By Chelsea Al Arif
On Friday, September 2, 2022
On August 29, the Danish parliament modified the Tenancy act and banned rent increases at 4 percent to seize landlords from exploiting the raging inflation by raising rents dramatically for the next two years.
According to an article published in ‘The local.dk’, the Minister of Interior and Housing mentioned that this agreement is a positive one and would give the tenants “peace of mind”. However, giving the tenants a peace of mind insinuates that someone would be the victim of such an agreement.
The minister also declared that the change is not only for upcoming rental agreements, but also for those already in place. It is evident that the government cannot reward its citizens for the increase in expenses with the ongoing inflation, however this leaves landlords as victims of price increase and income stability making the changes disproportional.
Denmark’s central bank cautioned in May that government initiatives to relieve strain on household budgets might result in even greater inflation. This initiative to release strain on households’ budgets is adding pressure to landlords’ salaries knowing that prices in the markets are increasing making landlords’ expenditures increase whereas the salary is not as proportional.
The agreement negotiated by the Social Democrat administration with parliamentarians who support it would provide relief to around 160,000 renters who would otherwise face significant hikes, according to the ministry.
In Aarhus, rent ranges from 4,750 kr for a small apartment to 27,046 kr for a larger apartment close to the city centre. Meaning that in the next couple of years, the rent will increase to 4,940 kr and 28,127 kr respectively.
This increase is mild and relieving for tenants but mild and dangerous for landlords who are facing drastic increases in expenses but not proportional increase in salaries.
However, it is evident that a lot of debate goes around the authenticity of the landlords in Aarhus where it has been told to be very careful from raging scams due to fake contracts and scam attempts to collect money.
Aarhus citizens are now protected from the raging inflation rate, but landlords are now victims of controlled and stable salaries in the face of a continuous cycle of price increase.
References:
City of Aarhus. (2021). Beware of Scams. International Aarhus DK. https://international.aarhus.dk/study/housing-for-students/beware-of-scams/
Gronholt-Pedersen, J. (2022). Denmark limits rent increases to help households. ACE Times. https://www.zawya.com/en/world/uk-and-europe/denmark-limits-rent-increases-to-help-households-okml2cct
Reuters. (2022). Denmark limits rent increases to help households. https://www.reuters.com/markets/europe/denmark-limits-rent-increases-help-households-2022-08-26/
Statista. (2022). Average rent price of residential property in Denmark 2014–2021. https://www.statista.com/statistics/801893/average-rent-price-of-residential-property-in-denmark/#:%7E:text=As%20of%202021%2C%20the%20average,cost%20was%20857%20Danish%20kroner.
The Local.DK. (2022). Denmark plans temporary limit on rent increases. https://www.thelocal.dk/20220816/denmark-plans-temporary-limit-on-rent-increases/
TRADING ECONOMICS. (2021). Denmark Inflation Rate – August 2022 Data – 1981–2021 Historical – September Forecast. https://tradingeconomics.com/denmark/inflation-cpi#:%7E:text=Near%2040%20Years-,Denmark’s%20annual%20inflation%20rate%20increased%20to%208.7%20percent%20in%20July,amid%20soaring%20global%20commodity%20prices.
Wienberg, C. (2022). Denmark Caps Rent Increases to Soften Blow From Inflation – BNN Bloomberg. BNN. https://www.bnnbloomberg.ca/denmark-caps-rent-increases-to-soften-blow-from-inflation-1.1810905
