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Copenhagen has traditionally (a bit less recently) fought this kind of effect by restricting absentee investment ownership through several mechanisms. For one,
by mjn 13y ago
Copenhagen has traditionally (a bit less recently) fought this kind of effect by restricting absentee investment ownership through several mechanisms. For one, a large percentage of property in the city has ownership that requires residency in Denmark, usually because it's structured as a residents' cooperative. Another significant portion is owned by nonprofit organizations that will only rent the property to residents. And beyond that, much rental property has renter-friendly laws with a view towards ownership, where if you have been renting the property to someone for three years, you are required to sell it to them if they want to buy. The general idea is to reduce the impact of absentee landlords/investors on the local housing market, by trying to restrict it to only people who physically live in Copenhagen.
The high taxes help make this work as well, by trapping would-be cheats in a situation where they can't have it both ways. Do they want to claim that they live in Denmark? Then their property is fine, but they are liable for Danish income taxes. Do they want to claim that they live elsewhere? Then they avoid Danish income taxes, but must sell their property.
- rwmj 13y agoWhy don't the real owners employ proxy Danish residents to act as "owners"?
- xyzzy123 13y agoI suppose that if the Danish residents hold title it might be hard to prevent them from disposing of the property.
- MrBuddyCasino 13y agoVery interesting! The more I know about scandinavian countries, there more impressed I am.
- roel_v 13y agoHow is that even legal? It's a direct violation of several European and human rights laws. Are these laws being challenged in court?
- mjn 13y agoDenmark has several EU opt-outs in its accession treaty. Equal treatment of non-resident non-nationals for the purposes of property ownership is one of them, mostly because they were worried about Germans buying up all the summer homes (joining the Euro and joining the European military command are two others). I believe Malta has the same opt-out, and Finland had a temporary one that's being phased out. However the coops are where the residency catch-22 hits most often, and those are just structured with contract law. They have the typical owner-occupied-only rules that most coops worldwide have (some NYC coops are similar). When you buy a coop share you sign a contract agreeing that you, the share owner, are buying the coop share because you plan to reside there. You agree in the contract not to sublet it, and to sell your share if in the future you no longer reside there (usually with a 2-year grace period). What's different from the U.S. is that it's fairly easy for the coop to enforce the owner-occupied requirement, because there is a central register of residence addresses. Every person resident in Denmark declares themselves legally resident at exactly one address. So the coop can trivially check if you have declared yourself resident at the coop or not. If you move out of the country, then to avoid Danish taxes you must declare yourself a nonresident, which removes you from the register, which the coop then sees. It also means that you can't own shares in two coops, since you can't register yourself at both. (Though in either case, some games can be played by spouses.) The nonprofit housing associations are just regular landlords, who own large parts of the city and rent out, again with no-subletting contracts.
- msh 13y agothe parent was a bit wrong on this. It dont require the owner to be a danish resident, but it requires the owner to live most of the time in the property and by that be liable for danish taxes (which makes the property unsuitable for this kind of investment).