Colliers Copenhagen Property Market Report 2019

Market practices – Market Report 2019

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Market practices

Agents’ fees and legal fees are typically subject to negotiation in Denmark and are highly case-dependent. As for acqui- sition costs, it should be noted in particular that the Danish transfer tax rate is only 0.6%, in eastern Denmark (including Copenhagen) payable by buyer, in western Denmark split 50:50 between the parties.

Information provided in the table below is intended for guidance only and reflects “typical market practice” as far as commercial and residential leases are concerned.

Typical lease practices, Denmark Commercial leases

Residential leases

Rent quoted in 1

DKK per gross sqm p.a.

Rent quoted in 9

DKK per gross sqm p.a.

Gross external

Floor areas Lease term 2

Gross external

Floor areas 10 Lease term 11

Negotiable Negotiable

‘For time and eternity’

Breaks

None

Breaks 3

Rent payment

Monthly or quarterly in advance

Rent payment

Monthly

4-6 months

Deposit and prepaid rent 4 Basis of rent adjustment 12 Frequency of rent adjustm.

3-6 months

Deposit 4

NPI

NPI

Basis of rent adjustment 5 Frequency of rent adjustm.

Annual

Annual

Every 2 years

Rent review6

Every 4 years

Rent review 13

External repairs Internal repairs Common areas 7

Landlord

External repairs Internal repairs Common parts

Landlord

Tenant

Negotiable

Tenant (via S/C)

Landlord

Tenant insures content

Building insurance

Building insurance

Landlord

Landlord insures building

Property taxes

Tenant

Property taxes

Landlord

Yes, 2-year max.

Subletting

Negotiable Negotiable

Subletting 14

Right of assignment

Right of assignment

Yes, in a swap

Yes

Restoration

Negotiable

Restoration (Hand-back) 8

Danish Rent Act

Pre-emption

Negotiable

Pre-emption 15

Notes 1. Exclusive of VAT, 25%. 2. An initial non-termination period of 3-10 years is customary, upon expiry of which the lease may be terminated at 6-12 months’ notice. The landlord is only entitled to terminate the lease under special circumstances, cf. sections 61 and 62 of the Danish Business Lease Act. It is important to note that in Denmark the expiry of the non-terminability period is not identical with lease expiry but simply denotes the date when the parties are entitled to terminate a lease at the stipulated notice. 3. Against penalty 4. Not in escrow. 5. NPI = Net Price Index, minimum and maximum annual increase as per agreement. 6. A review of the rent to market rent may be applied for by either party every four years but is not compulsory. 7. S/C means Service Charge. 8. The typical tenant restoration obligation is to put the premises back to the original condition when leased. 9. Not subject to VAT, 25%. 10. For multi-let properties including a proportionate part of common parts, including stairs, lifts, etc. 11. The tenant typically entitled to terminate the lease at 3 months’ notice. 12. Applicable to buildings occupied after 31 Dec. 1991 subject to agreement. Rules on cost regulated rent control (“omkostningsbestemt husleje”) may apply to buildings occupied prior to this date. 13. Utility value review may be applied for by either party every two years. This mechanism applies if the lease is not governed by the rules of cost regulated rent control, cf. (11). 14. Alternatively 50% of the rooms in the flat if not more than 2 persons live in each room. The total number of residents may not exceed the number of rooms . 15. Existing tenants in residential properties governed by the Danish Rent Act may have a pre-emption right to acquire the property in case of a direct or indirect sale.