The Business Rent Act (Erhvervslejeloven) regulates the relationship between landlord and tenant in commercial properties and is characterised by a high degree of freedom of contract compared to the Residential Rent Act. This allows investors to tailor flexible lease agreements that account for specific operational needs, maintenance obligations, and notice periods in accordance with current Danish law.
Understanding the Business Rent Act as a foundation for investment
When operating as an investor in the Danish property market, whether in growth areas like Copenhagen, Aarhus, or Odense, the Erhvervslejeloven (Business Rent Act) is the central legal pivot point. The structure of the law is fundamentally different from the legislation found in the residential market. Where the Residential Rent Act is largely protective of the tenant, the Business Rent Act rests on the principle that two professional parties can enter into agreements on equal terms.
This freedom of contract is one of the primary reasons why commercial property is an attractive asset class. It allows the landlord to specify rights and duties to suit the specific property type – whether it concerns retail premises on Strøget, warehouses in the Triangle Region, or office headquarters in Nordhavn. However, it is important to note that although freedom is vast, there are certain præceptive (mandatory) rules that the parties cannot contract out of to the detriment of the tenant.
Investors should always seek legal advice from specialists before a contract is finally signed, as drafting errors can lead to unintended financial consequences. At PropertyInvestments, we have seen since 1985 how well-structured contracts minimise conflict and ensure a stable cash flow.
The scope and limitations of freedom of contract
The core element of the Business Rent Act is that most of its sections can be waived by agreement. In practice, this means that if nothing is agreed, the law's standard provisions apply, but the parties have the right to write their own terms into the lease agreement.
What can typically be agreed freely?
- Rent levels and adjustments: You can agree on stepped rent, turnover-based rent, or adjustments according to the net price index.
- Maintenance: The distribution of indvendig og udvendig vedligeholdelse (internal and external maintenance) can be allocated almost freely.
- Notice periods: Very long non-termination periods can be agreed upon to ensure investment stability.
- Usage: Specification of what the premises may be used for.
Even in cities with high demand like Aalborg or Esbjerg, it is vital to define these frameworks sharply. If a contract is unclear, the courts will often interpret the ambiguity in favour of the party who did not draft the contract, or lean on the law's default provisions.
Market rent and adjustment mechanisms in the Business Rent Act
One of the most debated sections of the Business Rent Act concerns the lejeafgift (rent). According to Section 13 of the Act, both landlord and tenant can demand the rent be adjusted to markedsleje (market rent) if the current rent deviates significantly from it. Market rent is defined as the rent a knowledgeable tenant and a knowledgeable landlord would agree for the premises in question, considering location, type, size, quality, equipment, and state of maintenance.
For an investor in, for example, Roskilde or Køge, it is crucial to understand that market rent regulation generally requires that four years have passed since the start of the lease or the last market rent adjustment. This creates a certain inertia in the system that must be accounted for in your financial model.
| Adjustment Type | Description | Advantage for Investor |
|---|---|---|
| Net Price Index (NPI) | Annual adjustment based on inflation. | Protects the purchasing power of rental income. |
| Market Rent (§ 13) | Adjustment to what the market pays now. | Opportunity for large jumps in rising markets. |
| Stepped Rent | Fixed agreed increases in DKK or %. | Predictability in budgeting. |
| Turnover Rent | Rent based on shop sales. | Risk/reward sharing with retail tenants. |
It is possible to agree that the rent can only be adjusted upwards (a so-called "upward only" clause), but you should consult case law and legal experts here to ensure the clause is enforceable in the event of a lawsuit.
Maintenance and property operation
Unlike residential letting, where the landlord often bears a large part of the maintenance burden, the Business Rent Act allows you to impose large parts of the responsibility on the tenant. This is often seen in "Triple Net" contracts, where the tenant is responsible for almost everything except the property's klimaskærm (building envelope/roof and facades).
In growth cities like Silkeborg and Randers, where many older commercial properties are being converted into modern offices, it is essential to define the boundaries of maintenance. Should the tenant maintain technical installations such as ventilation and lifts? Who pays for replacement if a system breaks down?
Without a clear agreement in the contract, the Business Rent Act's default position applies, which places internal maintenance with the tenant and external maintenance (including supply lines and common areas) with the landlord. For an investor, it is often desirable to shift as much risk as possible onto the tenant in exchange for a corresponding adjustment in rent.
Termination and non-termination: Securing value
The value of a commercial property in Denmark is closely linked to the stability of the cash flow. Here, the Business Rent Act plays a key role through the rules on opsigelse (termination). By default, a lease can be terminated with notice (typically 3 or 6 months), but in professional settings, long non-termination periods of 5, 10, or even 15 years are often agreed.
For investors in areas with high vacancy risks, non-termination is one of the strongest tools. However, it is worth noting Section 62 of the Act, which covers the tenant's right to compensation upon the landlord's termination. If a landlord terminates a tenant without it being due to the tenant's breach, the tenant may, under certain circumstances, claim compensation for loss of goodwill and moving costs, especially if it is a erhvervsbeskyttet (business-protected) enterprise (typically retail shops and restaurants where the location is vital to the clientele).
Business protection: A vital detail for investors
The Business Rent Act contains special rules on "business-protected tenancies". This term covers leases where the operation of the business is heavily dependent on the specific geographical location. A classic café on a pedestrian street in Vejle or a specialist shop in Helsingør would typically be covered.
The protection does not mean the tenant can never be terminated, but it means the landlord must have a very compelling reason (e.g., the landlord needs the premises for their own use, or the building is to be demolished/reconstructed), and significant compensation must often be paid to the tenant. As an investor, you must be extremely aware of whether a lease is business-protected, as it affects the future flexibility and value of the property.
Subletting and assignment rights
Flexibility goes both ways. The Business Rent Act generally gives the tenant the right of afståelse (assignment) – the right to hand over the lease to another party within the same industry, unless the landlord has weighty reasons to oppose it (e.g., the new tenant's finances or lack of industry knowledge).
Assignment rights are often a point of intensive negotiation. A landlord wants control over who occupies the property, while a tenant wants to be able to exit their obligations by selling their business. In modern contracts in towns like Frederiksberg or Hellerup, we often see very detailed clauses regarding which financial KPIs a new tenant must demonstrate to be approved for assignment.
Fremleje (subletting) is another option, where the tenant lets all or part of the premises to a third party. According to the Business Rent Act, the tenant does not automatically have the right to sublet unless agreed. Here, the investor can advantageously maintain control by requiring written consent for any form of subletting.
Taxes, fees, and operating expenses
In a time of fluctuating energy prices and changing property taxes, how operating expenses are handled in the contract is crucial. The Business Rent Act allows for agreements where the tenant, in addition to the rent, pays for heating, water, electricity, and other operating costs (taxes, insurance, cleaning of common areas, etc.).
It is practice in Denmark to operate with an operating budget where the tenant pays a conto (on account), with annual reconciliation. For an investor, it is important that the definition of "operation" is as broad as possible, so unforeseen increases in, for example, dækningsafgift (property surcharge tax – in municipalities where this exists) or insurance premiums can be passed on to the tenant. We always recommend having an accountant or professional advisor review the structure of the operating accounts.
Digitalisation and the future of lease agreements
Although we are in September 2026 and the digitalisation of the Danish property market has come a long way, the Business Rent Act remains the stable anchor. However, we see a trend towards contracts becoming more complex in their data handling – for example, regarding the sharing of energy data to comply with EU requirements on sustainability reporting (ESG). Although the law does not directly dictate ESG clauses, its framework for freedom of contract provides space to build in "green addendums" that commit both parties to reducing the property's climate footprint.
Summary of investor strategy
To succeed with commercial property in Denmark under the Business Rent Act, an investor should follow these principles:
- Utilise freedom of contract: Do not let the law's default rules be your safety net. Tailor the contract to the specific property.
- Be sharp on maintenance: Clear boundaries for who does what prevent expensive lawsuits.
- Build in value protection: Use non-termination and index adjustments to secure your yield.
- Know your tenant: Understand if the tenant is business-protected and what that means for your exit strategy.
- Seek advice: The Business Rent Act is complex, and practice from the courts and Huslejenævnene (Rent Control Boards) changes continuously.
The Danish market in regions like Central Jutland and the Capital Region remains attractive for both domestic and foreign investors precisely because of the legal stability offered by this legislation.
Note: This article does not constitute legal or tax advice. Rules and rates may change, and we always recommend contacting a lawyer specialising in property law or relevant authorities such as the Ministry of Justice for the latest legislation.
Frequently asked questions
Can you always terminate a commercial tenant with 3 months' notice?
No. Although the Business Rent Act has standard notice periods, it depends entirely on what is agreed in the lease. Many contracts have non-termination periods. Furthermore, a landlord's termination of a tenant often requires a factual justification, and certain types of tenants (business-protected) are entitled to compensation.
What happens if we haven't agreed on anything regarding maintenance?
If the lease is silent, the rules of the Business Rent Act take effect. Here, the starting point is that the tenant is responsible for internal maintenance (painting, whitening, wallpapering, and floor treatment), while the landlord is responsible for everything else, including external maintenance and technical installations.
Can the rent be adjusted every year?
Yes, if it is agreed in the contract. It is very common to agree on an annual adjustment in accordance with the nettoprisindeks (net price index). Without an agreement on annual adjustment, you can typically only demand adjustment to market rent every four years according to Section 13 of the Business Rent Act.
Is a verbal lease agreement binding?
Yes, in Denmark, a verbal agreement is legally binding, including for commercial rent. However, it is extremely risky for both parties as the burden of proof in the event of a disagreement is difficult to meet. Therefore, a written lease agreement should always be prepared.
How PropertyInvestments can help
PropertyInvestments has assisted Danish and international investors in navigating the Danish property market since 1985. We source investment opportunities, set up optimal operating structures, and ensure that your lease agreements reflect the property's potential within the framework of the Business Rent Act.
Whether you have a portfolio or a single property that needs to be prepared for sale, or you are seeking new investment opportunities in Denmark's growth zones, you are welcome to contact us for a professional dialogue about your options.
Contact us: Email: info@propertyinvestments.dk Telephone: +45 31 16 31 00
