Investment Property in Finland - Residential & Commercial
- Helsinki vs. The Rest of Finland
- Residential Property, Helsinki
- Residential Property Market Reports
- Residential Property Prices
- Investment Property: Advice, Procurement & Management
- Advice for Landlords: Finnish Landlords Association
- Tax on Real Property and Rental Income
- Commercial Property: Market Reports, Brokerage, Management, and Advice
- Related Links
This page specifically concerns investing in property in Finland, as opposed to purchasing property as a residence. For additional information on purchasing property in Finland see Buying Property.
Since the beginning of 2020, buyers from outside the EU and EEA need permission from the Finnish Ministry of Defence to buy real estate in Finland. However, a permit is NOT necessary when buying shares in a housing company, which is how most apartments are owned in Finland. See the Ministry of Defence page, and Apartment Ownership and Shares in Housing Companies.
It should be noted that the state plays a prominent role in the Finnish real estate market. Of the approximately 800,000 rental homes in Finland slightly more than half have been constructed with state subsidies from the Housing Finance and Development Centre for Finland (ARA). The majority of ARA-subsidised dwellings are owned by municipalities and managed through municipal companies, local authorities, and limited-profit housing companies. They are only released from regulation after a period of between 10 and 45 years, so the 'free market' for investors is limited.
More information: www.ara.fi - En, Fi, Sw
Returns on Investment
My (very basic) understanding is that the best return on Finnish residential property investments is to be found from small apartments in central Helsinki. Additionally areas undergoing gentrification such as Kallio, a couple of kilometres north of the city centre, offer attractive investment prospects. Percentage-wise, in the current economic climate larger properties don't tend to make such significant gains and the market is not as active. However, don't take my word for it - always obtain professional advice.
The companies referred and linked to on this page are established Finnish firms with local expertise, actively offering investment property information and services in English. This page does not include companies claiming online to be Finnish property investment experts or specialists, who upon investigation were found to be based overseas with little or no expertise regarding Finland.
I expect all the agents listed at Finnish Real Estate Agents would also be able to provide sound investment advice, they just haven't promoted that service in English at their sites... yet.
Greater Helsinki, also known as the Helsinki Metropolitan Area, comprises the cities of Helsinki, Espoo, Vantaa and Kauniainen. It has a dominant position in Finland, accommodating quarter of the Finnish population and some 30% of all jobs. It delivers more than one-third of Finnish GDP and the proportion of private sector employment is significantly higher than in the rest of Finland. The global economy has a stronger impact on Helsinki than other regions. From the property investment perspective, central Helsinki is certainly the location of desire for most investors with the wherewithal, but it's also a lot more expensive than the rest of Finland as you will see below.
Investing Outside Helsinki
If you are interested in purchasing outside Helsinki, local real estate agents will have property data for their region stretching back over some years, and they should be able to provide good advice regarding the best investment prospects in terms of size, type and location of property. Language is rarely a barrier in Finland. In my limited experience with Finnish real estate agents (1 purchase, 2 sales) I have found them efficient, straightforward and ethical. This is in stark contrast to my experiences in Manhattan, which were high-pressure cutthroat affairs - and a lot more expensive.
In 2020 the COVID-19 pandemic further strengthened polarisation of the housing market. KTI data shows prices of residential dwellings in old apartment buildings increased by 2.3% compared to the previous year in the whole country on average. In the Helsinki metropolitan area, prices increased by 4.2%, whereas elsewhere in the country they decreased by 0.3%. Of the other large cities, prices increased in Tampere (4.4%), Turku (3.8%) and Kuopio (3.0%), whereas in Oulu, prices remained stable (-0.5%). In Lahti and Jyväskylä, housing prices decreased in 2020.
The KTI Rental Residential Index for new rental agreements showed an annual increase of 0.6% for the Helsinki metropolitan area.
Some salient facts relating to the Helsinki property market include:
- Only 39% of homes in Helsinki are owner-occupied or available for rental at market rates. Two-thirds of the land is in public hands and the city's real estate authorities play a prominent role
- Helsinki has a rapidly growing population of about 650,000, expected to reach 700,000 by 2025
- Both the city's central residential neighbourhoods and parts of greater Helsinki contain attractive investment options
KVKL, The Central Federation of Finnish Real Estate Agencies, publishes brief industry reports, including Finnish Housing Markets Reviews. Finnish.
- Changes in sale prices for houses and apartments
- Changes in rental prices for houses and apartments
- Turnover and percentage change of Finnish real estate transactions
- Other KVKL publications
According to preliminary data for August 2021 from the public authority for statistics, Statistics Finland, prices over the past 12 months of old housing company dwellings in blocks of flats and terraced houses had:
- Risen by 6.1% in Greater Helsinki.
- Risen by 2.8% elsewhere in Finland.
- Average prices per m², August 2021:
- These figures do not include new buildings.
Full service property house, providing property investors with analyses, evaluations, transaction and funding advice, and asset management. Offices in Helsinki, Hämeenlinna, Joensuu, Jyväskylä, Kuopio, Lahti, Lappeenranta, Oulu, Pori, Rovaniemi, Tampere, Turku, Vaasa.
- Property management services
- Sales, purchase, funding and investment strategy advice and implementation
- Rental property strategies and services, for housing and commercial properties
- Property development analysis and advice
- Assessment and advisory services for individual properties through to full investment portfolios
If you intend to buy an investment apartment, the Finnish Landlords Association website has a wealth of information about investment strategies and returns, applicable law and documentation, taxation, and more. There is also a large Guides and Recommendations section.
Tax on Real Property
- Transfer tax for real property is 4%. The buyer usually pays the tax
- Real estate tax is set by the local municipal council and is calculated as a percentage of the taxable value of the property. Municipalities set their own tax rates within prescribed ranges. In 2020 these were:
0.93% - 2,00% for general real estate tax
0.41% - 0.90% for permanent residences
0.93% - 2,00% for other residences
2.00% - 6.00% for unbuilt sites
- Rental income falls into the category of capital income and is assessed at the rate of 30% (34% if over €30,000)
- Landlords can claim deductions. All expenses connected with the rental operation may be deducted from gross taxable rental income. Typical expenses include housing-company maintenance charges, annual repairs, and interest paid on the loan taken out to buy the apartment
This information was obtained from the Finnish Tax Administration in January 2021. Always check www.tax.fi for latest updates.
Founded in 1994, Newsec provides commercial property sales and acquisition advice, valuations and analyses, brokerage services, and asset and property management services. Newsec publishes Property Outlook Finland in English, with Finnish market information useful to investors as well as companies making decisions regarding location. Contents include:
- Finnish economic situation and outlook
- Finnish real estate markets and submarkets
- Real estate taxes and legislation
KTI Property Information
KTI is an independent information business providing information and analysis of the Finnish real estate market. Their Benchmarking, Information and Research services support the planning, steering and monitoring of key processes of the property business. KTI's publications in English, KTI Market Review and The Finnish Property Market, are tailored towards international investors and offer detailed information regarding investment in Finnish real estate. They are available for purchase or online as PDFs. Contents include:
- The Finnish economy: overview and outlook
- Institutional aspects, structure and players in the Finnish property market
- Property sectors: investment performance, market structure and practices
- Regional outlook for property markets
Swedish-originated Catella Property is a leading European transactions advisor with expertise in the Finnish commercial property market, providing valuation, advisory, brokerage, and sales & letting services. Operating Finland-wide.
Catella Property: www.catella.com/en
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