Comparable Leases: Substantiating and Testing a Rent

When a rent is brought before the rent tribunal or a housing court, it is rarely the assertions that decide the case. It is the comparable leases. A landlord may have the finest feel for the market, and a tenant may hold the firmest conviction that the rent is too high — but neither carries much weight without concrete references to hold the level up against. This is where a rent review is genuinely won or lost.

The problem is that two leases with apparently the same rent per m² are seldom truly comparable. A figure in a listing or a contract says nothing about quality, state of maintenance, location within the building, or what is included in the rent. For a rent level to hold up in a case, the comparable leases you select have to withstand being pulled apart by the other side. This article is about how to choose the right references, assess comparability honestly, and use them to substantiate or test a level.

What a comparable lease has to support

A comparable lease is not simply another lease with a known rent. It is a piece of evidence. And like any evidence, it must be capable of being documented, tested, and defended. A usable comparable lease has, at a minimum, a known and verifiable rent, a known floor area calculated on the same basis as the lease you are assessing, and sufficient similarity in the characteristics that actually drive the rent.

That last point is the hard one. Similarity in price per square metre is not the same as similarity in value. A well-located lease in a newer building can have exactly the same rent per m² as a poorly located lease in a run-down building — without either telling you anything useful about the other. The point of comparison is to isolate the differences that matter and assess them, not to find the figure that best fits the conclusion you would like to reach.

Rule of thumb: A comparable lease is only strong if you can explain yourself precisely why it is similar — and where it differs. If you cannot, it is not a reference, it is a guess.

The factors that actually determine comparability

When you hold two leases up against each other, it is the value-bearing characteristics that count — not surface-level similarities. The most important axes to assess on:

• Location: Not just town or district, but the specific position. A ground-floor unit facing the rear courtyard versus a top-floor unit with a view can be decisive within the same building.
• Area and layout: Compare on the same area basis. The area concepts in BBR (the Buildings and Dwellings Register) — living area, commercial area, and gross floor area — must be understood correctly before the price per m² can even be compared meaningfully. Errors here are a classic pitfall, which you can read more about in the walkthrough of the typical errors in BBR data.
• Condition and quality: State of maintenance, materials, kitchen and bathroom, installations. A modernised lease and an original lease are not the same product.
• Age and property type: Year of construction and building type affect both expectations and the set of rules under which the rent is assessed.
• What is included: Are utilities, maintenance, shared facilities, or furnishing part of the rent? Two “identical” rents can cover widely different services.
• The terms of the lease: Non-terminability, deposit, adjustment mechanisms, and special obligations can shift the real value of a lease significantly.

The more of these axes two leases share, the stronger the comparison. Where they diverge, the divergence must be capable of being quantified — or at least explained — otherwise the reference weakens your case instead of strengthening it.

The value of the let versus market rent — what are you comparing against?

A comparable lease only makes sense if you know which level you are comparing against. Substantiating the value of the let is not the same as setting a market rent, and the difference governs both which references are relevant and how they are weighted.

The value of the let is a comparative standard: what is paid for dwellings of corresponding size, quality, location, and fittings in the neighbourhood or area. Here the actual rents of other leases are the very basis. Market rent for commercial premises rests more on what the market is currently willing to pay for a corresponding lease. Both build on comparison, but the reference basis and the weighting differ. If you are in doubt about which standard your case is to be assessed under, the distinction is elaborated in the article on the difference between market rent and the value of the let, and the broader method is covered in how market rent for residential and commercial premises is set and tested.

The consequence is practical: if you are selecting comparable leases for a residential case about the value of the let, you are looking for rents that have actually been agreed — preferably already tested — in comparable dwellings. If you are working with a commercial lease, current transaction data and active listings carry more weight, and the method for arriving at a realistic figure per m² is a discipline in its own right, described in the walkthrough of rent levels per m² in commercial leases.

How to document a rent level so that it holds

Documenting a rent level is the foundation beneath any review. It is the difference between an assertion and a piece of evidence, and it is the first thing the other side will attack.

For each comparable lease, you should be able to present:

• Identification and rent: Address, area, and the actual rent — not an asking or negotiable price, but the agreed level.
• Basis for the area: How the area has been determined, so that the price per m² is calculated the same way across the references.
• The value-bearing characteristics: Condition, age, layout, and what the rent includes, so that similarity and divergence can be assessed.
• Source references: Where the information comes from. Property data from the public registers — BBR for building and area data, matriklen (the cadastre), tingbogen (the Land Registry) for title and easements, Plandata.dk (the planning data register) for planning conditions — is stable and can be verified by all parties.

Number and spread

A single comparable lease is rarely enough. A level becomes credible when several independent references point the same way, and when the spread between them is explicable. A selection where the rent swings wildly without the differences being justifiable tells you that the leases are not in fact comparable — or that the selection has been made selectively. Be honest about the references that pull the other way. A case that presents only the favourable leases easily loses its credibility when the other side finds the ones you left out.

Testing in practice: challenging a level

Testing a rent is the reverse exercise: instead of substantiating a level, you attack the basis beneath it. The method is the same, but the gaze is critical.

Go through the other side’s comparable leases one by one. Is the area determined on the same basis? Is the stated rent the actual one, and does it include the same services? Is the condition genuinely comparable, or is a modernised lease being compared with an original one? Is the location the same at the level that matters? Each point where comparability breaks down weakens the weight of the reference. And if the other side has presented only the leases that support their level, it is precisely the omitted, comparable leases that carry your review. The principle is the same as in any thorough preliminary investigation: you look systematically for what does not fit before you conclude — the same discipline that underpins a proper due diligence checklist for a site.

From manual reference-hunting to a documented level

The manual exercise is time-consuming and uneven. Finding comparable leases, determining areas the same way, documenting condition and rent, and assembling it into a level that can carry a review can take hours per case — and the quality depends on how systematically you search and how honestly you include what speaks against you.

This is the exercise that the Arcili module Udlejningsvurdering (Rental valuation) automates. It gathers comparable leases on the basis of the value-bearing characteristics, determines the basis uniformly, and arrives at a market-rent estimate that can be documented and tested — built on transaction data and active listings linked to the property’s actual circumstances in the public registers. It does not replace the professional judgement of the valuer or the property manager; it removes the hours otherwise spent finding, determining, and documenting the references, so that the valuation can stand on a firm and transparent basis.

Want to see how a rent level can be documented on a comparable basis? Read more about Arcili, or book a walkthrough, and we will show you on a specific property.