Rent regulation when changes in taxes and duties occur

Changes in taxes and duties

A common feature of all sets of rules is that rent regulation can (and should) occur when the property is subject to an increase in taxes and duties. Conversely, if there are decreasing expenses for taxes and duties, the landlord is obliged to pass on the savings to the tenant through a reduction in rent. In other words, the landlord must be aware of the nuances between right and obligation in relation to increasing and decreasing taxes and duties.

Changes in taxes and duties are usually issued by the government in connection with the turn of the year with effect from 1 January.

When must rent increases be notified?

Under the rules of the Rent Act, a rent increase due to changes in taxes and duties must be notified to the tenant no later than 5 months after the change is imposed on the property if the increase is to take effect from the time when the increase is imposed on the property.

If the property is subject to changes in taxes and duties with effect from 1 January, rent increases must be notified to the tenant no later than 1 June. If the landlord first notifies the rent increase on 2 June or later, the landlord loses the right to retroactively increase the rent from 1 January and must then settle for increasing the rent for the future with 3 months' notice.

Special requirements for the content of the notification

There are special formal requirements for the content of the notification. If the requirements are not observed, the notification will be invalid. Before implementing rent regulation notification, the landlord should thoroughly familiarize himself with sections 46 and 47 of the Rent Act or sections 10 and 11 of the Commercial Leases Act.

If the rent is to be reduced based on a change in taxes and duties, the landlord must reduce the rent for the relevant tenancies with effect from the time when the change is imposed on the property. The landlord must in this connection give the tenant written notice of the rent reduction no later than 6 weeks after the change is imposed on the property.

If you have questions about rent regulation or how to notify correctly, please contact partner Henrik Høpner, assistant attorney Daniel Boalth Petersen or assistant attorney Louise Janholm Kristensen from our real estate team.