties that match your criteria.
It's important to note that most properties in Copenhagen are sold through real estate agents. Therefore, it may be beneficial to work with a local agent who has knowledge of the local market and can help you find the right property. Another way is to hire a buyer's agent. This way, you will have suitable apartments presented to you, based on your preferences. The buyer's agent will also help you bid on properties, assist you with loan applications and financing options, legal counselling, and much more. Read more about buyer's agents and what services they offer.
Attend open houses
Attending open houses (or in this case open apartments) is another way to view apartments in Copenhagen. Open houses are typically held on weekends and allow you to view the property with your own eyes and ask questions to the seller or the real estate agent. You can find information about open houses on real estate websites or by contacting a local agent. This is of course not possible if you haven't moved to Copenhagen yet.
The Process of Buying an Apartment in Copenhagen
The process of purchasing an apartment in Copenhagen can be a bit different from what you might be used to in other countries. However, by following these general steps, you can navigate the process successfully:
Find a local buyer’s agent
It's recommended to work with a local real agent who has knowledge of the local market, the legal requirements, and the process of buying an apartment in Copenhagen. The agent can help you find suitable properties that meet your criteria, negotiate with the seller, and guide you through the entire process. This is especially important if you are a first time buyer and don’t speak Danish.
Secure the financing and make an offer
Determine your budget and obtain financing before you begin your search. It's important to note that banks in Denmark require a minimum down payment of 5% to 20% of the purchase price of the apartment. Once you've found an apartment that you like, you can make an offer to the seller. The offer is typically made in writing and includes details such as the purchase price, the closing date, and any conditions of the sale.
Before you move on to signing the contract, you should also have a professional home inspection made. This inspection will ensure that your Copenhagen apartment is in good condition and does not have any issues that could affect its value later on.
Sign the purchase contract and transfer ownership
If the home inspection goes well and you're satisfied with the terms of the sale, you can sign the purchase contract. This legally binds both you and the seller to the terms of the sale. The final step is to transfer ownership of the apartment. This typically involves transferring the purchase price to the seller, registering the transfer of ownership with the government, and paying any applicable taxes and fees.
It's worth noting that the process of purchasing an apartment in Copenhagen can take several weeks or even months, depending on various factors such as the complexity of the sale, financing, and government processes. Working with a buyer’s agent can help you navigate this process and ensure a smooth purchase.
Things to consider when you want to buy a flat in Copenhagen
Buying an apartment in a buzzing and vibrant metropolis such as Copenhagen requires many considerations. First and foremost, you need to find out which type of apartment you want to purchase. Because in Denmark, two types of apartments exist, and they have different obligations and requirements.
The two types of apartments that you can purchase in Denmark are condominiums and cooperative apartments. Which of the two is better depends entirely on your needs and wishes. Below, we have gathered the most important pros and cons that every potential flat owner should take into consideration when looking to buy an apartment in Denmark.
When you buy a condominium, you own it. Condominiums are almost always more expensive than co-op apartments, meaning you have to borrow more money if you want to buy the former. There is a silver lining, of course, and that is that a mortgage is cheaper than a bank loan. When you buy a condominium, you – and only you – decide which loans you want to take.
Condominium owners must pay property tax
Condominium owners can sublease their property.
The story is different if you want to invest in a co-op apartment. As you are buying a share into the tenant owner’s association owning the entire property – and not the individual property per se – you cannot obtain a mortgage. Instead, you must take out a bank loan which is more expensive.
When you buy a co-op apartment, not only do you buy yourself into the tenant owner’s association’s property. You also buy yourself into its financial situation. In other words, its past loans and financial decisions are yours.
This highlights the importance of thoroughly investigating a tenant owner’s association’s (andelsbolig forening in Danish) financial status before committing further. Because if the association runs into any financial trouble, then guess who has to pay? That’s right, you, the shareholder/tenant.
Co-op apartment owners don’t have to pay property tax.
Co-op apartment owners might be able to lease their apartments, but it is the tenant owner’s association’s statutes that have the final say.
Co-op apartment owners are required to maintain their homes. Meanwhile, condominium owners decide how much effort they want to put into maintaining their homes. However, it is advisable to maintain your property regularly to keep the value from diminishing.
A certain sense of community is expected no matter which type of apartment you buy.
When you buy a co-op apartment, you are expected to take part in joint duties, such as maintaining the property, making financial decisions etc.
This is also the case for condominium owners but to a lesser extent. Even though you own your home, you still share roofs, common areas etc., with the other tenants in the building. As such, you are expected to contribute to maintenance expenses.
Your choice of apartment might limit your refurbishing dreams
Co-op apartment owners aren’t allowed to make major changes in their homes without a permit from the tenant owner’s association’s committee.
With a condominium, you are free to do (almost) whatever you want because you own the property. However, you are not allowed to tear down load-bearing walls, or make other arrangements that could damage or alter the building structure.
Which type is more profitable?
A condominium can be a source of profit should you decide to sell it someday. Though for that to happen, you have to pay off your debt, and your property’s value must increase. Recently, the price index for Copenhagen real estate has declined. However, if you plan to stay for a longer period of time, these numbers shouldn’t be too worrisome.
Prospects of profit aren’t as favourable for co-op apartments as they have a price cap. The price cap is determined by factors such as the property’s value and its debt.
As you can see, there are pros and cons to each apartment type. Whether you should choose one or the other depends entirely on your needs and wishes. A co-op apartment can be just as accommodating as a condominium and vice versa.
Financing your Copenhagen apartment
Copenhagen is one of the most expensive cities in Europe, and Danish housing prices tend to be on the higher end of the scale. Therefore, a solid financing plan is essential when considering buying an apartment in Copenhagen. Some may have the total amount in cash, but for most people, buying an apartment in Copenhagen requires a bank loan or mortgage. Here it's important to remember that your choice of an apartment will determine how much you can loan and what type of loan you can get.
When buying a condominium in Denmark, you can finance up to 80% of it with a mortgage. Up to 15% can be financed with a bank loan, and you must put down at least 5% of the purchase price. However, this only applies to Danish and EU/EEA citizens. If you are outside the EU/EEA zone, the down payment may vary from 10-40% of the purchase price. You can still finance up to 80% of your apartment with a mortgage, but how much you can borrow is up to your bank to decide. Read more about how to buy property in Denmark as a foreigner.
You can't get a mortgage for cooperative apartments in Denmark. So, unless you have a small fortune, your only option is to apply for a regular bank loan.
At Bomae, we strongly advise you to talk to many different banks for a good loan offer. Our guide to Danish banks lists Denmark's biggest banks and their services.
Tip! Consulting a buyer's agent can often help you get a better loan offer that will be cheaper in the long run. Plus, you don't have to do all the negotiating yourself.
Legal Considerations for Buying an Apartment in Copenhagen
Buying an apartment in Copenhagen involves several legal considerations that should not be overlooked. It's important to understand the property tax system, comply with building regulations, and hire a lawyer or a buyer’s agent to ensure that the transaction is legal and all necessary documentation is in order. With the right preparation and guidance, you can confidently purchase your dream apartment in Copenhagen.
Property taxes in Copenhagen are relatively low compared to other European cities. The tax is calculated as a percentage of the assessed value of the property and is paid annually. The amount of tax you pay will depend on the value of the property and whether it is your primary residence or a secondary property. When it comes to co-op apartments, they are exempt from property taxes.
It's important to note that as a buyer, you will be responsible for paying any outstanding property taxes on the apartment you purchase. Your lawyer can help you determine how much tax is owed and ensure that it is paid in full before the sale is completed.
As we touched upon in a previous section, building regulations in Denmark are strict. This means that any renovations or alterations to a property must comply with local laws and regulations. Before buying an apartment, it's important to carefully review the building's history and any renovation work that has been done in the past.
If you plan on making changes to the apartment, you will need to obtain the necessary permits from the local authorities. Your lawyer can help you navigate the permit process and ensure that all necessary permits are obtained before any work begins.
Get a lawyer or an agent
The role of a lawyer or a buyer’s agent in the buying process is essential, as they can help ensure that the transaction is legal and all necessary documentation is in order. Your lawyer or agent will review the purchase agreement, title documents, and any other legal documents related to the sale.
They will also conduct a title search to ensure that there are no liens or other encumbrances on the property that could impact your ownership. In addition, your lawyer or agent will help coordinate the transfer of ownership and ensure that all necessary taxes and fees are paid.
Read more about the advantages of consulting a buyer’s agent before you buy an apartment in Copenhagen.
Buying an apartment in Copenhagen can be a complex and challenging process, but with the right guidance and knowledge, it's possible to find your dream home in this beautiful city. By reading this guide, we hope you will have an easier time navigating the housing market, regulations and the many financing options.
Don't hesitate to seek professional advice and guidance throughout the process, as this can help ensure a smooth and successful transaction. At Bomae, we have long experience helping expats find, finance and purchase their dream homes. Together, we can make your dream of owning an apartment in Copenhagen come true.