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The Danish Business Rent Act (in Danish: “Erhvervslejeloven”) and the Danish Rent Act (in Danish: “Lejeloven”) provide tenants with a high level of mandatory protection in the contractual relationship with the landlord, notwithstanding the contents of the lease agreement.
A tenant’s rights, following from the Danish Business Rent Act and the Danish Rent Act, are protected from subsequent purchasers’ or the landlord’s creditors without registration as long as no extraordinary rights are granted to the tenant under the lease agreement. By registering their lease agreement or part thereof in the Danish Land Register, protection may also be provided to the tenants with regard to more extensive rights following from the lease agreement. Such a step should therefore be considered when entering into a lease agreement.
Although the Danish Business Rent Act seeks to reflect the fact that the parties in question are commercial parties and therefore provides these parties with a degree of freedom with regards to lease agreements, some significant exceptions apply such as provisions and restrictions on the termination of the lease.
For instance, termination of the lease agreement by the landlord may only occur under specific conditions such as the tenant’s failure to pay the rent, the tenant’s non-contractual use of the premises or if the landlord wishes to use the premises himself.
Also, unless otherwise agreed, rent increases may only take place if a four-year increase period is respected. The rent based on the “market rent” is then increased by an equally large amount each year during this four-year period until the final increase is reached.
If the parties agree to permit the landlord to demand changes in the terms of the lease, for example regarding the size of the rent or other significant changes, tenants are protected from new changes for eight years.
Private leases offer the tenant a high level of protection as the tenant is considered to be the weaker party to the agreement. Therefore, the Danish Rent Act contains many mandatory provisions.
For instance, termination of the lease agreement by the landlord may only occur under specific conditions such as the tenant’s failure to pay the rent, the tenant’s non-contractual use of the premises etc. However, certain circumstances provide the landlord with the possibility of terminating a lease, e.g. if he wishes to use the premises himself. Therefore, it is common that lease agreements are limited in time.
Furthermore, an increase in rent requires that certain conditions are met. As a general rule, the rent may not be increased (or set when the lease is commenced) to a level higher than the “value of the rented premises”, which in some situations is much lower than what commercial parties would consider market rent.
If a lease concerns premises located in a regulated district such as Copenhagen, certain additional regulations may apply depending on the character of the lease. As a consequence, certain matters, such as fixing of the rent, may be subject to stricter regulation than those which follow from the Danish Rent Act.
The above does not constitute legal counselling and Moalem Weitemeyer Bendtsen does not warrant the accuracy of the information. With the above text, Moalem Weitemeyer Bendtsen has not assumed responsibility of any kind as a consequence of a reader’s use of the above as a basis of decisions or considerations.