The development of renovation construction has been exceptionally weak throughout the 2020s. Renovation construction has decreased for three consecutive years. This year is not expected to be much better either, unless the government makes the necessary decisions.
Niemelä, the budget manager at the Ministry of Finance, has publicly expressed surprise at the drop in tax revenue by three billion euros. Before Russia's invasion of Ukraine, the construction industry's direct turnover was almost 47 billion euros, of which over 40 percent was paid in taxes or tax-like payments, and 46 percent in housing construction. This has already fallen by 6,5 billion, which means a decrease of approximately 2,5 billion euros in tax revenue. This largely explains the hole that the budget manager is thinking about.
In such a cyclical situation, the combined effect of several different targeted measures is needed to restore the economy and to bring the entire Finnish economy to growth. There are projects in readiness all over the country that could be started almost immediately. When housing companies' necessary and already well-planned investments can be brought forward, jobs and income will be created quickly.
A fixed-term investment grant of EUR 100 million for renovation construction and various basic improvement projects in housing companies would set in motion projects worth EUR 14 billion. This would create jobs for 000 Finns for a year. At the same time, these investments would return over EUR 400 million to society in taxes and tax-like payments.
The fixed-term nature would speed up projects, as housing companies do not want to lose their opportunity to receive grants. When projects are launched and approved by general meetings already this spring, tax revenue and economic growth will also be accelerated.
Pressure for energy renovations is growing
The repair gap in buildings is constantly growing, and at the same time their usability and value will deteriorate if we do not invest enough in maintenance and upkeep. And if the repair load increases too much, renovations will become increasingly expensive to carry out and obtaining financing may become impossible.
In the near future, the Energy Performance of Buildings Directive will also oblige Finland to increase energy-saving renovations through various types of incentives. Improving energy efficiency and extending the lifespan of properties are effective ways to reduce the environmental impacts of properties.
Despite falling interest rates and slowing cost developments, housing companies, small municipalities and other property owners have not dared to launch even their already planned projects.
CEO of OP Bank Group Timo Ritakallio proposed in the Kauppalehti newspaper on 3.3 March a better state guarantee for renovation loans. According to him, a state guarantee for renovation loans would speed up construction and help small and weak housing companies to pay off their renovation debts. In the same newspaper, the minister Sari Multala said that preparations for these types of changes are already underway. The minister also highlighted that banks should enable renovation construction more widely. Both of these are of great importance for the opening up of the market, and RT has been raising these issues for some time now.
At the same time, the use of renovation guarantees agreed between the European Investment Fund (EIF) and Finnish banks should be streamlined. With EIF guarantees, banks could offer better financing terms, such as lower interest rates. The guarantees could cover 70-80 percent of loans, but for one reason or another, they are not being used sufficiently.
Methods that have been proven to work
In the latest renovation barometer (autumn 2025) of the Finnish Real Estate Association, housing companies do not expect financing conditions to improve, but rather the opposite. More than a third of housing companies expect financing conditions to worsen further. Correspondingly, more than a third of housing companies received only one loan offer or even none. The proposed investment grant would also bring relief in those areas where there have been difficulties in obtaining financing for renovations.
A fixed-term investment grant has been used as a stimulus measure before. The government implemented a similar cyclical 10 percent renovation grant in connection with the financial crisis in 2009–2010. A similar stimulus measure was also used in the 90s. VTV estimates that the grant has increased renovation construction in housing associations and has had a positive impact on employment in the construction sector and the quality of the housing stock.
In order for renovation construction to get off to a good start, other measures are needed in addition to the investment grant and the terms of renovation loans. These include, for example, renewing the state guarantee for renovation loans from housing companies, developing the so-called residential building reserve for housing companies, and expanding and increasing the household deduction.
Renovation construction is heavily focused on small and medium-sized enterprises, with more than half of the turnover generated by SMEs. The exceptionally low level of activity in the construction sector means that there is currently a large amount of capacity available for use.
Now would be an excellent opportunity to initiate energy efficiency renovations that would significantly reduce energy consumption and heating costs, while improving the usability of the premises and healthy indoor conditions.
Aleksi Randell
CEO
aleksi.randell@rt.fi +358 9 129 9201Confederation of Finnish Construction Industries (CFCI)
Assistant: Lotta Räty
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