Until the 1st of May 2021, Danish homeowners have built up debt to their municipality without necessarily being aware of it. This debt has been developed because any increase in land debt has been automatically frozen in recent years. The debt has had to be paid when selling the home. The new scheme, which came into force on the 1st of May 2021, means for homeowners that it is now possible to pay the frozen land debt instantly, instead of waiting until the house is sold. In practice, you can do this by unsubscribing from the freezing scheme on borger.dk.
As a homeowner, should you pay off your debt right now, or should you wait?
Until the end of 2023, the debt is interest-free. From 2024, there will be an interest rate on the debt. The interest rate from 2024 will be imposed on the entire frozen debt, and thus not only the debt that has been frozen from 2024 and onward. As the debt is interest-free now, it can therefore be an advantage for homeowners who pay negative interest in their bank to repay the debt now. The opposite can be the case if you instead spend an amount on paying off more expensive debt first.
If you as a homeowner want to wait to pay the frozen debt and continue the scheme, then you do not have to do anything. Even if you choose to leave the scheme, you can sign up for it at a later date.
