Housing companies' decision-making about demolishing buildings and building new ones is made easier. The legal changes related to the reform will enter into force on March 1, 2019.
Demolition new construction practically means that building societies in growth centers demolish or hand over their buildings in need of major renovations and improvements, and more new apartments and other apartments are built in their place.
The most important change is that the housing company's general meeting can in the future with a qualified majority of 4/5 (of the votes cast and the shares represented at the general meeting) decide on demolition and new construction, while according to the current law, the housing company must decide on the project unanimously.
The reform gives building societies more implementation and financing options for major renovations than at present, and it also secures each partner's housing, the value of housing assets, and the position of the company and the partners' creditors. The change accelerates the creation of new apartments and enables more efficient use and development of the areas.
The general meeting of the housing company can decide with a qualified majority of 4/5 on demolition and new construction, when the shareholders are offered new apartments in accordance with the principle of equality. In this case, the fair value of the new apartment is at least the value of the old one, the mutual ratio of the fair values of the new apartments of the old partners corresponds to the ratio of the values of the old apartments, and the right of possession of the new apartment corresponds approximately to the old apartment, and the shareholder's consideration basis does not increase.
In addition, there will be new provisions in the Housing Corporation Act regarding the demolition and new construction plan prepared for decision-making and the related independent expert's opinion, as well as their delivery to shareholders and creditors before the general meeting.
If the shareholder does not want to participate in the project, he has the right to demand that his shares be redeemed at the fair price. Provisions on redeeming minority shares at the fair price will also be added to the law. A shareholder who owns more than 90 percent of the housing company's shares and the votes they produce has the right to redeem when the renovation is not profitable financially or in terms of the usability of the apartments.
The general meeting can also, with a qualified majority of 4/5, decide on the transfer of the demolished building and real estate, as well as on liquidation, in terms of economy and usability, so that the company's net assets are immediately distributed to the shareholders. In this situation, the partners receive financing, for example, to buy a new apartment somewhere else.
The magnitude of the effects of demolition new construction depends not only on the regulation of the Housing Corporation Act, but also on how regulations and practices related to land use and zoning, taxation of the housing association and shareholders, and other peripheral conditions of project implementation will be developed in the future, and how the housing and construction market will develop.
In order to evaluate the possibilities of demolition new construction, a calculator has been created on behalf of the Ministry of Justice, which can be used to illustrate the project's prerequisites and effects. Get to know the calculator!
RT thinks it's excellent that the decision-making for demolishing new construction becomes easier. In addition to increasing the right to build, other municipal actions also play a key role in creating the conditions for the success of a new construction project. Among other things, parking obligations, the speed of zoning actions and the amount of land use fees to be collected play a key role. Building permit practices should also support new construction that demolishes.
RT has actively influenced the facilitation of legislation, and RT's representatives have been involved in the Ministry of Justice's working group preparing the law.
For more information:
- Juha Terho
juha.terho@rakennusteollisuus.fi - Anu Kärkkäinen
anu.karkkainen@rakennusteollisuus.fi