House Hunter: Copenhagen

My heart belongs to Frederiksberg
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The problem

The problem

CAMILLA PETERKEN OF SURREY WRITES: I am really keen to buy a one-bedroom flat in Copenhagen. I believe as I am half Danish this is possible. It's been my dream for some time and having been ill over the last 18 months its time to get on with living and not dreaming! I would like to find one in the Frederiksberg area if possible as this is where my family were based. It's a fabulous area with a large park.

I would prefer an older-style apartment and don't mind if it is quite small. I am really keen to have some roots in the city so that I can go there for a number of long weekends and over Christmas each year. The rest of the time I would like to rent it out, with the agreement to have it vacant for my use at certain times.

However, I need to know a number of things. Do you think Copenhagen is a safe place to invest in property in terms of providing a good return? Are there any tax implications either in Denmark or in the UK? What is the best way to borrow money for this, here or in Denmark? Are there any hidden extras I should know about?

I would like to spend about £100,000 and have a mortgage over the next 15 years.

The advice

KATY POWNALL REPLIES: The first thing you need to do is assess whether you actually can buy a property in Denmark. The country has some special rules regarding foreign investment in property, intended to prevent Danish holiday homes on the attractive coastline being sold to investors from Central Europe. Although you are half Danish, I'm afraid it is residency that is the issue. To buy a property in Copenhagen, you need to have lived in Denmark for at least five consecutive years. Failing this, you'll need to make an application to the Ministry of Justice of Denmark, which will assess your case.

Even if you get permission, there are likely to be restrictions on use: you may be unable to rent it out. For property purchases in Denmark made by persons with foreign residency, permission is generally refused for second or holiday homes. Again, you need to clarify matters with the Ministry of Justice and, perhaps, a lawyer.

Otherwise, buying a property in Copenhagen should be a safe investment. The Danish Association of Chartered Estate Agents says property prices have risen constantly since 1993, with growth last year reaching 31.7 per cent in some areas.

The UK has a double taxation treaty with Denmark which means that you will only need to pay tax in one country. Obviously, you will need to pay income tax on any rental income received on the property and capital gains tax when you sell the property. You should also consider your situation with regard to inheritance tax.

Mortgages will depend on your personal circumstances. Interest rates are very low in Denmark - just 2.42 per cent on a 30-year fixed-rate mortgage - though these may be offset by set-up costs.

I'm afraid your budget of £100,000 isn't realistic in Frederiksberg. For £150,000, you may get a very small apartment there. If £100,000 really is your ceiling, look outside the city centre. I've included a property in Valby, south-west of Frederiksberg.

Danish Association of Chartered Estate Agents, Islands Brygge 43, DK-2300 Copenhagen S (00 45 3264 457; www.de.dk)

The solution

Property one: One bedroom apartment, Roarsvej, Frederiksberg.

Price: £137,500

Agent's details: Situated on the fourth floor of a recently renovated building in the centre of Frederiksberg, this apartment boasts a new bathroom and kitchen. At just 41 square metres, the property is small but it is well located, next to a park, cafes and public transport. The city centre is approximately two kilometres away.

Agent: Home Frederiksberg, 00 45 33 23 18 18, www.home.dk.

Property two: Two bedroom apartment, Borups Alle, just outside Frederiksberg

Price: £143,000

Agent's details: This 57-square metre apartment has just been restored and has a modern interior. It is on the ground floor and has access to a communal garden.

Agent: RealMæglerne Garder, 00 45 3325 8384, www.realmaeglerne.dk/garder

Property three: One-bed apartment, Folehaven, Valby

Price: £92,000

Agent's details: A 50-square-metre apartment situated about six kilometres from the centre of Copenhagen. The property is next to the six-lane main road into the centre. There is a communal garden and laundry.

Agent: Home Frederiksberg, 00 45 33 23 18 18, www.home.dk.

If you would like House Hunter's help in finding a property in the UK or overseas, write to: The Independent, 191 Marsh Wall, London E14 9RS, 020-7005-2000 or e-mail: househunter@independent.co.uk

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