Living in Finland

Finnish apartment ownership system explained

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Buying an apartment in a foreign country can be daunting if one doesn’t know or understand the legal framework around home ownership in one’s new country. We thought we’d explain very briefly how apartment ownership in Finland is organized, and how that ownership system influences the maintenance and repair of owner-occupied apartment buildings.

The ownership system of apartments in use in Finnish owner-occupied apartment blocks is very rare globally. The more common ownership systems used are the condominium system common in for example Europe, and North and South America; and the unitary system used in for example Holland, Austria, and Norway.

In the condominium system each apartment is a property on its own whereas the joint areas and utilities within the apartment block are jointly owned by the condominium owners.

In the unitary system, the co-owners own a certain share of the property, and connected to that share is an exclusive right to use a particular apartment in the building.

In Finland, the whole building and everything in it, including the apartments themselves is owned by a legal entity called in Finnish asunto-osakeyhtiö (limited liability housing company). This is a separate legal structure.

Thus when you are buying an apartment in Finland, you are not legally speaking buying property, but are buying specific shares in the limited liability housing company connected with your apartment. The shares you are buying allow you to live in and manage that apartment, but do not make you a property owner.

The governance and decision making system of the limited liability housing company in Finland is regulated by the Limited Liability Housing Companies Act. Having the legal framework defining the rights and responsibilities of shareholders in a single act makes the administration of the apartment block clear and transparent.

Because the ownership of the whole building in clearly organized and legally regulated, the companies can get loans to finance larger repairs. All of these facts mean that Finnish owner-occupied apartment blocks are generally well maintained and do not suffer from neglect of repairs, large or small.

The Act contains specific requirements for bookkeeping, annual accounts, and auditing making the company’s financial information transparent. Thus the existing shareholders or anyone wanting to purchase shares can better anticipate the future costs associated with the their own apartments.

The Finnish model is thus a model that defines the rights and responsibilities of unit owners clearer than the two other models. This doesn’t mean that Finnish apartment blocks are free from neighbors fighting over the most trivial of things, but in the Finnish model those disputes don’t necessarily translate into the neglect of joint areas or of financial responsibilities as they might elsewhere.

Sources used:

Lujanen, Matti (2010): “Legal Challenges in Ensuring Regular Maintenance and Repairs of Owner-Occupied Apartment Blocks”, International Journal of Law in the Built Environment Vol. 2, Issue 2 , pp. 178-197.

Lujanen, Matti (2017): “Taloyhtiö”, In 100 sosiaalista innovaatiota Suomesta, 3. edition, edited by Ilkka Taipale, pp. 219-221. Into Kustannus, Helsinki.

Pekkarinen, Anna-Liisa (2013): “Suomalainen asunto-osakeyhtiö on ainutlaatuinen”, Suomen Kiinteistölehti 4/2013, pp. 34-37.

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