When alterations or renovations are carried out on a rental property, questions often arise about rent increases as a result of improvements, notification of tradespeople, and the distinction between improvement and maintenance.
These issues relate in particular to the landlord's right to make changes when the work affects the tenants' right of use.
It may be necessary or desirable for a landlord to make changes to or on a rental property that affect the tenants' right of use. Landlords have the right to make changes, even if the change affects the tenants' right of use, but the landlord is subject to certain conditions and restrictions in relation to this right – so what should the landlord be particularly aware of when changes to or on the rental property are necessary or desired?
Common to both residential and commercial leases is that the landlord has the right to make extensive changes to their property, unless otherwise agreed in the lease agreement. However, this right to make changes is limited in that the changes may only be carried out if they do not significantly and permanently alter the identity of the leased property. Conversely, this means that if a change is significant, it may be justified as long as it is not also permanent – and vice versa.
When reading the above and below, it is important to note that other specific terms may have been agreed in the lease agreement . According to the Commercial Lease Act, the rules regarding the landlord's right to make changes may be waived, with the exception of the eight-week notice period (except for the month of July) and the provision that alterations affecting the tenants' right of use must be carried out without interruption and with the greatest possible consideration for the tenants, which cannot be waived to the detriment of the tenants. According to the Rent Act, several of the rules concerning the landlord's right to make changes and improvements cannot be waived to the detriment of the tenant. In this connection, reference is made to the provisions of the Rent Act on waivers.
This article is part 2 of our previous article: "The landlord's work on rental properties." This article discusses, among other things, the landlord's notification of the commencement of work, the concept of improvement, and various options for choosing a contractor when a rental property is facing major modernization or renovation.
In this article, we describe the landlord's right to make changes, whether these changes affect the tenants' right of use, and focus on rent increases in connection with improvements and points to note for landlords if a rent increase as a result of improvements.
Rent increases due to improvements and the significance of the landlord's right to make changes
"Landlord's right to make changes" refers to the right of a landlord to make changes to the rented property or rental property that a landlord has vis-à-vis the tenant when a lease agreement has been entered into. This is a right that, with restrictions, allows the landlord to physically alter the rental property or the leased property, even if it affects the tenants' right of use. For example, if the tenant is affected, this may include extensive renovation of the rental property, replacement/installation of fire safety systems, inclusion/expansion of space in the leased property, replacement of kitchens or bathrooms, other changes to the rental property inside or outside the leased property, etc.
Danish contract law, which also applies to rental agreements, is based on the principle that agreements must be upheld according to their content, unless the parties to the agreement agree on a change. However, in the case of rental agreements in particular, landlords often need to be able to make changes to their rental property, as these are long-term contracts that can extend over many years.
If the parties can agree on changes to the lease, the matter is straightforward. However, it may be difficult for the landlord to obtain the tenant's acceptance of all types of changes that the landlord desires. This raises the question of the extent to which such changes can be implemented by the landlord without the prior consent of the tenant.
In relation to the landlord's right to make changes, there is always a specific assessment of what the desired change actually means for the tenants' right of use and whether the change falls within or outside the scope of the right to make changes. A change must not significantly and permanently alter the identity of the rented property, and the landlord will therefore, as a starting point, not be able to change a rental property on the basis of the right to make changes, e.g. so that it can no longer be used for the agreed purpose, and the landlord will, as a rule, hardly be entitled to convert a utility room into a bathroom or to expand or reduce the area of the leased property. Conversely, a landlord will probably be able to change the wall covering in a bathroom or install charging stations in the parking areas of the rental property, although this is less certain if the landlord thereby removes parking spaces to which the tenant has a right of use. It is therefore not possible to make an exhaustive list of specific works that will always be within the landlord's right to make changes, as this depends on the specific circumstances and the tenancy agreement. It is therefore possible that a work may be a significant and permanent change in one tenancy agreement, but not in another.
The consequence of the landlord making any unjustified unilateral changes to a rental property or to the rented premises that affect the tenants' right of use will be a breach of the lease agreement, as the landlord is not providing a contractual service to the tenant.
In this context, the tenant's remedies for breach of contract may include, among other things, a reduction in rent during renovation if the work causes significant and prolonged inconvenience that reduces the utility value of the rented property.
The tenant thereby obtains remedies for breach of contract against the landlord, which may include termination of the lease, a demand to reverse the change, a demand for a reduction in rent, or compensation if the conditions for compensation are otherwise met. It is therefore particularly important for landlords to be aware of the right to make changes and the scope thereof.
In practice, questions arise regarding the landlord's right to increase the rent in connection with improvements. However, unjustified work may give rise to a claim for a reduction in rent during renovation if it causes noise, access restrictions, or other significant inconveniences that reduce the tenant's actual utility value of the rented property.
In relation to the landlord's right to make changes, there is a difference between residential and commercial leases, and both are discussed below in this article.
When is a "change" covered by the right to make changes?
In rental agreements, the physical conditions are often described in very limited and general terms, and landlords should be aware that there may well be "additional agreements" regarding the physical conditions beyond what is stated in black and white in the rental contract.
As a rule, tenants have inspected the rental property and the rental property prior to signing the lease, and as a rule, a move-in report will also have been prepared, just as there is often a description of the rental property and the rental property.
Subject to the landlord's right to make changes, the tenant has the right to rent the leased property in accordance with the agreement and "as the leased property and the property were at the beginning of the lease."
Regular maintenance and "minor alterations" that repair signs of wear, age, and damage to the property and keep the property and its installations in good and usable condition, as well as replacement of building parts and installations, including replacement with new, modern standard installations – i.e., qualities to which the tenant was already entitled – may, in principle, be carried out by the landlord, and such work does not, in principle, constitute alteration work in relation to the landlord's right of alteration.
The distinction between improvement and maintenance of a rental property is of central importance in tenancy law. Only work that qualifies as improvements may, depending on the circumstances, entitle the landlord to give notice of a rent increase. General maintenance—including repair of wear and tear—is, on the other hand, part of the maintenance obligation and does not, as a rule, provide grounds for either a rent increase or a change in the financial terms of the lease.
All other work carried out by the landlord in the rented property or on the rental property that affects the tenant's right of use (regardless of whether they result in an improvement or not) are not permissible changes, unless the landlord is entitled to make the change to the leased property or the rental property in accordance with the lease agreement or the landlord's right to make changes.
In addition, when carrying out renovation work, landlords must be aware of the applicable notification rules in both the Commercial Lease Act and the Lease Act.
This also includes notifying tradespeople and contractors when the work involves physical access to the rented property or otherwise affects the tenants' right of use. The notification must give the tenant sufficient advance notice to prepare for the craftsmen's work and must comply with the statutory deadlines, including 8 weeks' notice for commercial leases (except in July).
The criterion for whether such changes are permissible under the landlord's right to make changes is, as stated, that the changes "do not significantly and permanently alter the identity of the rented property."
This follows, among other things, from section 126(1) of the Danish Rent Act, which was inserted into the Rent Act of 2022. However, the provision is considered to be a codification of existing law and case law:
"The landlord has the right to make changes, including improvements to the property and the rented premises, provided that the changes do not significantly and permanently alter the identity of the rented premises."
Examples of permanent changes include cases where the landlord reduces or expands the area of the dwelling. In addition, there are also cases where major changes are made to, for example, the usability of rooms—e.g., converting one of the rooms in the apartment into a bathroom instead. Such changes will typically also constitute a significant change to the identity of the rented property, which means that the landlord is not entitled to carry them out.
Section 26(1) of the Commercial Lease Act contains a similar rule concerning the landlord's right to make changes:
"Regardless of any agreed non-terminability, the landlord has the right to make changes to the leased property and changes to the property, even if this affects the tenant's right of use, provided that the changes do not significantly and permanently alter the identity of the leased property, cf. however, paragraph 2."
Section 26(2) of the Commercial Lease Act, to which section 1 refers, deals with the tenant's right to a rent reduction during renovation, although this provision appears superfluous in light of, inter alia, section 18(2) of the Commercial Lease Act on proportional reduction.
An example of when a change may be considered to fall outside the landlord's right to make changes under the specific circumstances, and which is mentioned directly in the bill for the Commercial Lease Act, is the case where the landlord chooses to install a bathroom in a rental property where there have previously been no toilet or bathing facilities – and where a not insignificant part of the total area of the rented property is thus taken up for this new purpose.
As examples of lawful alterations, the bill for the Commercial Lease Act mentions, for example, the temporary demolition of a balcony on the rental property. In commercial tenancy practice, permissible alterations have also been found to include, for example, a temporary impediment to a commercial tenant's ability to receive goods due to renovation work.
For both residential and commercial leases, a very specific assessment will be required when determining whether a project falls within or outside the landlord's right to make alterations. Factors that are relevant in this context include the area of the leased property, the purpose of the lease, the previous use of the leased property, etc.
Points to note for landlords in the event of a rent increase
Part 1 of this series of articles reviewed what landlords need to be aware of when it comes to changes to the rented property that constitute improvements and thus give the landlord the right to increase the rent charged to the tenant(s).
The following is a summary—though not exhaustive—of what landlords should pay particular attention to when calculating the new rent.
There is no exhaustive list of improvements that will automatically increase the value of the rented property, but section 127(1) of the Danish Rent Act, which is considered to codify applicable law, stipulates that improvements are understood to mean: "measures or installations that increase the value of the rented property, or measures that are required by law or public regulations, when these are not covered by the landlord's maintenance obligation."
If the improvement entitles the landlord to increase the rent, the rent may be increased by an amount corresponding to the increase in the (use) value of the rented property. Furthermore, the rent increase must, as a starting point, provide an appropriate return on the expense reasonably incurred for the improvement, as well as cover depreciation and usual expenses for maintenance, administration, insurance, and the like.
The key provisions regarding rent increases due to improvements are found in sections 128-131 of the Danish Rent Act and sections 31-32 of the Danish Commercial Rent Act.
Section 129 of the Danish Rent Act sets out specific rules on how rent increases should and may be calculated in certain cases involving work that results in energy savings for tenants. The provision also regulates measures relating to private urban renewal, work carried out in accordance with an energy plan, and any connection to a collective heating supply system.
In addition, landlords must pay particular attention to section 130 of the Danish Rent Act, which specifies the requirements for landlords to give notice of rent increases. The notice, which must be given three months in advance, must, in order to be valid, be in writing and contain information about the reason for the rent increase and a calculation of the rent increase with information about the expenses incurred, as well as information about the tenant's right to object.
In addition, special legal provisions apply to residential leases, which must be observed by the landlord if the landlord is to be able to give notice of a rent increase that the improvement would otherwise justify.
Section 131 of the Danish Rent Act stipulates that, in a situation where a landlord in a property with tenant representation announces the commencement of work that will result in a rent increase which, together with improvements carried out over the past three years, will amount to more than DKK 63 per square meter of gross floor area per year (the amount is adjusted annually and will be DKK 72 in 2025) – must give reasonable written notice to the tenant representatives to attend a meeting for the purpose of informing them about and discussing the planned improvement works.
Pursuant to Section 131(4), landlords may not charge rent increases in excess of the limits specified in the provision unless Section 131(1)-(3) is complied with.
In addition, landlords of properties covered by section 6(1) of the Rent Act and of "large small houses" (small houses with four or more residential apartments at the time of notification, cf. section 7(3) of the Rent Act), comply with sections 105 and 106 of the Rent Act if the improvement will result in a rent increase that exceeds the limits specified in the provisions (The limits are adjusted annually. In 2025, the limit is DKK 114 in section 105 of the Rent Act and DKK 228 in section 106 of the Rent Act. Improvement increases implemented in the last three years must also be taken into account).
The landlord must therefore inform the tenants (and the tenant representative, if any) of the commencement of upcoming improvement works (including a description thereof and of the costs, cf. the provisions stated), and may be required to notify tenants no later than three months before the improvement work commences that they are entitled to request alternative suitable accommodation. Landlords must be aware of the validity requirements for notification under section 105 of the Danish Rent Act.
If the tenant or tenant representative objects to the commencement of the work, cf. section 105 of the Rent Act, the Rent Tribunal may oppose the commencement, cf. section 109 of the Rent Act. If the landlord nevertheless carries out an improvement that the board has opposed, the landlord cannot demand a rent increase for the improvement.
In the Commercial Lease Act, when calculating a rent increase due to improvements, the landlord must be aware of Section 31(3)-(8) concerning improvements that result in energy savings, improvements in relation to communal antenna systems, work in accordance with an energy plan, and connection to a collective heating supply system (if the existing system is central heating or hot water installation), for which the Commercial Lease Act sets out special rules for calculation.
In addition, landlords must pay particular attention to section 32 of the Commercial Lease Act, which specifies the requirements for landlords to give notice of rent increases. The notice, which must be given three months in advance, must be in writing and contain information about the reason for the rent increase, a calculation of the rent increase with information about the expenses incurred, and information about the tenant's right to object. If the notice does not contain this information, it is invalid unless the landlord can prove that the omissions have not adversely affected the tenant's legal position.
It should be noted that the calculation of the rent increase and information about the expenses incurred, which the tenant must be informed of in the notice, cf. section 130 of the Rent Act and section 32 of the Commercial Rent Act, must be made according to specific criteria and methods, which are not discussed in detail below. It is therefore recommended that the landlord seek legal advice before preparing and sending a notice to the tenant.
In practice, disputes often arise as to whether a specific piece of work constitutes maintenance or improvement of a rental property, and whether this provides grounds for a rent increase or rent increase, or whether the notification of the craftsman has been done correctly.
We often hear this regarding rent increases due to improvements:
Yes. The landlord may demand a rent increase or rent increaseif the renovation work carried out on the rental property qualifies as improvementsthat increase the value of the rented property. If the improvement entitles the landlord to increase the rent, the rent may be increased by an amount corresponding to the increase in the value of the rented property.
The right to rent increases due to improvements depends on the landlord complying with the notification rules and giving notice of the rent increase in writing with three months' notice, and that the notice contains information about the reason for the increase and a calculation of the expenses incurred.
On the other hand, routine maintenance does not, as a rule, provide grounds for either rent increases or changes to the financial terms of the lease.
The landlord must notify the tenant when the work involves access to the rented property or otherwise affects the tenant's right of use.
The notice must comply with the statutory deadlines in the Danish Rent Act and the Danish Commercial Lease Act, including eight weeks' notice for commercial leases (except in July).
Maintenance includes work that repairs wear and tear and ensures that the property is kept in good condition.
On the other hand, improvement of a rental property occurs when the work increases the value of the rented property or is required by law without being covered by the landlord's maintenance obligation.
Only improvements may, depending on the circumstances, give rise to a rent increase.
No. Even if work qualifies as an improvement, rent increases can only be implemented if the statutory requirements for calculation and notification are met.
In addition, there are monetary limits and special procedural rules that may restrict or exclude the possibility of charging increased rent.
Legal assistance may be the right way to go
Carrying out renovation projects and alterations to a property can be a major undertaking. The fact that it is a rental property does not make it any less complex, as tenants must also be taken into consideration. Landlords have a right to make alterations under both the Danish Rent Act and the Danish Commercial Lease Act, but it is not always clear whether the work in question is covered by this right, as it depends on the specific assessment of the work, the rental property, and the lease.
Overall, the rules show that alterations and renovations to a rental property can have direct financial consequences for the landlord. Issues such as proportional rent reductions during renovations, proper notification of tradespeople, and the distinction between improvements and maintenance require a specific legal assessment of each individual tenancy.
It is therefore recommended that landlords who are planning renovation projects or alterations to a leased property seek legal assistance before notifying tenants of the work and commencing it.
