Housing benefit

The individual housing benefit scheme known in Denmark today came about as a result of of a political compromise in 1966. By introducing individual rent subsidy, the legislation aimed at ensuring that all Danes lived in suitable dwellings.

In 1979, Denmark introduced a more favourable housing benefit scheme for pensioners; pensioners' rent allowance. The rent allowance scheme aimed at giving old-age pensioners - whether they live in owner-occupied homes, private cooperative housing or renter-occupied homes - more uniform housing costs while also reducing net housing costs.

1998 introduced the latest major reform of the housing benefit scheme to be phased in in the period of time leading up to 2003, so that, generally, the current housing benefit rules have been in force as of 2004.

                                     
Housing benefit is normally granted as rent allowance to pensioner households or as rent subsidies to people in active employment, etc., and anticipatory pensioners awarded pension after the rules valid as of 1 January 2003. Further, certain households in social housing commissioned after 1 April 1964 can be granted lease premium loans.

Number of recipients

In the last part of the 1990s, around 500,000 households received individual housing benefits. The figures show a slight drop until 2000, at which time around 495,000 received housing benefits. The number then rose to around 537,000 in 2006, finally dropping to 528,000 in 2007.

The rent allowance recipients (pensioners) significantly outnumber recipients of rent subsidies (people in active employment, etc., and anticipatory pensioners after 2002). In 2007, around 320,000 received rent allowance and 208,000 received rent subsidies.

The increase in the number of recipients after 2000/2001 is comprised by fewer recipients of rent allowance and more recipients of rent subsidies. Thus, since 2000 Denmark has seen a drop in the number of recipients of rent allowance of 12,000, offset by an increase in the number of rent subsidies of 45,000. In 2007, the number of recipients of both rent allowance and rent subsidies dropped.

Conclusively, the number of rent subsidy recipients has increased significantly in the period covered, reaching a maximum in 2006 with 212,000 households. The increase comes around as a result of the anticipatory pension reform which transferred anticipatory pensioners awarded pension under the new rules valid as of 1 January 2003 to rent subsidy from rent allowance. In 2007, an average of 17,000 anticipatory pensioners received rent subsidies, i.e. the number of non-pensioners receiving rent subsidies has increased. Presumably, the increase should be understood in the context of significantly increased housing construction projects in the same period.

Public expenditure

Housing benefits are calculated and payable by the local authority of residence, while the central government refunds a part of the expenditure. The central government refunds 75% of rent allowance and 50% of rent subsidies.

Public expenditure for individual housing benefits, 2008 prices

 
Source: Internal account statements from the Local Government Data Processing Centre (number of recipients) and local authority financial statements (expenditure).

In 2007, DKK 2,680m was paid out as rent subsidies to 208,365 households or an average of DKK 12,860 per household. Pensioners receiving rent allowance received DKK 8,616m distributed on 319,881 households or an average of DKK 26,935 per household.

The average paid-out amount of rent subsidies has remained relatively stable in recent years, i.e. around DKK 13,000. In contrast, the average, paid-out rent allowance has increased from DKK 24,695 in 2003 to DKK 26,935 in 2007. The increase in the average rent allowance is mainly rooted in the fact that an ever greater share of the pensioners live in new pensioners' flats where, due to the special housing allowance regulations, they receive higher rent allowance because of, for instance, the higher rent charged in such housing.

Expenditure trends

In the years around the millennium (2000-2001), expenditure registered lower than the other years shown. As from 2001, expenditure for rent allowance has gone up every year, while expenditure for housing subsidies dropped in the period 2006-2007.

From 2000 to 2007, total expenditure for rent subsidies and rent allowance went up by around DKK 1,200m from around DKK 10bn at the millennium to around DKK 11.2bn  (fixed 2008 prices), a real increase of around 14% or an average 1.8% annually for the last seven years.