Mission: Impossible. This is what I admit I thought when the Ministry of the Environment at the end of June appointed ARA CEO Hannu Rossilahti as a liquidator to make a proposal for a new ten-year interim model for rental housing production. In the background was a wave of confusion that had been raging for years and two attempts to create a new model that ended up facing the wall from the previous government. I thought that Rossilahti needs at least the superpowers of the hero of an action movie starring Tom Cruise in order to win the project.
The surprise could not have been bigger and happier when the Ministry of the Environment announced on November 10, just ten days after the October deadline, the short interest subsidy model of the Rossilahti plan. And what a plan! It seems to skilfully circumvent the traps set by various boundary conditions and – based on the first comments received from the developers – fulfill its most important task, i.e. increase the production of rental apartments that are more affordable than the market price.
According to the presentation, the proposed model is cost-effective, flexible, low-risk, compliant with EU regulations and simple to monitor. When in the past one solution has been offered to everyone, it has not suited anyone. The new model, on the other hand, is designed to adapt to the changing needs of operators and different economic situations.
Instead of ten years, the loan period can stretch to thirty at the longest, but it can be called an intermediate model both in terms of production conditions and the end result. With its help, it is possible to produce apartments whose rent is placed between the more heavily subsidized and more strictly regulated social housing supply and freely financed rental apartments.
Why then did Rossilahti succeed in his impossible task? The answer can be found in the survey report, which is excellently thorough, analytical and plain language - and should be prescribed as a compulsory course for everyone who deals with housing policy and especially housing support systems. Instead of superhuman means, Rossilahti used techniques that are within everyone's reach. The third attempt to create an intermediate model was successful for three reasons in particular:
- By knowing the past, you can understand the current situation and see the future
Before thinking about the new model, a meritorious review of the origins of the production support system has been made, from the end of the 1940s and the crazy years of construction in the 70s to these days. The most essential thing is the opening of the cause-and-effect relationships and the conclusions, where the lessons are recorded for the continuation.
- The questioner does not get lost
What was quite unusual about the creation of the model was that it was widely consulted before its drafting even began. In addition, a seminar event was organized and a dialogue was held based on the statements. In this way, it was possible to shed light on perspectives that are very different from each other and to identify the pain points of different parties.
- Pragmatism overrules ideological steepness
Rossilahti had a clear mission. The goal was a model that would be "interesting to industry operators, create new production and promote the construction of affordable housing in the largest growth centers". The previous proposals fell already in the statement phase, because they stumbled on the first point of the goal and thus also on the next two points. Actors were seen as too much in the role of bad guys, who only try to profit from the plight of others. This time, with an open mind, a way out of the impasse was sought, so that the opportunities and risks of the different parties would be balanced.
At the same time, Rossilahti had its face washed after it, when the blame for the system's inefficiency has been thrown at ARA from time to time. And the Housing Minister of the past years also rocked the chair under the CEO. This is also how the agent named Ethan Hunt, played by Cruise, faced accusations of his own in the first part of the movie "Dangerous mission", looked for the real culprits and cleared his reputation.
Of course, Rossilahti did not work alone, but several ARA experts have participated in the work. The job is also not over, but only at the beginning, because now it is the turn of the officials of the Ministry of the Environment to show their abilities and finalize a suitable bill for the government's presentation.
The survey report also provides plenty of material for sequels. Next, we should attack the casting defects of the 40-year interest subsidy model. The shortage of plot land or the zoning requirements that increase costs should also not be forgotten. The report contains (in chapter 1.5) a game of thought that breaks the boundaries, with which the municipalities could be persuaded to increase their land supply aimed at the production of affordable rental housing. It seems that the lack is not about the land, but about motivation. It is about the municipalities' own struggle for survival.
Rossilahti throws the ball to the builders as well: In order to make rents affordable as government support opportunities dwindle, we need to find even more ways to reduce construction and life-cycle costs. Since the vast majority of the construction project's costs are locked in the planning and design phase, the contractor's means are limited. If you're an hour behind the leader in the marathon, you won't be able to close the gap at the end. Or Tom Cruise would no doubt be able to do this too, but the builders need the whole chain and new types of project, procurement and operating models.
Merja Vuoripuro
Director, Communications and Responsibility
merja.vuoripuro@rt.fi + 358 40 587 2642Confederation of Finnish Construction Industries (CFCI)
A well done thorough presentation
We have read Rossilahti's presentation, which is done thoroughly and is absolutely brilliant.