Legislation passed yesterday in Denmark’s parliament to limit increases in housing rent for the next two years has drawn ire from the country’s pensions lobby, with the industry association saying it is pension savers who will have to foot the bill for the cap.
Kent Damsgaard, chief executive officer of Insurance and Pension Denmark (IPD), said: “We have great sympathy for the desire to help the citizens who are hardest hit by inflation. But the rent ceiling is not targeted at all.”
A government proposal to limit the amount by which landlords can increase residential rents to 4% a year for the next two years was passed by 55 to 43, with the ruling Social Democrats backed by left-leaning political parties.
Under current rules, landlords are allowed to hike rents in line with inflation, which measured 9.9% in August, according to Statistics Denmark.
“In practice, the intervention will mean unskilled workers, nursing assistants and nurses will be allowed to foot the bill for tenants, who may be far more wealthy, through their pensions,” Damsgaard said in a statement from IPD.
The new law implements a political agreement from 26 August on initiatives to counteract large rent increases.
The IPD CEO said there were better alternative and more targeted solutions, however.
“As an industry, we would very much have liked to contribute to a solution that helped those most in need, without sending the bill to pension savers,” he said, adding that his association had already made very specific proposals involving targeted housing support.
“But the law has been rushed through in a way that I hope we will never experience again, if the government and parliament are aiming for more thorough and better legislation,” he said.
IPD said there was a need for calm around the real estate sector, as well as broad political agreements, if pension companies were to invest Danes’ savings in building and renovating homes in the future.
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