Buying Property in Finland as A Foreigner: A How-to Guide

Do you ever want to buy a property in Finland and stay there? Known for its pristine forests, crystal-clear lakes, and an abundance of wildlife, Finland is beautiful. It’s evident what Finland offers its citizens when considering low pollution levels and clean air. The beauty of the natural environment is regarded by many as a primary reason why this country is an excellent living place.

From 2020, buyers from outside the European Union and the European Economic Area (EEA) will have to obtain permission from the Finnish Ministry of Defence to purchase real estate in Finland. You should also note that, in Finland, you don’t need a permit when buying shares in housing companies, which is how most people acquire apartments.

There is no doubt that real estate is one of the best investments. This how-to guide will help you learn everything you need if you want to obtain a property in Finland. To learn how much houses and apartments cost in Finland, read this article.

Can a foreigner buy a house in Finland?

As part of the new legislation passed in March this year, foreign residents must obtain permission to buy real estate in Finland on 1 January 2020. It’s necessary for the applications to be submitted electronically to the Ministry of Defence to be considered.

In an interview with Yle News, Matias Warsta, Director of Real Estate and Environment at the Ministry of Defense, explained that the legislation is in place to protect national security.

Warsta explained that there had been a significant decline in security in the Baltic region over the last decade. Thus, they want to create a system to monitor and control the real estate purchases in Finland to help them secure the national interest to protect the country.

Land use and real estate ownership are now regulated to ensure national security throughout Finland, except for the Åland Islands. Only property deals that are closed after January 1, 2020, will be affected by this law.

Private individuals, companies, or other entities domiciled outside the European Union (EU) or the European Economic Area (EEA) must obtain the permit. Moreover, Warsta stressed that even if one of the partners of joint ownership is a foreign national, permission must be obtained to make the purchase.

In the case of dual citizenship, the person doesn’t need to apply for the permit if one of the nationalities is in an EU or EEA country. 

If you don’t want to go through the hassle of getting a permit, you may opt to purchase a housing company share. This process is how many foreigners obtained their apartments in Finland. 

House prices in Finland in 2022

To give you an idea of how much buying a property costs in Finland, the table below shows the average price of housing in the country. 

CityThe average lot size for a one-family house in a zoned area (sq.m.)Average price (€)Median price (€)
Espoo1,117677,119580,000
Helsinki923572,825490,000
Vantaa1,015422,578392,000
Turku1,223312,244251,000
Oulu1,249227,451210,000
Rovaniemi1,304203,515175,900
Tampere987325,000383,281
Jyväskylä1,160246,319230,000
Source: finnwards.com

The process of buying a property in Finland

In Finland, if you want to buy a property, you have two options: purchasing a piece of real estate or a share of housing. The majority of apartments are owned as shares in a housing company.

This could be a new process to adjust to, depending on the type of experience you have already had. If you agree, finding a trustworthy real estate agent who can help you is more vital.

During the buying process, your agent will take care of many details. As soon as you find the home of your dreams and you are ready to make an offer on it, you should be aware that the bid that you are making is legally binding. But, don’t worry!

There is no doubt that the details of the buying process will be made clear to you by your agent, who will ensure that it runs smoothly throughout.

1. Finding a house you like

If you are looking for an apartment, you should be prepared to spend several months searching for the right place. The first thing you need to do is to pick a property that you like and answer all the questions related to it.

Some of the most popular platforms to find houses and apartments are etuovi.com and asunnot.oikotie.fi. Both sites are in Finnish only, so make sure to use a Google translation tool.

Besides, many directory websites provide information about real estate in Finland. Use them to find information on how to find a home and apply for a mortgage. You can also ask a real estate agent for help when buying a property in the country.

2. Checking the property

When you find a property you like, you should ask all the questions related to it. For instance, when considering an apartment, find out from the House Manager what repairs or other work the management company has planned and how much the work will cost.

It may involve high financial costs, so you should know this in advance. The cost of repairing water supply and sewerage pipes can be thousands of euros.

It is essential to assess the condition of the property you want as soon as possible. Ensuring its good condition is your responsibility as a buyer. 

There is nothing worse than buying a house and finding a malfunction that could you could have seen during the inspection. That is because you cannot get compensation from the seller for that damage.

Aside from that, it is essential to learn all about the liabilities of making a house purchase in Finland. Housing joint-stock companies are usually liable for defects for two years. Meanwhile, real estate sellers are responsible for five years.

3. Opening a bank account

Whether you want to pay in person or remotely, you should open an account with a Finnish bank. However, you cannot avoid visiting the bank in the first instance. Account activation will take place only then, and opening an account in euro is necessary.

To open a bank account, you need a foreign passport, bank statements from personal accounts in the country of residence, a certificate of employment, a certificate of income, and several other documents that a bank may ask for from you.

4. Making a deposit

A preliminary contract must be drawn up, and a deposit must be made after you select a specific property.

Preliminary agreements specify the property’s characteristics, such as:

  • payment schedule
  • payment method
  • total cost of the property
  • exact date of transfer of the property to the new owner
  • amount of penalties for late payments
  • amount of the deposit and the conditions for its transfer

Both the seller and the buyer sign the preliminary agreement. It’s also mandatory to have a notary present at the same time.

In most cases, the deposit is 3-5% of the cost of the property, although you may be able to negotiate this individually. However, the transaction amount cannot be less than €2,000 or greater than 10%.

The deposit will be refunded in full if a transaction is disrupted or canceled due to the seller’s fault. On the other hand, if it’s your fault, the deposit remains with the seller.

Types of Housing Purchases in Finland

Before and after the purchase of property, your rights and obligations change depending on the type of purchase you make.

There is a good chance that you will also need a mortgage or home loan in all cases. Depending on the type of housing, transfer tax may also be charged, and renovation costs are high in purchasing an old house.

1. Buying an Apartment – Omistusasuminen

When you buy an apartment, you will likely purchase shares in a housing company. Check whether monthly charges include hot water or if you must pay separately. Moreover, transfer tax also applies to apartment purchases.

A transfer tax of 4% is imposed on transfers of real property (such as a house with land). A rate of 2% on transfers of securities for shares in a housing company when buying an apartment).

Securities are subject to 2% tax based on the total debt-free transfer price, which is the sale price plus any outstanding housing company debt.

In most cases, the purchaser is responsible for paying transfer tax. Securities payments are due within two months of the contract date. On the other hand, property payments are within six months. When an estate agent signs the transfer contract, the transferee must pay the tax.

2. Buying a House – Omistusasuminen

As in most countries, when you buy a house, you are responsible for maintaining and renovating it and paying attention to the land and its surroundings. Transfer tax will also apply in this type of purchase.

3. Part Ownership – Osaomistusasuminen

In a part-ownership arrangement, the tenant pays a percentage of the apartment’s total price, usually 10-15%. This price has been agreed upon at this time, so market fluctuations during part-ownership will not affect the final price. 

The tenant then pays rent to the majority owner as a lessee. Rent does not accrue towards the apartment’s purchase price. In this phase, the residential lease laws govern the tenant’s obligation.

If you wish to increase your share of ownership during the residential period, you can typically do so. In some apartments, the shareholders’ agreement determines when you can buy additional shares.

In other apartments, you may purchase up to a maximum of 49% a year. Thus, it is essential to check this out before signing any agreement.

Tenants have the right to buy the apartment outright after a certain period (the interest subsidy loan period – perhaps five to twelve years). At this point, the tenant’s initial investment and subsequent investments to acquire a more significant share are deducted from the purchase price.

When the tenant buys the apartment outright, it’s treated as a standard apartment in a housing company. From here on, the Housing Companies Act determines its status and maintenance.

Part ownership properties are subject to transfer tax. The rate will be based on the price agreed upon when the tenant purchases the property.

4. Right-of-Occupancy Apartment – Asumisoikeusasuminen

Residents of right-of-occupancy agreements have rights similar to those of homeowners. In addition to the right-of-occupancy fee (asumisoikeusmaksu euroina), the Housing Fund of Finland (ARA) grants a loan for the remaining 85% of the purchase price. A monthly occupancy fee is then charged to residents, similar to rent. 

Residents cannot own their homes under right-of-occupancy schemes. But their right-of-occupancy agreements may not be unilaterally terminated by the housing owners. This means that residents enjoy the same tenure as if they owned the apartment.

It may seem like you are paying a lot for the right to pay rent, but there are other advantages as well. Upon leaving the apartment, you will receive your index-adjusted 15% fee.

As an additional benefit, occupancy fees are often less expensive than rent for a comparable apartment. Furthermore, the 15% right-of-occupancy payment is not subject to transfer tax.

Anna

Anna is an experienced expat and writer. She has been living abroad for over 6 years.

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