Norway, home to the midnight sun, northern lights, and where the mountains meet the sea. Sounds like a great place for a vacation home or perhaps where you’d want to settle down for work or retirement.
If so, you might wonder if you are able to purchase property in Norway as a foreigner? The answer is that there are no restrictions on foreigners purchasing property in Norway.
That being said, there are rules and regulations you need to comply with when purchasing a property. In this article, we take you through the ins and outs of purchasing property in Norway.
Buying property as a foreigner in Norway
There are no restrictions on foreigners purchasing property in Norway and you don’t need to be a Norwegian citizen or have a residency permit to do so.
As for Norwegian citizens, any foreigner wanting to purchase property will be subject to the general laws and regulations governing property transactions.
First, you have to identify yourself in Norway. You are also subject to general laws regarding financing and money laundering when purchasing a property.
Important rules and regulations
Houses and properties in Norway belong to different categories, to which different rules and regulations apply.
In addition, buyers are subject to several laws and regulations that you should be aware of before purchasing a property in Norway
Housing categories
Norway has several types of housing categories. The most common ones are freehold properties and condominiums. In addition, you have a hybrid type known as leased-land properties.
Freehold properties
Freehold property is when the property is fully owned by the owner. This can include houses when the owner owns the house and the plot of land on which it stands, as well as terraced houses.
You also have freehold apartments. Here the owner gets a co-ownership share in the property and gets the exclusive right to use his owner section with its own section number in the building.
Owners of freehold properties are free to sell the property at any time to whomever they want. They can also rent out the property without being subject to local regulations common for condominiums.
Condominium
Any property type can be part of a condominium, however, it is most commonly apartments or terraced houses.
If you buy a property in a condominium, you don’t own the property. Instead, you purchase an exclusive right to live in a given section of the condominium.
The condominium owns the building and the plot of land on which it stands. It can be organized as an independent condominium or affiliated with a housing association.
To maintain the building and common areas, the condominium takes up loans. Each section then takes on its share of the total loan which is paid as part of the common cost.
Owners of condominiums are subject to regulation for the given condominium when it comes to renting it out. Also, for large renovations, they might also have to apply for approval.
Leased-Land properties
Leased-land properties are a special type of property where the owner of the building owns the house as a freehold property, but the land on which it is built is leased from a landowner.
The renter pays an annual fee to the landowner for leasing the land. The renter is usually free to sell the house to whoever they wish, but it may be subject to approval by the landowner.
Because of this, one should make oneself familiar with the terms of leased land properties before considering purchasing such properties.
Right of first refusal
Certain properties have a right of first refusal contract associated with them. This gives the holder of the contract the right to buy a property for the price achieved in the market.
This means that a buyer might not get a property despite having the highest bid. This is because the holder of the right of first refusal contract is entitled to purchase the property for the same price.
As mentioned, a condominium can be associated with a housing association. If this is the case, members of the housing association often have the option to purchase apartments for sale from the housing association with a right of first refusal option.
Hereditary right of inheritance
The hereditary right of inheritance can come up if you are looking to buy farming property in Norway.
This gives the closest living relative to the farm owner the right to inherit the farm upon agreement. Certain criteria must be met before a farm is affected by a hereditary right of inheritance.
The property must have been in the family’s continuous ownership for at least 20 years. Furthermore, the property must have more than 35 acres of fully cultivated and/or surface cultivated land or more than 500 acres of productive forest area.
Residency requirement
A residency requirement is a regulation where the owner of a property is required to use a property as his/her year-round residency.
The duty can be either personal or impersonal. Personal residency requirement means that a specific person must be a resident on the property.
impersonal residency requirement requires that a particular building be used as a year-round residence, regardless of who lives there.
In Norway, this has been used by local governments to prevent the excessive purchase of property by individuals looking to use it as a summer residence in popular holiday destinations.
Requirement to farm
Concerning agricultural properties, most are associated with a requirement to farm. This is a regulation that was put in place in order to prevent the land from decaying or becoming unusable as arable land.
In most cases, the regulation does not specify who has to farm the land. This means that the property owner fulfills the requirements by renting out the arable land to be used by other farmers.
Property tax
The majority of Norwegian municipalities have property taxes. Here property owners are required to pay a tax based on the value of their property and the property tax rate.
Currently, municipalities have the option to collect up to 5 parts per million (0.0005%) of a property’s value as property tax.
The value of the property is usually determined by regular property valuations or based on estimates from the property owners’ tax returns.
Before calculating the tax to be paid, property owners get a 30% value deducted, leaving 70% of the property value to be taxed as the given property tax rate.
For a property worth 6 000 000 Norwegian kroner, the actual value being subject to taxation is 4 200 000 kroner. If that property is being hit with a property tax of 5 parts per million (0.0005%), it amounts to a yearly tax of 2 100 kroner.
Is it safe to purchase property in Norway?
Norway has a stable market economy, and the Norwegian real estate market is no different. Property owners have private property rights that are protected by the law.
This means that the owner decides over his or her own property. That being said, there is a slight exception to the Norwegian law that states the citizen’s right to roam.
This law states that everybody has the right to roam the outdoors, even that located on private property. However, this does not include courtyards, gardens, cultivated land, cultivated pasture, etc.
How much does it cost to buy property in Norway?
The average home price in Norway is about 45 500 NOK per square meter, which equals about 5150 USD or 4300EUR. However, the average price for a house is lower at 31500 NOK, which equals 3550 USD or 3000 EUR.
This means that the average family home of 150 square meters, or 1600 square feet, costs around 4 725 000 NOK, which equals 535 000 USD or 450 000 EUR.
Urban areas are the most expensive and have had the most dramatic price increase over the last 10 years. Many rural areas in Norway are a lot cheaper.
You can read more about real estate prices in Norway in this article.
Is it expensive to buy property in Norway?
There are many indicators of property pricing. One of the best ones are House Prices/GDP per Capita.
This indicator looks at the ratio of the cost of a typical upscale housing unit of 100 square meters, compared to the country’s GDP per capita.
According to global propertyguide.com, this ratio was about 14.55 times for Norway. This is lower than most European countries as well as below that of Canada and the US.
That being said, the Oslo market is a lot more expensive than the country’s average and is among the most expensive cities in Europe.
Also, average salary levels and GDP per capita are relatively high in Norway. Because of this, Norway might appear cheap on ratios, but in real life, property prices can be relatively high, especially for foreigners.
You can read more about the price levels in Norway, and why Norway is considered expensive in this article.
What are the most popular real estate markets in Norway?
Like in most developed countries, more and more people move into cities. Because of this, Norway’s largest cities are the most attractive real estate markets.
Oslo has emerged as the hottest real estate market. As Norway’s largest city and capital, the city attracts many Norwegians as well as foreigners every year.
As a consequence, property prices in Oslo have seen a steeper increase than in the rest of the country. Other strong real estate markets include Bergen, Trondheim, and Tromsø.
The real estate markets in southeast Norway, in general, are also quite popular. This is largely due to its relatively short distance to Oslo which is easily reached by car or public transport (Train).
Where can you find Norwegian properties for sale?
While you might find a few websites featuring property listings in English online. The absolute best place to look is the online marketplace finn.no.
Virtually all properties being put up for sale all across the country are featured on the site. This makes it synonymous with the Norwegian real estate market.
Unfortunately, the website is not available in English. However, if you use a browser that has a translation function (such as google chrome) you can easily navigate the site.
Sources
House hunting in Norway – The New York Times
Housing in Norway – Nordic Co-operation
What is property tax? – Skatteetaten
House prices/GDP per capita in Norway compared to Europe – Global Property Guide
