An overview on how to buy property in Denmark as a foreigner

Your Step-by-Step journey to buying property in Denmark

1. Initial considerations and financial planning

Before you even start looking at properties, understanding your financial capacity is paramount.

• How Much Can You Afford? Your budget will be determined by your income, savings, and creditworthiness. Danish banks typically offer mortgages covering up to 80% of the property value, with the remaining 15% often financed by a bank loan and a minimum of 5% as a down payment.
• Mortgage Types: Denmark offers various mortgage types, primarily through mortgage credit loans. These come with different interest rate structures (fixed, adjustable) and repayment profiles. Choosing the right one depends on your risk appetite and financial outlook. 
• Budgeting for Additional Costs: Beyond the purchase price, factor in expenses like stamp duty (tinglysningsafgift), legal fees, valuation fees, and setup costs for your mortgage. These can easily add up to 3-5% of the purchase price.

2. Navigating legal requirements for foreigners

One of the most critical aspects for foreign buyers in Denmark is understanding the specific legal requirements regarding property acquisition.

Do you need permission to buy property in Denmark?

Generally, foreigners need permission from the Danish Ministry of Justice to purchase real estate in Denmark, unless they meet specific criteria for permit-free acquisition.

Permit-Free Property Acquisition: The Domicile Rule

You typically do not need permission if you:

1. Have a domicile in Denmark: This means you have established your permanent residence here and intend to stay for an extended period. Evidence might include a CPR number, employment contract, tax residency, and enrollment in Danish schools for children.
2. Have resided in Denmark for at least 5 years: This refers to continuous residence.

It's crucial to understand that "domicile" implies a genuine connection to Denmark, not just a temporary stay. The Danish courts are strict in their interpretation.

Special Rules for EU/EEA/Swiss Citizens

Citizens from EU/EEA countries and Switzerland can acquire property in Denmark without prior permission if the property is intended as their permanent primary residence. This means you must reside in the property yourself. If you are buying a property for any other purpose (e.g., investment, secondary home), you will generally need permission.

Buying a Non-Permanent Dwelling (Fritidsbolig/Summer House)

Purchasing a summer house or holiday home as a foreigner is generally more restricted. Even EU/EEA/Swiss citizens typically need permission if they do not have a strong connection (domicile or 5 years of residence) to Denmark. The intent behind the purchase (permanent residence vs. leisure) is key.

Understanding these rules can be complex. We strongly recommend seeking expert legal advice early in the process to clarify your specific situation.

5. The purchase agreement and legal safeguards

When you're ready to make an offer, the purchase agreement comes into play.

• The purchase agreement: This legally binding document outlines all terms and conditions of the sale, including the price, takeover date, and any specific conditions.
• The buyer's agent: Engaging a buyer's agent like Bomae is highly beneficial. We represent your interests exclusively, negotiating on your behalf, reviewing all documents, and ensuring your rights are protected throughout the process. This is particularly valuable for foreigners who might be less familiar with Danish legal nuances.
• Attorney's reservation: A standard clause in Danish purchase agreements allows you to withdraw from the deal without penalty if your legal advisor (attorney or buyer's agent) disapproves of the terms within a specified timeframe (typically 5-6 business days). Always ensure this clause is included.
• Financing reservation: This reservation makes the purchase contingent on you securing the necessary financing. It protects you if your loan application is denied.

6. Negotiation and formalities

Once the purchase agreement is signed, there are still a few steps before finalising.

• Negotiating the purchase price: Don't hesitate to negotiate! A buyer's agent can provide valuable insights into market prices and negotiation strategies, potentially saving you a significant amount.
• Property registration Fee: This is a mandatory government fee for officially registering the transfer of ownership (title deed) and any mortgages at the Danish Land Register. It consists of a fixed fee plus a percentage of the purchase price or mortgage amount. 
• Bank approval: Your bank will finalize your mortgage and bank loan once all conditions are met and documents are reviewed.

Our clients’ bids are often favoured

If you have not decided exactly where to buy or don't know what sort of property your budget will yield in different areas, we can help get a precise overview.

Once the ideal property has been found we undertake a detailed price comparison re­search using Land Registry data and on-market comparables to establish what we believe to be fair market value.

We will then agree on a negotiation strategy and work to secure the most favourable terms with the selling agent. Simultaneously to this process, we will make sure your financing is obtained to your needs.

We have an excellent track record of successfully negotiating very substantial savings from asking prices.

Our clients’ bids are often favoured over competing bids because agents and vendors value our involvement and have greater confidence the deal will reach a successful conclusion.

Review purchase documents - preferably with a lawyer by your side

Once you have found your dream home, and the parties have agreed on a price, it’s time to meticulously go through each purchase document. This is to ensure that you are getting exactly what you are paying for.

Most people hire a lawyer to go through the documents, as these kinds of papers tend to be written in a manner that is difficult to understand.

A lawyer is not required to complete the purchase but keep in mind that the cost of hiring a lawyer is tiny compared to the huge amount of money you are spending on your future home.

If there is a time when you don’t want to make a mistake, then this is it.

Finally, when all the documents have been read and approved - either with or without a lawyer – the deed is created and sent to the Registry Court, officially making you the new owner of the property.

What should I pay attention to when looking to buy a house in Denmark?

Once you have set your eyes on a specific house (not an apartment – we will get back to that later on), make sure you get an independent surveyor to inspect the property.

Though the seller will always provide you with a home condition report that describes the state of the property, including deficiencies and damages, there is a chance that the surveyor who made it missed some crucial issues.

By hiring your own surveyor, you get an independent evaluation of your future home. Also, the surveyor can help you to better understand the issues listed in the property condition report and how they will financially affect you in the long run. These findings can then be used as negotiation advantages when dealing with the real estate agent.

But what if I want to buy an apartment - shouldn’t I also get a surveyor to inspect it?

The short answer is no. The long answer is that if you want to perform a survey on an apartment, you need to include the entire building in the survey. And that, dear reader, is very, very expensive.

Practically no one performs a survey when they want to buy an apartment in Denmark. The only exception is when the buyer seeks to purchase the whole building.