Blackstone Is Warned Denmark Will Act on High Apartment Rents

(Bloomberg) -- Denmark’s new left-wing government pledged tough laws to control housing costs and singled out Blackstone Group Inc. for “unsustainable” rental practices.

Kaare Dybvad, the Danish housing minister, said Blackstone is “challenging” local legislation “where there are holes.” By taking advantage of those holes, the concern is that properties are being bought up and then rented out at prices that Danes are finding increasingly difficult to afford.

Speaking in an interview in Copenhagen on Tuesday, Dybvad said that “it’s clear we need to do something about this.”

“We’re not going to legislate around an individual firm, but the way this has been going so far isn’t sustainable,” he said. “If Blackstone chooses to conduct itself in a different way in Denmark, in a more sustainable way here than in many other places in the world, then it’s clear that they’re allowed to be here on the same terms as others.”

Dybvad said the Social Democrat government that has ruled Denmark since June will now start formulating stricter laws to address the concerns. He has previously criticized Blackstone for “driving up prices in the Copenhagen rental market” and making it harder for low-income earners to remain in the city.

The housing minister laid out his plans as Denmark’s parliament met for its first session since the summer break. As the chamber reconvened, Prime Minister Mette Frederiksen took the opportunity to lash out at what she described as corporate greed.

The 41-year-old became Denmark’s youngest ever head of government this year after promising a more equal society with increased spending on welfare. Her government’s budget proposal means that Denmark will need to raise its borrowing requirement for next year by about $2.3 billion, the finance ministry estimates.

Read more: Blackstone Defends Real Estate Deals as Denmark Voices Anger

Frederiksen also used her speech to lawmakers to zero in on the housing market. “An American private-equity fund is purchasing our houses,” she said. And she touched on the list of financial scandals that have angered Danish voters in recent years. “Does greed know no boundaries? Apparently not,” she said.

Blackstone has said it’s a long-term investor in the Danish market, and that it complies with all regulations. Jean Ahlefeldt-Laurvig, a spokeswoman for Blackstone-owned 360 North Property Management, said in August that “the under-supply of rental housing in Copenhagen needs to be addressed, which is why we are bringing additional units to market, while continuing to invest capital into the properties, improving sustainability and contributing to the local economy.”

“We intend to own these properties for decades and will ensure that they are operated to the highest standard,” Ahlefeldt-Laurvig said back then. “We have always operated within the existing regulatory framework, which is one in which all leases are and will remain indefinite for the existing tenants.”

--With assistance from Frances Schwartzkopff and Nick Rigillo.

To contact the reporter on this story: Morten Buttler in Copenhagen at mbuttler@bloomberg.net

To contact the editors responsible for this story: Tasneem Hanfi Brögger at tbrogger@bloomberg.net;Paul Sillitoe at psillitoe@bloomberg.net

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