Over two thirds of Finnish people live in owner occupied apartments (Eurostat). This is mainly due to historic reasons as well as preferential taxation for homelenders as mortgage interest can partly be deducted in income taxation.
Understanding how the property market is set up in Finland can be tricky, even for Finnish people, let alone for people coming from abroad. To help with this we compiled a three part blog series about owning, buying and selling apartments in Finland. In this blog post we'll cover the basics of owning real estate in Finland.
All apartment buildings in Finland that contain 4 or more apartments are usually organised as housing joint stock companies called “Asunto-osakeyhtiö”. When you purchase an apartment you’re actually purchasing a series of shares in that particular housing company that give you the right to control a specific apartment.
The joint stock company owns the whole building and is responsible for the upkeep of general structures of the building (roof, structural walls, facade, staircase, common areas) and the basic systems of the building (heating systems, water and piping systems, ventilation, electric wiring and data/TV cables). The owner is responsible for the inside of the apartment with some exceptions (excluded are most visible parts of the housing systems such as water taps, the toilet seat etc.).
All housing joint stock companies have a board that makes decisions regarding the company. As a shareholder you have the right to attend and vote at the housing company’s annual general meeting.
The decisions the board makes range from agreeing on repairs and renovations that concern the whole building to various financial matters such as the size of the various housing fees that are being charged from the shareholders. It’s of vital importance to follow and participate in the housing company’s decision making as it might have a significant impact on the value of your apartment.
“Isännöitsijä” or the housing manager organizes and manages the daily running matters of the company such as keeping records, co-ordinating and getting quotes for various repairs. The housing manager is usually an external company or professional individual that charges a fee from the housing company for the provided services.
“Huoltoyhtiö” is a maintenance company that provides services such as keeping the yard and pathways clean of snow and cleaning the stairwell. This is typically an external maintenance company, that charges a fee from the housing company for the provided services.
“Vastike” is the housing fee that the housing company charges from the shareholders to cover past and future expenses. There are several kinds of fees that the housing company can charge:
- "Hoitovastike" or Maintenance fee
- "Korjausvastike" or Repair fee
- "Rahoitusvastike" or Financing fee.
Hoitovastike or maintenance fee is charged to cover running expenses such as payments to the housing manager and maintenance company.
Korjausvastike or repair fee is collected in advance from shareholders to fund future repairs and renovations. The money
collected from repair fees are deposited into the repair fund (“korjausrahasto”).
The financing fee is used to pay back loans and interests for funds the company has borrowed in order to finance repairs or other investments. As a shareholder you can choose to pay back your apartments share of the loan all at once or in monthly instalments via the financing fee.
Both the maintenance fee and financing fee are usually charged on a per square meter basis. The average maintenance fee in Finland is 4,29 e/ m² (2013). Typically it’s slightly higher in large cities, for example in the Capital region the average fee is 5,26 €/m² (2013). The size of the financing fee varies from company to company.
"Tontti is the plot of land where the apartment building is located on. In Finland the housing company can either rent or own the plot of land. If the land is rented the maintenance fee will be slightly higher since a part of it will be used to pay the land rent.
The value of the apartment is typically higher if it's located on land that is owned by the housing company.
In some instances the housing company can have an opportunity to purchase the land it has previously rented. For example the City of Helsinki offers housing companies whose rental agreements are ending an opportunity to purchase the lot. Land rental agreements are usually long and can stretch for 50 years or more.