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Corporate

Amendments of the Danish Lease Act impose high demands on lessors

26 April 2015

The Danish Parliament has recently passed a number of amendments of the Danish Lease Act, which are put into force on July 1, 2015. The amendments cause, inter alia, that lessors will have to arrange a mandatory survey before the lessee’s moving in and after the moving out. Furthermore, the lessors will have to send a report of the survey to the lessee within two weeks after the survey. A third result of the amendments is that the lessors cannot stipulate a complete renovation when the lessee is moving out.

The Danish Parliament has passed a number of amendments of the Danish Lease Act to upgrade and simplify the regulation on the bearing area. The purpose of the amendments is, inter alia, to reduce conflicts between lessors and lessees and to make sure that the lessees do not receive unexpected bills when moving out.

Some of the amendments are:

  • Mandatory survey when the lessee is moving in and moving out
  • Repeal of the possibility to agree on complete renovation
  • A simplification of the maintenance rules
  • A simplification of the rules of notification for cost-based rent and the tenant representation’s authority
  • Possibility to adjust the rent on basis of the net prize index
  • Tougher sanctions in case of violation of the rules of fine
  • Cheaper access for lessors with only one owner-occupied apartment to get a preapproval of the rent
  • Lessors of owner-occupied houses and shared ownership properties can terminate the lease unconditionally if the lessor needs the property himself

 The amendments become effective on 1 July 2015.

In the following, we will focus on the first two points: The mandatory survey before the lessee is moving in and moving out and the amendments concerning renovation when moving out.

1. The mandatory survey
To avoid disagreements between lessors and lessees when the lessee vacates the premises, a mandatory survey has been imposed. This obligation applies to lessors with more than one property. The survey entails that the lessor must make a report providing evidence of the premises’ condition, before the lessee is moving in and moving out. The report must be sent to the lessee no later than two weeks after the survey.

If the lessor violates the rules regarding the survey and does not ensure that the lessee receives the report within two weeks after the survey, the lessor loses his right to claim ordinary renovation when the lessee is moving out. However, this does not apply to claims which are a result of the lessee’s neglect of the premises.

The amendment causes an increased administrative burden to the lessor, who has to arrange a survey, provide evidence for the premises’ condition and make sure that the lessee gets the report.

2. Renovation when moving out
Another important amendment is that from now on the lessor cannot stipulate that the lessee has to make a complete renovation when the lessee is moving out. The lessor can only demand that the lessee carries out an ordinary renovation which includes necessary whiting, painting, paper-hanging – including painting of wood and iron and grinding and lacquering of floors – if it is necessary. The scope of the ordinary renovation therefore depends on the need for renovation.

The result of the amendment is that the lessor can only demand that the lessee pays for a complete renovation if the premises are neglected. This amendment increases the requirements to the lessor’s evidence of the premises’ condition before the lessee is moving in.

IUNO’s opinion

The amendments in the Danish Lease Act have been widely criticized by the lessors. The lessors state that the housing standards in general will drop, because the lessors are forced to pay for a complete renovation themselves. Furthermore, even minor mistakes regarding the mandatory survey can have great financial consequences for the lessors, who risk losing their claim of ordinary renovation when the lessees are moving out.

The imposition of the mandatory survey causes an increased administrative burden to the lessors, but at the same time the survey clarify the premises’ condition before the lessee moves in. Hopefully, this will lead to quicker terminations when the lessee moves out and fewer conflicts about the premises’ condition.

However it is possible that the amendment stating that the lessor can only demand ordinary renovation when it is necessary can cause conflicts, because there is no common practice stating when a renovation is necessary.

IUNO recommends that lessors already implement routine procedures for the survey to which comprehensive and detailed reports are carried out.

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Aage

Krogh

Partner

Kathrine

Skøtt Jespersen

Senior associate

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