Danish city mayors are calling for a halt to the construction of expensive rental apartments, as a growing number of residents turn to corporate-owned housing.
Shift in Denmark’s Rental Market
In recent years, Denmark has witnessed a significant transformation in its housing landscape, particularly in major cities like Copenhagen, Aarhus, and Aalborg. The rise of corporate-owned rental properties has sparked concern among city leaders, notably in Copenhagen and Aarhus. These mayors are urging for changes in legislation to curb the overwhelming dominance of private rental construction, which they argue is increasingly skewing the housing market towards the affluent.
The trend reflects a dramatic shift in ownership, with statistics from Statistics Denmark indicating that around 682,000 individuals now rent homes owned by companies. This marks an increase of approximately 436,000 since 2010. City officials feel that these corporate investments have gone too far, creating a disparity where those with average incomes struggle to find affordable housing options.
According to Aarhus Mayor Anders Winnerskjold, “it is unhealthy for a city if people with ordinary jobs and salaries cannot afford to live there.” He emphasized the importance of developing quality housing that residents can afford, rather than enabling corporations to profit excessively from the rental market.
The emergence of these rental markets has led to rising rent prices, particularly in cities where corporate-owned properties dominate. Data from the Danish Agency for Housing shows that rental apartments owned by companies can cost 50 to 70 percent more on average in Copenhagen and Aarhus compared to public housing.
Lars Weiss, the Mayor of Copenhagen, voiced his concerns, stating, “Copenhagen has a tendency to become a closed VIP club for those with substantial wealth.” With approximately one in six residents in eight major municipalities living in company-owned rentals, the issue of housing affordability has become pressing. The mayors fear that the influx of wealthier tenants could lead to greater societal divides within their cities.
Investment Patterns and Market Forces
The last 15 years have seen substantial investment from large players—companies, pension funds, and international investors—spurring the construction of rental properties. Curt Liliegreen, director of the Housing Economics Knowledge Center, noted a significant shift in who is investing in housing. “Those investing today have financial resources far beyond those of individual amateurs,” he explained, highlighting the reality that many corporations now control thousands of rental properties.
Peter Stenholm, CEO of Property Denmark, added that historically low interest rates in the 2010s made it profitable for corporations to build rental properties, positioning them as long-term, stable investments. “The calculus was that real estate was attractive and safe, yielding competitive returns compared to stocks and bonds,” he stated.
While the boom in rental properties has averted a housing crisis, it comes with the drawback of soaring rents. Liliegreen points out that while there has been a considerable construction boom, the resulting high rent prices are unsustainable for many families with lower incomes. The transformation from a nation of homeowners to renters has meant that property value increases now benefit corporations and investment funds rather than local residents.
As Stenholm pointed out, if the system transitions too much toward corporate ownership, the public may become disconnected from the appreciation in property values. Furthermore, potential uncertainties in the market make building homeownership less appealing to investors, a sentiment echoed by Liliegreen, who argued that it’s becoming a “naive” expectation to build more affordable owner-occupied homes when corporations prioritize steady rental income streams.
Calls for Legislative Changes
The mayors of Copenhagen and Aarhus are calling for a revision of laws to give municipalities more control over the types of housing that can be constructed. They seek tools that would allow for a more balanced approach to housing development, including a greater focus on building owner-occupied and social housing. Since 2010, the number of people living in owner-occupied homes has fallen by 3,000.
Weiss emphasized the urgency of this issue, referring to the housing market as a “super tanker” that is difficult to steer back on course once it veers off track. He firmly believes that it is critical for cities to dictate their housing strategies to ensure development meets the needs of all citizens.
Moreover, the mayors are advocating for improved conditions that would allow non-profit housing associations to construct lower-rent homes, a process that has stalled due to legal limits on what such associations can build. They argue that the current market conditions are not favorable for producing an adequate number of owner-occupied homes, significantly impacting families, especially those with children.
In Aarhus, where one in five residents lives in a property owned by a company, Winnerskjold believes the city bears responsibility for the ongoing developments in their housing landscape. He admits, “We have built many homes, and I believe that has helped keep prices from skyrocketing in Aarhus compared to Copenhagen.” Nonetheless, he also acknowledges that the city is contending with broader market forces that complicate their efforts.
Voices of Skepticism
Despite the mayors’ initiatives, some experts remain skeptical about the viability of their proposed solutions. Liliegreen questions whether enforcing more political governance on rental construction will yield the desired effect, voicing concerns that it may drive up costs and eventually result in fewer housing units being built.
Stenholm also warns of the need to balance regulatory demands with maintaining adequate housing supply. “Our biggest concern is that excessive requirements will hinder the construction of enough homes to meet demand,” he cautioned.
As city leaders confront the challenge of satisfying the housing needs of a growing urban population, many believe that changes in legislation and a reevaluation of investment strategies will be essential for building a more inclusive and sustainable housing market. The future of Denmark’s housing landscape hangs in the balance as stakeholders navigate the intricacies of affordability, investment, and community needs.
