We pay it all as tenants – but how is rent calculated? Read here if you want to know more on how the rent is determined and if you pay too much.
How is rent calculated?
Your rent can be determined in 3 ways:
- Cost specified rent
- The value of the residence
- Market price
You can’t choose yourself. Factors such as how old your property is, if it is a regulated or unregulated municipality, etc. all affects under what rule your lease is governed.
Cost specified rent
If your rent is determined on the rule of cost specified rent, then the rent is determined based on the costs that your landlord has in relation with the operation of the property and a reasonable fee.
But what residence are covered by this?
There are a total of 2 conditions that must be met.
1) The residence is situated in a municipality with housing regulation
2) The property is listed before 31.12.1991
Thus, if the property is listed after 31.12.1991, this will not be covered by these rules, but will most often be regulated by market price (read more below).
There are, however, a few exceptions to these rules, where the residence will not be covered by the rules anyway, and the rent will not be determined in accordance with the rules for cost specified rent. Here are a few of them listed:
- Small properties
- Sublease of condominium, cooperative housing etc.
- Residence located in a roof area, which in 2002 were not used or were registered as residential property
The value of the residence
If you live in a non-regulated municipality, the rent is determined based on the rules governing the value of the residence. The value of the residence is determined by comparing the rent in your residence with the rent in similar residences, taking into account the location, nature, size, quality, equipment and maintenance condition.
1) Newly renovated rooms
Are there newly renovated rooms in your apartment, eg. newly renovated toilet, the rent is of course higher than in a corresponding rent if the room is not newly renovated.
2) Number of square meters
It is clear that the more square meters the apartment/room has, the higher the rent. Typically, the value of a property will depend on the number of square meters, as for the area will apply an approx. square meter price.
In larger cities, the rent will typically be higher, the closer to the center the apartment is located then the rent will automatically be higher. However, there may also be other factors that may occur, such as prospects, shopping opportunities, etc.
4) Age and renovation of the building
The newer an apartment is, the higher the rent will usually be. If, on the other hand, the building is old and not renovated, you should pay a lower rent. However, a building may be old but well maintained by renovations and thus having a high rent.
The inventory in the lease can also play a role. Some apartments have only a stove in the kitchen, while others have both a stove and an oven. This also plays a part in the rent-fixing.
If your rent is not to be determined by any of the above rules, the rules on market rent will apply. Under the rules for market price, the landlord must determine the rent itself as long as it is not unreasonably high.
Do I pay the right rent?
It can be difficult to find out if you pay the right rent. The rent act sets out the above criteria for evaluating this. When assessing whether the rent fits exactly your residence, your rent is compared with the rent paid in corresponding residences according to location, nature, size, quality, equipment and maintenance.
If you pay too much in rent, you can get the rent reduced. This usually happens by putting a case before the rent committee. However, it requires that the actual rent is significantly higher than the residence value. As a general rule, you will be required to get the rent reduced if you pay 10% more in rent than the residence value. It may also be that the landlord contains different expenses in the budget for operating expenses that should not be included in this. In such a case, you are also entitled to a reduced rent.
If you pay too little in rent, the landlord may choose to raise the rent. These may be the following:
It rented value
It is claimed that the rent is significantly lower than the residence value. As a general rule, the rent will be significantly lower than the rent value if the rent is 10% lower than the rent value.
Cost specified rent
It may also be that the landlord’s operating expenses increase. The landlord may then require a rent increase to offset the difference between the current tenant and the increase in operating expenses.
Net Price Index
Landlord may choose to adjust your rent according to Statistics Denmark’s net price index. And what is the net price index then? The net price index regulates prices and other payments in Denmark so that they follow the general economic development in Denmark.
Rent is one of the payments that the net price index regulates. The net price index is updated annually. If it is agreed in section 11 of the lease that the rent must follow Danmarks Statistik’s net price index, the landlord may change the rent once a year. However, the landlord is obliged to inform the tenant in writing about the rent increase. It is sufficient to register this in section 11 of the lease. Therefore, no written notice is required after each time the rent is adjusted according to the net price index.
If you have any problems with the landlord regarding the rent or otherwise, DIGURA is always available to you.