Over two-thirds of Finnish people live in owner-occupied apartments (Eurostat). This is mainly due to historical reasons as well as preferential taxation for home lenders as mortgage interest can partly be deducted in income taxation.
Understanding how property market is set up in Finland can be tricky, even for Finnish people, let alone for people coming from abroad. In order to make it a bit easier, 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 organized 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 gives you the right to control a specific apartment.
The joint stock company owns the whole building and is responsible for the upkeeping 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.
Decisions the board makes range from agreeing on repairs and renovations that concern the whole building to various financial matters such as size of the various housing fees that are being charged from 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 your apartment value.
“Isännöitsijä” or the housing manager organizes and manages daily running matters of the company such as keeping records, coordinating and getting quotes for various repairs. Housing manager is usually an external company or professional individual that charges a fee from the housing company for services provided.
“Huoltoyhtiö” is a maintenance company that provides services such as keeping the yard and pathways clear of snow and cleaning the stairwell. This is typically an external maintenance company, that charges a fee from the housing company for services provided.
“Vastike” is a housing fee that the housing company charges from shareholders in order to cover past and future expenses. There are several kinds of fees that a housing company can charge:
"Hoitovastike" or Maintenance fee
"Korjausvastike" or Repair fee
"Rahoitusvastike" or Financing fee
Hoitovastike or maintenance fee is charged in order 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. Money collected from repair fees are deposited into repair fund (“korjausrahasto”).
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 apartment’s share of the loan all at once or in monthly instalments via financing fee.
Both maintenance fee and financing fee are usually charged on a per square meter basis. 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 average fee is 5,26 €/m² (2013). Size of financing fee varies from company to company.
"Tontti” is a plot of land where the apartment building is located. In Finland, housing company can either rent or own a plot of land. If the land is rented, maintenance fee will be slightly higher since a part of it will be used to pay land rent.
Apartment value is typically higher if it's located on land that is owned by a housing company.
In some instances, a housing company can have an opportunity to purchase land it has previously rented. Land rental agreements are usually long and can stretch for up to 50 years and longer.