Apartment ownership in Finland, part I: the system explained

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Are you considering buying an apartment in Finland? In this blog post, we explain the apartment ownership system in Finland.

Buying an apartment in a foreign country can be daunting. It is especially so if one doesn’t understand the legal framework around homeownership.

So, in this blog, we help you in this by describing how

  • apartment ownership in Finland works; and
  • the ownership system influences the maintenance and repair of apartment buildings in Finland.

This blog post is part of a series of posts relating to apartment ownership in Finland. The other parts are:

Ownership systems around the world

The ownership system of Finnish apartment blocks is quite rare.

In contrast, common ownership systems are the so-called condominium system and the so-called unitary system.

The condominium system is common for example in Europe, and North and South America. The unitary system, in turn, is popular in, for example, Holland, Austria, and Norway.

In the condominium system, each apartment is a property on its own. The apartment owners jointly own the common areas and utility systems. Often the homeowners’ association manages these parts of the building.

In the unitary system, the co-owners own a certain share of the property. Connected to that share are rights to a particular apartment in the building.

In Finland, a single legal body owns the whole building. This legal body is called ‘asunto-osakeyhtiö‘ in Finnish. The English term is ‘limited liability housing company’. This company also owns the apartments themselves.

In these companies, the company’s share capital is divided into groups. Thus, owning a group of such shares means having possession of a specific apartment.

Therefore, when you buy an apartment in Finland, you are not buying property. You are actually buying specific shares in the limited liability housing company. Those shares are connected to the apartment you are buying. They allow you to live in and manage that apartment. But they do not make you a property owner. They make you a company shareholder.

The limited liability housing company is its own legal structure. It is regulated by the Limited Liability Housing Companies Act.

Governance of Finnish limited liability housing companies

The Limited Housing Liability Housing Companies Act regulates the administration and decision-making of housing companies in Finland.

The decision-making bodies the law lists are the shareholders’ meeting and the housing company board.

The shareholders’ meeting is the main decision-making body of the company. Because it is the most important way for owners to influence what goes on in the building, we have a whole separate blog post about it. Read that post. It helps you to prepare for the meeting.

The board takes care of the day-to-day administration of the housing company. Their primary responsibility is to put the decisions of the shareholders’ meeting into effect. They also take care of smaller, daily issues that don’t require the input of all shareholders.

Another major responsibility of the board is to make sure that the company’s finances are in order.

The board is also responsible for organizing the maintenance of the building. Often that is done through a separate property manager.

Quite often housing companies also have a maintenance company. They are the ones that mow the lawn, plow the snow, and come to fix a leaky faucet.

Apartment ownership system in Finland compared

Matti Lujanen has compared the Finnish apartment ownership system to those used elsewhere.

He says the Finnish system has the following benefits:

  1. The property has a clear owner. The owner has the responsibility for building maintenance and repairs.
  2. The administrative process is clear.
  3. Because of the law, there is a high level of accountability and transparency.
  4. Shares can be sold easily. Selling is fast.
  5. Both private individuals and companies can own apartments. And the apartments can be let.
  6. Individual apartment owners cannot do renovations that might damage the building.
  7. Ease of financing: The housing company can take loans for renovations using the property as collateral. Individuals can take mortgages against their shares in the company.

As a result, Lajunen thinks that the Finnish model defines the rights and responsibilities of apartment owners clearer than the two other models.

He also says that the rules governing bookkeeping, annual accounts, and auditing make the company’s financial information transparent. Thus the existing shareholders or anyone wanting to purchase shares can anticipate the future costs quite well.

All this doesn’t mean that Finnish apartment blocks are free from neighbors fighting over the most trivial of things. However, those disputes don’t usually affect the maintenance of the building. Also, they don’t result in the neglect of financial responsibilities. Therefore, as a general rule, Finnish apartment buildings are quite well maintained.

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  • 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.
  • Lujanen, Matti (2017): “Meillä ja muualla. Asunto-osakeyhtiö kansainvälisessä vertailussa”, in Nurmi, Esko; Puro, Laura, and Lajunen, Matti: Kansan osake. Suomalaisen asunto-osakeyhtiön vaiheet, p. 213-233. Suomen Kiinteistöliitto ry. English version: Here and There. Limited liability housing companies – an international comparison
  • Pekkarinen, Anna-Liisa (2013): “Suomalainen asunto-osakeyhtiö on ainutlaatuinen”, Suomen Kiinteistölehti 4/2013, pp. 34-37.

This post was edited and republished on April 23, 2020.

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