For years, Denmark has repeatedly topped surveys as the happiest place on Earth, touted for its positive quality of life, favourable start-up business environment and healthy work-life balance. But now Denmark, and its capital Copenhagen, may have something to cry about: its sky-high rental market.
Popularity, after all, comes at a price. And with Copenhagen’s burgeoning population, the influx of newcomers has led to a housing shortfall, particularly when it comes to rentals, with demand outpacing supply. The City of Copenhagen forecasts that the city will grow by 11,000 people by the end of 2016 and a full 100,000 by 2027.
"We will hit a milestone this year when we pass 600,000 Copenhageners. That means that we will continue to have an enormous need to build housing that Copenhageners with normal incomes can afford to buy,” says the city’s mayor Frank Jensen. The city hopes to earmark 9,000 new residences for lower and middle class workers and has worked to avoid a city of only luxury apartments.
The game changer
There are two main reasons for the rise in housing competition — more Danish couples are staying in the city once they start a family rather than moving to nearby suburbs, plus there are more people moving into the city. City officials say that 45,000 new residences need to be built in the next 10 years to accommodate this rise.
It isn’t uncommon for someone to spend three months trying to find a flat
There is a lot of new development in the city, notably in Nordhavn, Carlsberg Byen and Sluseholmen, all former industrial areas. But Charlotte Larsen, who runs a company called Copenhagen Housing assisting expats in finding places to live in the city, fears these areas are not necessarily going to benefit people seeking rentals.
“Unfortunately most of the newly built apartments in Copenhagen are big, expensive places. We need smaller apartments for less than 10,000 Danish kroner (about $1,500) per month… to meet the demand.” A 97-square-metre apartment in Carlsberg Byen or 70-square-metre one in Nordhavn will set you back 3.4m kroner ($501,422) to buy. By comparison, rental of a 100-square-metre apartment with sea views in Nordhavn is currently at 18,000 kroner ($2,655) a month.
Playing the field
The rental market in the city has become incredibly complex and massively competitive, Larsen says. “The biggest challenge for people hoping to move to the city is that the number of apartments available for rent is so low and demand far exceeds supply,” she says. It isn’t uncommon for someone to spend three months trying to find a flat at their target price.
Landlords keep upping the ante to secure a lease
Trine Lohmann Pedersen who decided to return to Denmark from Portugal in 2015 agrees. “You need to get on the portals first thing in the morning and keep refreshing the page otherwise somewhere can be listed and gone within hours,” she says. A Danish speaker, Pedersen didn’t have the language barrier when searching, but even so, “was a full-time occupation looking for a place”. It took Pedersen two months to find an apartment.
Rent-stabilisation regulations further complicate matters. Similar to New York City, rent-stabilisation regulations in Copenhagen keep a large swathe of the rental apartments in the old buildings in city centre artificially low in rent so they rarely become free. This means those that aren’t rent controlled (for example apartments that are renovated or built after 1991) are expensive to rent, Larsen explains. A 70-square-metre rent-stabilised apartment of could cost as little as 6,400 kroner ($943) per month, whereas the average one-bedroom apartment on the open market in the city centre runs 8,634 kroner ($1,272). Between 1% and 6% of rentals were built after 1991, according to reports from 2015 and 2016.
And landlords keep upping the ante to secure a lease. It is not unusual, for example, to be asked for the equivalent of seven months’ rent upfront (three months’ rent as a deposit, three months prepaid rent and then the first month’s rent) to secure a property. Many people take out loans to cover this.
Looking further afield
As is the case with many popular metropolitan cities around the globe, the prices drop considerably and options increase if you decide to live further out of the city. “It is essential to set expectations right and to be prepared to accept living other places than the city centre,” Larsen says. “With public transport many outlining places are still within a half hour commute of the city.”
Alex Ross, a former teacher from the UK, moved to Copenhagen in March 2016. “It was challenging to find a home within the budget we had, but it was made easier by not being picky about the areas we were looking at. We wanted to be close to Copenhagen but were happy to live outside of the city, and this allowed us to get more for our money.”
Ross was also flexible when he arrived in Copenhagen. “Our first move to Copenhagen was into a shared accommodation. This had some huge benefits in terms of getting to know the local community and make friends.”
And before arriving, be sure to do your homework and set realistic budgetary expectations. Kara Wong from San Diego, California, in the US found the prices in the city a lot higher than she expected.
“I ended up having to increase my budget by about 25% in order to find a place in the city. The location I ended up in was not one of the options of neighbourhoods I had originally hoped for,” she says, adding that she loves the city nonetheless. “One must either be prepared for disappointment or increase budget significantly in order to find an accommodation here.”
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