Denmark introduced a rent cap. The rents were set to rise by 10 percent because they are linked to inflation—as they are in Austria. But the Danish government has removed this link in order to ease the burden on households: rents may increase by a maximum of 4 percent until 2024, and increases that have already been made must even be reversed.
In January, a letter arrived with the new rent—and it wasn’t a nasty surprise: For his 42-square-meter apartment in the middle of Copenhagen, the Dane will pay only 534 euros per month for 2023 instead of 623. The posting of the user “Piitaa-Pain” spread quickly on the Internet. The reason behind this is a rent cap introduced by the Danish government, which applies from January 2023. Denmark is governed by a coalition of social democrats, liberal conservatives and liberal moderates.
Rents to rise by 4 percent instead of 10 percent
In 2023 and 2024, rents in Denmark may rise by a maximum of 4 percent. Actually, rents in Denmark are linked to inflation, just like in Austria. So without government intervention, Danish property owners would have been allowed to raise rents by almost 10 percent. The 4 percent maximum cap applies to existing and new leases, but also to rents that have been increased above the 4 percent in recent months—those must be reduced again.
“IT IS CRUCIAL FOR THE DANISH GOVERNMENT TO TAKE CARE OF DANISH TENANTS. THEY SHOULD NOT BE FORCED OUT OF THEIR HOMES AND APARTMENTS BECAUSE OF RAMPANT INFLATION,” INTERIOR AND HOUSING MINISTER CHRISTIAN RABJERG MADSEN SAID IN A STATEMENT.
Madsen’s ministry presented the law limiting rent increases in September. The Danish government is also working on a new law on rent adjustment from 2025, because even then rents will no longer be able to be increased automatically by inflation.
Rents rise by 8.6 percent in Austria
In Austria, too, there is a discussion about a cap on rent increases: for almost 400,000 leases, rents will rise by 8.6 percent in April 2023 – after rent increases last year of over 6 percent. The reason is the automatic increase in rent by inflation (the “consumer price index”) stipulated in the law. In January, the Social Democrats in the National Council propose that the rent increase be completely suspended until 2025 and then capped at two percent.
Property owners are naturally opposed to this, saying that they would then lack the money to maintain the buildings. The Danish government met this objection: If property owners can prove large investments that are not covered by current rents, they can raise rents above 4 percent in exceptional cases. Landlords are not happy about this either and complain about the bureaucratic effort. Experts assume that this very rarely apply to any case.
All in all, according to the government’s calculations, Danes will save 2.7 billion Danish kroner (about 360 million euros) in additional rental costs. Denmark’s inflation rate reached 10.1% in October, its highest level in four decades, but has since fallen to 8.7%. Rent caps also exist in Spain, Portugal, Scotland, and France.