Buying an Apartment or House in Finland
This page deals mainly with the "nuts and bolts" or purchasing property in Finland. If you're looking for a house or apartment to buy, see the Finding Housing or Estate Agents pages.
This page refers to investment property and property purchases in Helsinki, Espoo, Vantaa, Hämeenlinna, Joensuu, Jyväskylä, Kajaani, Kotka, Kuopio, Lahti, Lappeenranta, Mikkeli, Oulu, Pori, Rauma, Riihimäki, Rovaniemi, Savonlinna, Seinäjoki, Tampere, Turku, Vaasa
If you purchase a home, tax credits are available for certain repair/renovation costs, as well as home loan interest payments.
Types of Housing Purchases
If you intend to buy property there are a few common forms of purchase, and your rights & obligations change with each one both before and after the purchase.
In all cases you will probably also require a mortgage / home loan. Depending on the type of housing, costs may often also include transfer tax and, particulalry important in the purchase of an old house, renovation costs.
Buying an Apartment - Omistusasuminen
If you're buying an apartment, chances are you will actually be purchasing shares in a housing company. Please see Apartment Ownership and Shares in Housing Companies. Find out whether costs such as hot water are included in the monthly charges, or whether you'll be paying for those separately. Transfer tax applies.
Buying a House - Omistusasuminen
Similarly to most countries, if you're buying a house you are responsible for its maintenance and renovations; and you also need to pay attention to the plot of land and its surroundings. Transfer tax applies.
Part Ownership - Osaomistusasuminen
Initially the part-ownership tenant buys part of the apartment by paying a percentage, usually 10-15%, of the total price of the apartment. The total price is agreed upon at this time, so market fluctuations during the part-ownership period will not affect the final price. The tenant then starts paying rent, as a lessee, to the majority owner. The rent does not accrue towards the purchase price of the apartment. During this phase, the tenant's obligations are based on the legal provisions for residential leases.
It is usually possible to increase your share of ownership during the residential period. In some apartments the times you can buy additional shares are determined in the shareholders' agreement. In other apartmentss, shares can be purchased once a year up to a maximum limit of 49%.
After a specified time period (the period of the interest subsidy loan - perhaps 5-12 years), the tenant has the right to buy the apartment outright. At this point the initial investment, and any further investments made by the tenant to acquire a larger share, are deducted from the purchase price. Once the tenant has bought the apartment outright it is treated as a standard apartment in a housing company, and status and responsibility for maintenance are determined by the Housing Companies Act.
Transfer tax applies to part ownership property, assessed on the price agreed at time of initial purchase.
Right-of-Occupancy Apartment - Asumisoikeusasuminen
Right-of-occupancy agreements give residents certain rights similar to ownership of their homes. Residents pay a right-of-occupancy fee (asumisoikeusmaksu euroina) amounting to 15% of the purchase price, and the Housing Fund of Finland (ARA) grants a loan for the remaining 85% of the purchase price. Residents then pay a monthly occupancy fee, similar to rent. Right-of-occupancy schemes do not ultimately entitle residents to purchase their homes , but the owners of the housing may not unilaterally terminate the right-of-occupancy agreement. Thus, residents enjoy the same tenure as if they owned the apartment.
This may sound like you are paying a lot for a "right to pay rent", but there are other benefits. When you leave the apartment your index-adjusted 15% fee is returned . Also, monthly occupancy fees are often a little less than rent for a comparable apartment. Finally, the 15% right-of-occupancy payment is not subject to transfer tax .
To apply for a right-of-occupnancy home the applicant must obtain a queue number from the municipal housing authority.
Further information, Property search, Queue numbers, & Applications: www.asuntosaatio.fi Finnish only, contacts at bottom of page
Purchase by Foreigners or Non-residents
In 2000 the government removed the requirement that a non-resident must obtain a permit to buy a secondary residential property in Finland, putting foreigners on exactly the same footing as Finns. However, foreigners are restricted from acquiring property in the Åland (Ahvenanmaa) archipelago, an autonomous, Swedish-speaking region of Finland. Foreigners need to obtain permission from the Finns to purchase property in Åland.
Non-residents intending to purchase property in Finland should contact an estate agent who can help them through the buying process in English or many other languages.
Transfer Tax - Leimavero
Transfer tax is imposed on transfers of real property (ex. a house with land) at the rate of 4%, and securities (ex. shares in a housing company when buying an apartment) at the rate of 2%. In the case of securities, the 2% is calculated on the total debt-free transfer price i.e. the sale price plus the portion of outstanding housing company debt for the apartment.
Transfer tax is usually imposed on the purchaser. Payment in the case of securities is due within 2 months from the date of the contract and, in the case of real property, within 6 months. When a transfer is intermediated by an estate agent, the transferee must pay the tax when the transfer contract is made.
First-time home buyers are exempted from the transfer tax subject to certain conditions: see the Tax Advantages page for more information.
Funny note: You may know the Finnish word "lehmä", meaning "cow". I read a nice story of a foreigner being told about leimavero by his Finnish estate agent, and asking in reply "Why do I have to pay cow tax?!"
The Terminology of Apartment Purchases
This section expands upon some of the more complicated terms relating to apartment purchases (see also the Real Estate Terminology page). It assumes a basic understanding of the operation of Finnish housing companies.
NB: When major work is required on the building, the housing company usually obtains a loan to cover it. The housing company then recoups the money from the shareholders i.e. the apartment owners. The share of the housing company loan per apartment is based on the size of the apartment in m². The loan share may be paid in monthly instalments, or in a lump sum.
- Myyntihinta: "Sale price". Price to be paid to current owner; this does not include payment of any of the apartment's outstanding share of the housing company loan
- Velaton myyntihinta: "Free of debt sale price". This includes the payment to the current owner PLUS lump sum payment of the apartment's outstanding share of the housing company loan.
- An advertisement in which Myyntihinta and Velaton Myyntihinta are the same amount indicates that the housing company has no outstanding loan. In this situation there will be no Rahoitusvastike
- Rahoitusvastike: If the housing company has a loan, and you do not pay the velaton myyntihinta at the time of purchase - thus freeing the apartment of debt to the housing company - rahoitusvastike will be your monthly payment towards the housing company loan.
When buying an apartment it's important to check whether any building/renovation work has already been agreed upon for the near future; if it has, the rahoitusvastike will be increasing!
Apart from outstanding loans, housing companies have other expenses which are also recouped from the shareholders:
- Hoitovastike: This is the monthly fee for services, general maintenance etcetera. The charge per apartment is based on the size of the apartment in m²
- Yhtiövastike: This is the combined cost of Rahoitusvastike + Hoitovastike
Shared and Individual Costs: Some costs are the responsibility of the housing company (i.e. shared by all owners), and some are the responsibility of individual apartment owners. This is indicated in advertisements as follows:
- Omistus: Responsibility of owner
- Osa: Responsibility shared by owners
- Sanakirja: Finnish > English > Finnish Dictionary
- Financial Support: First-time homebuyers' exemption from transfer tax, Tax deductions / tax credits, State subsidies
- Real Estate Agents: Finnish real estate agents, Conveyancing, Costs and commissions
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