Hidden housing potential in unused attic floors

The housing market in Denmark’s largest cities is under considerable pressure – yet new construction is not always the solution. A new analysis from Ejendom Danmark (in Danish) shows that unused attic space in existing residential apartment buildings could accommodate up to 22,000 additional homes nationwide – equivalent to roughly 1.35 km² of unused floor space, or the area of approximately 180 football pitches. The analysis sheds light on an underutilised opportunity in the existing housing market – one that comes with a notable legal advantage under Danish rent legislation.

A national housing potential that has yet to be realised

The greatest conversion potential is in Greater Copenhagen where approximately half of all potential units are located – predominantly in the City of Copenhagen and Frederiksberg Municipality. The analysis assumes that a minimum of 50 m² of unused attic space can be converted into one housing unit. If the threshold is raised to a minimum of 75 m² or 100 m², the estimated potential falls to approximately 13,000 units or just under 9,000 units, respectively. As several factors, including construction costs, interest rates and expected rental income, will influence the economic viability  of converting an unused attic space into residential accommodation, this figure could be even lower.

Nevertheless, the figures are significant when viewed against Copenhagen’s most recent housing report, which estimates that the city will require an additional 77,000 homes by 2060.

In Copenhagen and Frederiksberg, the conversion potential is greatest for properties owned by private housing cooperatives. In Aarhus and Aalborg, however, it is predominantly concentrated in social housing. For corporate owners – including limited liability companies and private individuals – the combined share of the conversion potential is estimated at under 20% in Copenhagen, 25-30% in Frederiksberg and Aalborg and 40-50% in Aarhus.

Free rent determination: a key advantage for landlords

Realising this potential, however, requires an understanding of the legal framework specifically designed to incentivise exactly this type of conversion. For property owners considering converting an unused attic space, an important legal advantage is worth noting. The rules on free rent determination for dwellings established in unused attic space are set out in section 54 of the Danish Rent Act. These rules aim to strengthen the incentive to establish new private rental housing, including through attic conversions.

For the rent to be freely set, the tenancy agreement must explicitly state that the rental unit is subject to the provisions of section 54(1)(3). Three conditions must be met:

• The attic space must not have been used or registered as a residential unit as of 1 September 2002;
• The unit must be newly converted; and
• The unit must be let for all-year residence

If all three conditions are met, the rent can be set according to market conditions and the actual conversion costs, regardless of the rent determination principles that would otherwise apply to the building. However, if any one of these three conditions is not met, the rental unit will instead be subject to the ordinary rent determination principles applicable to the building in question – which may significantly affect the achievable rent level.

Practical and regulatory considerations

Before embarking on a conversion, there are several practical and regulatory considerations to take into account.

• Fire safety: Attic conversions must comply with the Danish Building Regulations 2018 (BR18), including providing adequate escape routes and rescue openings for each dwelling. These requirements must be assessed and documented on a case-by-case basis, taking into account the building’s use category and risk class. If a building does not already satisfy the applicable requirements, conversion costs can increase significantly, which may affect the overall viability of a project.
• Land value tax: Converting an attic space may result in the property being assigned a new identification number or a change in use category. Either of these changes would cause any existing cap on annual increases in land value tax to lapse. However, the Ministry of Taxation is working to introduce a retroactive exemption for land value tax increases arising specifically from attic conversions, effective from the 2024 calendar year. At the time of writing, the proposed legislation has not yet been adopted. Subject to parliamentary approval, it is expected to enter into force on 1 July 2026, and property owners should monitor developments closely.
• The 95 m² rule (Copenhagen only): Property owners in Copenhagen should note that the 95 m² rule – requiring new residential construction to average at least 95 m² per unit – currently limits the number of units that can be achieved from a given attic space.

Nonetheless, a planned renovation, such as a roof replacement, could provide a practical opportunity to consider attic conversion at reduced incremental cost.

Need assistance?

Attic conversions involve a variety of legal considerations relating to lease law, fire safety, planning and taxation. At the same time, they provide an opportunity to optimise existing assets and help tackle the growing housing crisis.

Gorrissen Federspiel’s Real Estate group advises on all aspects of the Danish property market and can assist with, among other things:

• Drafting and reviewing lease agreements to ensure compliance with section 54 of the Danish Rent Act;
• Navigating building permit and fire safety requirements under BR18;
• Assessing the land value tax implications of a proposed conversion; and
• Advising on planning law considerations, including the 95 m² rule in Copenhagen.

We are happy to provide a specific assessment of the opportunities available for a given property.