Why Denmark holds the solution to Britain’s broken property market

UK’s outmoded buying regime is in urgent need of a continental-style overhaul

Denmark vs UK property market

When Sarah, a 34-year-old veterinarian, and her partner walked into their flat in central Copenhagen for the first time, they instantly knew it was the one.

Tall ceilings, a balcony with a view of the nearby canal and close to transport, it ticked all of the boxes.

They decided to put an offer in on the same day – January 20 – which was accepted.

“All of the paperwork was done and dusted by January 27. We could have moved in then if we wanted to,” Sarah says.

“We agreed with the seller to wait until early March just to have more time to prepare.”

On March 6, she and her partner collected the keys and popped open a bottle of champagne in their new home.

Many hundreds of miles away in London, Rory Evans, a 31-year-old office manager, had started his property search around the same time.

He quickly saw something he liked – a 2-bed flat with beautiful parquet floors and good train links. His offer was accepted on February 6.

But half a year later he has spent more than a thousand pounds on surveyor and solicitor fees and is still no closer to moving in.

In fact, it is looking increasingly likely that he will not move in at all.

“It’s been immensely frustrating,” he says.  

“It’s taken an incredibly long time to then have it all fall apart in theory at the last minute.”

It is a tale of two systems and a stark example of how, according to some, England’s outmoded property buying regime is in urgent need of a continental-style overhaul.

Evans was only told weeks after having his offer accepted that his seller was purchasing another property that had tenants with a six months notice period.  

Getting a crucial bit of information about any planned works on the block of flats was also a struggle.

After months of waiting and with less than two weeks to go until the planned exchange, it finally arrived:

“They revealed £370,000 worth of work that was potentially going to happen to the building, which then triggered an intense renegotiation,” he says.

“At the moment it seems like it has probably tanked the sale.”

Such tales are common in England and Wales, where as many as one in three sales fall through.

It now typically takes more than four months, from offer to completion, before would-be owners can pick up the keys to their new properties.

That is nearly twice as long as ten years ago, according to data from Landmark Information Group, a data firm.

Yet in Denmark, the laws around property sales prevent such horror stories from happening.

Marc Lund Andersen, an economist and housing market expert at think tank Boligøkonomisk Videncenter, says buyers and sellers have to commit much sooner than in the UK.

“When they find a house and come to an agreement with the seller, a deal is signed. The buyer then has six days working days to cancel the deal if they like to,” he explains.

In theory, cancelling a deal even within that six-day window would cost 1pc of the transaction price, although there tends to be a clause ensuring this does not apply.

In Sarah’s case, once the six-day period was up, she and her partner signed a final sales contract and paid around 5pc of the price of the flat.

The remaining amount was then transferred on the day of completion.

Unlike in England, someone selling a house in Denmark must provide independent survey reports on the condition of the property and the condition of electrical installation.

While the rules are slightly different for flats where the buyer tends to bring a surveyor with them for a second viewing to highlight any flaws, the onus is still on the seller to provide all necessary information from the onset.

“[The seller] must also offer the buyer to pay half of a transaction insurance policy. This is to make sure that they are insured if something shows up after the sale that is critical to the building and has to be done,” Andersen says.

“The whole process is just very quick,” he adds.

Beth Rudolf from the Conveyancing Association in the UK says that making all of crucial information available immediately is the reason why buying a home is so much quicker in places like Denmark, Norway and Australia.

“The reason other jurisdictions can do it so quickly is because they’ve got vendor disclosure. They’ve got upfront information, which ensures that before the property has got a buyer, all of the information about it is collated together,” she says.

In Denmark, a solicitor can sort out searches on a property in an afternoon as the system is completely digitalised.

This saves waiting for a response from various authorities about development plans in an area and other information such as the level of flood risk.

“You’ve got this bizarre situation where we don’t seem to learn from other jurisdictions despite the fact that we’ve been trying to get upfront information out there for 15 years. And the reason that we can’t get it out there is because we don’t get government support,” Rudolf says.

“The difficulty is that unless you mandate it, then you can only go as fast as the slowest person in the chain.”

Simon Brown, the chief executive of Landmark Information Group, says that there is not one easily identified bottleneck slowing down the pace of sales.

“If the answer was really simple, we wouldn’t have that problem, because someone would have fixed it by now,” he says.

“We have an industry that has largely been siloed. So the real estate agents, the lenders, whether it be the banks or building societies, the brokers to some extent, the conveyances, they’re all highly regulated, they all have significant obligations of things they must do, but they’re not necessarily well connected with each other.

“If you then add the fact that you’ve got an industry that’s been highly analogue, you’ve got a situation where the work practice is such that it has gotten very slow.”

While digitalisation has improved somewhat as a result of the pandemic, the lack of cooperation between the different parties involved still slows the process down. Many processes such as money laundering and identity checks are therefore duplicated.

“The industry as a whole needs to agree that it needs to go faster,” Brown adds.

Scandinavian countries have smaller populations, national digital ID systems and a different legal system to the UK – making quick property transactions more feasible.

But Australia has a similar legal system to the UK and a fairly large population at 26 million people. And yet you can buy a property there in four weeks, Brown, who is from Australia himself, points out.

“When I came here I couldn’t believe that it took so long. In fact, when people were talking about chains, I’d never heard of a chain,” he says.

Having a more effective system for selling properties would benefit the economy in many ways, it is argued. Making it easier for people to move means there is less inefficient use of resources, workers can easily follow opportunities and more money is spent on home improvements.

In Copenhagen, Sarah has long since had new floors installed, bought a big bright blue sofa and is now looking at getting the kitchen redone.

Evans, who will likely be forced to walk away from the flat he’s been trying to buy since February, had been looking forward to renovating and furnishing his new flat too.

Instead he will likely be stuck in his current house share for many months and faces a much higher mortgage rate than previously if he finds a new place.

“The biggest hurdle is just how long it’s taken,” he says wearily.    


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