Norway Real Estate Legal Update 2024

The amendments in the Norwegian Lending Regulations relating to residential mortgages loans will come into effect on 31 December 2024. The amendments mainly concern changes related to the fact that the maximum LTV ratio for residential mortgages loans has increased from 85% to 90%. In practical terms, this means that going forward, residential mortgage borrowers will generally need to provide a 10% equity when applying for a mortgage, compared to 15% under the current rules. It is expected that this will lead to an increase in housing prices when interest rates begin to fall, particularly in Oslo where there is a significant housing shortage.

The Tenancy Act Committee) has submitted its final report, NOU 2024:19, proposing revisions to the Tenancy Act (Nw. husleieloven). The deadline for public comments is 31 January 2025. The committee will not assess the regulations that apply to commercial leasing.

Key proposals include:

• Extending the minimum duration for fixed-term tenancy contracts from three to five years.
• Still allowing exceptions for shorter contract durations under valid circumstances.
• Introducing a new right for tenants to extend the lease under specific conditions
• Mandating landlords to allocate 1 percent of rental income to a tenant council (Nw. beboerråd) initiative aimed at improving the residential environment.
• Eliminating the “current levels of rent” (Nw. gjengs leie) for simpler adjustments to market rent.
• Granting tenants the right to make more changes to the dwelling without the landlord’s consent.

Background facts

The Register of Beneficial Owners aims to combat money laundering, terrorist financing, and economic crime by providing an overview of who controls businesses in Norway.

Since November 2021, legal entities have been required to obtain and retain information about their ultimate beneficial owners. However, with effect from 1 October 2024 and pursuant to the Norwegian Act relating to Beneficial Owners, Norwegian entities must now also register this information in the Norwegian Register of Business Enterprises (Nw: Brønnøysundregistrene).

Legal entities covered by the Act

The Norwegian Act relating to Beneficial Owners requires all legal entities, units and other associations (with certain exceptions) registered or conducting business in Norway to identify ultimate beneficial owners and register this information in the Norwegian Register of Business Enterprises.

Registration requirements

Entities must report who ultimately controls and/or owns the entity to the authorities. The registration process includes a 10-month phase-in period, with a mandatory requirement to register from 31 July 2025. After this, non-compliance may result in fines.

Entities must identify beneficial owners based on formation documents, shareholder registers, articles of association, shareholder agreements or any other documents that establish ownership rights and/or voting rights.

It is the responsibility of the board of directors to ensure that the entity obtain and register any information about beneficial owners. If the registering entity considers that there are no real beneficial owners, this must be duly explained and documented.

Note that the information must be accurate and up to date. In the event of any changes in the ownership or control, updates must be registered no later than 14 days after the entity becomes aware of such changes. Entities may be required to present this documentation to the authorities upon request. The registration shall be made electronically through Altinn (using the form “Registrering av reelle rettighetshavere (RRH-0100)”).

Currently, there are several different and dispersed sources of information on property ownership. There is no joint, authoritative source from which ownership information can be obtained.

The most central sources of information at the state level are the land register (Nw. grunnboken), the cadastre (Nw. mattrikkelen), and the Tax Administration’s internal system for property ownership information for taxation purposes (Nw. Skatteetatens interne fagsystem for opplysninger om eierskap til fast eiendom for skatteformål). None of these sources provide a complete overview of the actual ownership of real property in Norway.

The land register is a public register of registered rights and encumbrances relating to real property and housing cooperative shares. Registering a change of ownership is voluntary. Therefore, the land register only reflects actual title of real property if a property acquisition is registered, and the registration corresponds to the actual ownership circumstances. The information registered does not determine the real ownership circumstances. However, since most people choose to register to secure legal protection for their acquisition, there is a relatively good correspondence between who has registered title to control the property and the actual ownership.

Better overview and control of property ownership are necessary for the effective combat of economic crimes, including money laundering and tax evasion. Such overview and control are also crucial for maintaining national security. The geopolitical situation particularly strengthens the need for control over the acquisition and ownership of properties of importance to national security. The Ministry of Local Government and Regional Development has stated that it is therefore necessary to investigate concepts that are able to meet the needs for information on property ownership in Norway in a better way. In this investigative task, the Mapping Authority will collaborate with the Tax Administration. The Mapping Authority is to submit its report by 16 June 2025.

The Ministry has also underscored that there is a need for technical modernisation of several systems that currently handle information on property ownership.

The report, NOU 2023:28 (Investeringskontroll – En åpen økonomi i en usikker tid / Investment Control – An Open Economy in Uncertain Times), recommends establishing a new act on investment control, to monitor foreign investments in companies not covered by the Norwegian Security Act.

The committee concludes that the current investment control system is not functioning adequately. The committee proposes four main improvements:

• Implementing a notification system for foreign direct investments in security-sensitive sectors,
• Establishing a separate investment control authority,
• Drafting a new act on investment control.
• Strengthening the cooperation with neighboring countries and the EU on investment control.

In Norway, the Energy Mapping Regulations came into effect on 1 October 2024. The Regulations implement the European Parliament and Council Directive 2012/27/EU on energy efficiency (the Energy Efficiency Directive). The Regulations supplement the new provision in section 8-5 of the Energy Act, which came into effect on 1 March 2024. The Regulations require large enterprises to conduct energy mapping every four years. Large enterprises are defined as enterprises that have an annual energy use in Norway of at least 2.5 GWh over the last three years. This will primarily apply to, for example, data centers and large industrial facilities.

The mapping should provide a description of the enterprise’s energy use in Norway in the previous calendar year, including electricity consumption profiles. The completed energy mapping report must be sent to Enova (an entity owned by the Ministry of Climate and Environment) and made available to energy service providers. The Norwegian Water Resources and Energy Directorate (NVE) controls that the requirements of the Regulations are complied with. If the requirements are not met, NVE has the authority to issue orders, compulsory fines, and infringement fines.

The aim of the new sustainability reporting legislation, that entered into force in Norway on 1 November 2024, is to provide relevant, comparable and reliable information about (i) the sustainability risks that companies are exposed to, and (ii) how the companies affect people, climate and the environment. Transitional rules that provide a gradual introduction of the new requirements on sustainability reporting over the next years, in alignment with the approach of the EU, have also been established.

Companies affected by the CSRD:

The new rules on sustainability reporting in the Accounting Act apply to large enterprises/groups and small and medium-sized listed enterprises, excluding micro-enterprises. The reporting obligation will be gradually introduced in Norway, following the same model as the CSRD:

• From the fiscal year 2024 with reporting in 2025: Large enterprises of public interest with more than 500 employees, and which meet one of the following two criteria: (i) balance sheet: ≥ NOK 290 million, (ii) sales revenue: ≥ NOK 580 million. Examples of large enterprises of public interest are banks, credit institutions, insurance companies, and listed companies.
• From the fiscal year 2025 with reporting in 2026: Other large enterprises that meet two of the following three criteria: (i) balance sheet: ≥ NOK 290 million, (ii) sales revenue: ≥ NOK 580 million, and (iii) ≥ 250 employees.
• From the fiscal year 2026 with reporting in 2027: Listed small and medium-sized enterprises* (“SME”s), and large entities that are “small and non-complex credit institutions” or captive insurance companies.

* Listed SMEs are enterprises that meet at least two of the following three criteria: (i) balance sheet: NOK 5 – 290 million, (ii) sales revenue: NOK 10-580 million and (iii) 10 – 250 employees. The SMEs must have securities listed on a regulated market in the EEA. In Norway, Oslo Børs and Euronext Expand are regulated markets.

• From the fiscal year 2028 with reporting in 2029: Certain third-country enterprises.

To enhance comparability in reporting across companies, sectors, and countries, enterprises subject to the CSRD are required to use the European Sustainability Reporting Standards (ESRS).

With a few exemptions, the Norwegian legislation establishes the same content and scope of reporting, as well as assurance requirements and transitional rules, as under the CSRD.

Implications for Norwegian companies

• The implementation of the CSRD into Norwegian law has significantly expanded the scope of the sustainability reporting, as well as the number of companies subject to reporting requirements. The sustainability reporting process now requires the use of standardized templates and involves detailed calculations across numerous data points. As a result, the reporting process will demand considerable resources, particularly during the initial implementation phase.
• A key effect of the CSRD is that it expands the scope of the EU Taxonomy. This means that companies subject to the CSRD are required to also meet the Taxonomy’s reporting requirements. Therefore, companies subject to the CSRD from fiscal year 2025 should start preparing for both sustainability and Taxonomy reporting.
• Companies falling outside the scope of the CSRD will most likely become indirectly affected by the new sustainability reporting requirements. The reason is that companies subject to the CSRD are required to obtain sustainability information from their contractual partners to fulfill their obligations.

The relationship between the Transparency Act and the CSRD

• Some of the reporting points in the ESRS partially overlap with national reporting requirements in the Transparency Act ( Åpenhetsloven). However, the Norwegian Ministry of Finance has noted that the implementation of the CSRD reporting requirements into Norwegian law does not affect the obligations of Norwegian enterprises to conduct due diligence assessments under the Transparency Act.

On 1 January 2024, new rules on gender representation in the board of directors of private limited liability companies (of a certain size) entered into force. The requirements will be gradually implemented in five phases until 2028, with specific deadlines for companies to be compliant that depend on income and number of employees.

Companies affected by the gender requirement

The following companies will inter alia be affected by the rules:

• 31 December 2024: Companies that have a total operating and financial income that exceeds NOK 100 million.
• 30 June 2025: Companies that have more than 50 employees and are not covered by (i)

• 30 June 2026: Companies that have more than 30 employees and are not covered by (i) or (ii).

• 30 June 2027: Companies that have a total operating and financial income that exceeds NOK 70 million and are not covered by (i)-(iii).
• 1 July 2028: Companies that have a total operating and financial income that exceeds NOK 50 million and are not covered by (i)-(iv).

The requirements

If the board of directors consists of three or more members, the gender composition of the board of directors shall meet the following requirements within the deadline specified above: If the board of directors consists of three or four directors, a maximum of two directors can be of the same gender.

• If the board of directors has five or six board members, a maximum of three board members can be of the same gender.
• If the board of directors has seven board members, a maximum of four board members can be of the same gender.
• If the board of directors has eight board members, a maximum of five board members can be of the same gender.
• If the board of directors has nine or more board members, a maximum of 60% can be of the same gender.

Similar requirements apply to deputy board members (Nw. varamedlemmer).

If three or more board members are to be elected among the employees, they cannot all be of the same gender. This requirement does not apply if more than 80% of the total number of employees at the time of the election are of the same gender. For companies with more than 200 employees, the gender composition shall meet the requirements that apply to shareholder-elected board members. The requirements apply as of the first ordinary election after the dates specified in items (i) – (v) above.

Calculations show that the regulations are expected to affect around 20,000 companies by 2028.

Finally, as a reminder, the Norwegian Companies Act sets out requirements when it comes to board members’ place of residence. At least half of the board members must be residents of Norway, an EEA state, Great Britain, Northern Ireland or Switzerland.