Fair rent

After the new Tenancy Act entered into force on 1 July 2022 and the new Form A10 was published on 1 September 2022, it has become even clearer which properties are covered by the rules on free rent determination and how it must be filled in the special conditions in § 11. But what is free rent determination actually, and when can you agree on it?

What is free rent determination?

Free rent determination means that the tenant and landlord can freely agree on the rent. This deviates from the rules on cost-based rent and rent based on the value of the rent. As a landlord, you thus have the opportunity to achieve a greater return with free rent determination than with the general rules for determining rent.

However, it is important to remember that you as a landlord must not set an unreasonably high rent. If a dispute arises between tenant and landlord about the rent, the tenant can turn to the Housing Rent Board, which will make a decision.

When can you agree a free rent determination?

Some properties are not covered by the rules on cost-determined rent or the rules on rent based on the value of the rent, and in such cases the rent can be determined based on the market rent. The establishment of when the building in which the rental property is located was built, whether it is possible to agree on a free rent determination.

Rental properties built after 31 December 1991

There are four reasons where the rules on free rent determination apply, and you as a landlord can enter into an agreement with the tenant on free rent:

1. Newly built property: The tenancy is located in a property that was put into use after 31 December 1991.
2. Converted occupation: On or before 31 December 1991, the lease was used exclusively for occupation.
3. Newly furnished attic: The tenancy is located in an attic that was not used for or registered as a residence on 1 September 2002.
4. Newly built floor: The tenancy is located on a newly built floor, for which building permission was granted after 1 July 2004.

In municipalities where the Housing Regulation Act applies, the rent can be fixed according to the value of the rent. Rental properties that were built before 31 December 1991 are covered by this legislation and the rules on rent determination according to the value of the rented property apply. This means that the rent for a residential apartment must not exceed a reasonable rent, calculated based on the property’s standard, location, size, equipment, etc. In cases of doubt, the Rent Board can decide whether the agreed rent is reasonable or not.

So, in short, free rent fixing is an option for tenant and landlord in certain cases, but it is also important to be aware of the rules on rent fixing according to the value of the rented property and the Housing Regulation Act. It is a good idea to seek advice and guidance if you are in doubt about which rules apply to your specific tenancy.