Copenhagen is hidden gem for investment
December 21, 2015 - Denmark
The Danish capital, Copenhagen, is a hidden gem that more international buy-to-let investors should consider, says an Anglo-Danish property management company.
Nectar Asset Management, which helps UK investors to buy in Denmark and vice versa, says Copenhagen has ranked highly in international surveys for its quality of life for many years
Charles Sherratt-Davies says Copenhagen is a hidden gem. “Its stable economy, great schools and safety make it attractive for locals and visitors alike. Although it is one of the world’s most expensive cities, it is also one of the most liveable with excellent public transport, a world class cycle network and strong environmental policies.
“Copenhagen’s population of over 1.2 million has been growing rapidly over the last decade, with a net 1,000 people per month being added to the population. By 2025 the population is expected to grow by 18%. And most importantly for buy-to-let investors, there is a 0% vacancy rate in the city.”
Denmark has some of the lowest property transaction taxes in Europe, with Stamp Duty Land Tax being just 0.6% of the purchase price, with no upper limit.
The country also has some of the cheapest buy to let mortgages in Europe, with a typical 80% LTV mortgage having interest of just 1% at present. Debt can be fixed for up to 30 years.
Non-Danish residents cannot own real estate directly and have to set up a local Limited Partnership or limited company which will then own the asset. Corporation tax is 22% in Denmark.
The landlord will also have to pay property tax -Property Value Tax and Land Tax, at around 1% of the taxable value of the property. The official taxable values are usually much lower than the market value.
Usually lease contracts are non-terminable by the landlord unless there has been a breach of the lease, for example, non-payment of rent. Tenants are usually required to pay three months pre-paid rent, and 3 months deposit. Rents can be increased in line with the Consumer Price Index.
In older buildings, rents are regulated by the local council and there is a maximum ceiling that a landlord can charge in rent. The ceiling is increased each year. For newer buildings there is no regulation of the rents.
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