Regulation of private rental property

Article 5.2 in the legislation on private rental property in Denmark allows a property owner to increase the rent after thoroughly renovating a rental unit. Article 5.2 was introduced in the light of a large renovation backlog in the 1990’s which led to large publicly financed city renewal projects.

Currently, there are political consideration about whether the article should be limited or even removed. In this study, we assess the incentives for property owners to maintain a quality building stock in the current regulation, and assess the consequences of removing article 5.2 for different parts of the rental market and the Danish economy.

The main conclusions of our study are:

• The incentive to renovate rental apartments is not sufficient without article 5.2.
• Removing article 5.2 will have a number of other undesirable consequences.

The study is commissioned by EjendomDanmark.