The Oslo model - a potential pathway for first-time buyers in Denmark

In Copenhagen, increasing property prices have made it difficult for first-time buyers wishing to enter the real estate market. A similar challenge is faced by first-time buyers in Oslo, which led to the creation of the OsloBolig initiative - a shared ownership model aiming to enable ownership for first-time buyers and low-income individuals. The Oslo model has caught the attention of the Danish politicians, who are considering its potential application in Denmark. 

The Oslo model is based on a shared ownership structure between the buyer and OsloBolig, where the buyer acquires a minimum of 50% of the property with the option to gradually increase its ownership over time until the buyer owns the entire property. OsloBolig acquires the remaining part and leases it to the buyer at the current market rate. This allows the first-time buyer to progressively save towards financing full ownership. However, the model is subject to a 10-year period, which means that OsloBolig is entitled to terminate the agreement and list the property for sale if the buyer has not acquired the property within 10 years. 

To take advantage of the Oslo model, specific requirements must be met, including:

1. a minimum purchase of 50% of the property;  
2. the gross household income of the first-time buyer must be less than NOK 710,000, and for former property owners less than NOK 860,000; and 
3. a reduced down payment requirement of 7.5 % (when buying 50% of the property), as opposed to the standard 15% required in Norway (when buying 100% of a property).

OsloBolig aims to offer 1,000 owner-occupied homes within the next 5-7 years. However, the experience with shared ownership is currently limited, as OsloBolig sold its first homes in 2022. Therefore, it is difficult to draw any conclusions regarding the impact of the model on the real estate market and for first-time buyers in general. 

Models for shared ownership are known, among other places, in England, and similar models are used in Spain. However, it is common to both countries that the shared ownership models are adapted to local legislation regarding loan opportunities, tenant rights, etc. Also in Demark, the model will require that Danish legislation is considered, including financing, VAT, ownership forms, the transition from lease to ownership related to any increase/decrease in the value of the property, rights for buyer/tenant and the property owner, etc. 

At Plesner we will continue to follow the ongoing development of this matter, and we are available to advise clients on how the development might impact their property strategies.