At the 27th Builders Seminar of the Eastern Finland District of the House Construction Industry in Nilsiän Tahko, the measures taken by the country's government and financiers to improve the operating conditions of the construction industry, which is still mired in a downturn, were discussed. A series of amendments is coming to the new Building Act before the turn of the year. Other construction standards are also being renewed and fine-tuned.
Member of Parliament from Kuopio Karoliina Partanen said that a series of amendments will be made to the new Building Act, which will enter into force from the beginning of 2025, this fall, with the intention of streamlining construction and reducing bureaucracy. The time guarantee for processing the building permit would be set at three months, and in exceptionally demanding cases at six months. The climate clearance requirement would be removed from small houses and renovation projects. The right of appeal would be narrowed and the administrative burden on builders would be lightened in providing various information. In addition, the regulation of building demolition is being clarified and made more flexible.
Construction Act regulations are also being prepared. They concern climate assessment, construction demolition material and waste assessment, residential, accommodation and work spaces, limit values of buildings and difficulty classifications of several tasks. The reforms of the Area Use, Community Building and Community Development Act that affect zoning are also starting.
According to Karoliina Partanen, the basic starting point for house and especially apartment construction is still self-financed production, but preparations are being made to speed up complementary state-supported ARA construction if necessary. The government has already accelerated it on a cyclical basis by increasing this year's borrowing authority to 2,25 billion euros. In addition to the funding of the State Housing and Development Center ARA, the reform of the state's housing production support is being investigated because the state's support for the construction of right-of-occupancy apartments will end.
"In the future, ARA funding will be directed more clearly towards housing production for special groups and other disadvantaged people. At the same time, we want to better manage the risks of government housing financing," Partanen summed up.
The funding of the defunct ARA is about to collapse in the next few years
CEO of ARA Hannu Rossilahti reported that ARA's funding powers are decreasing in a catastrophic way. From this year's 2,25 billion euros, they will first shrink to 1,75 billion and further to 1 billion euros in the next two years. According to Rossilahti, there is such good demand for ARA's long-term interest subsidy loan and the related investment support, short interest subsidy loan and guarantee loan that the granting powers have been fulfilled.
"This year, more than 9000 apartments will be completed with ARA financing, while the average for the years 2013-2023 is 7 apartments. The number will drop to around 700 apartments in 2026," Rossilahti listed. "The puzzling thing is that investment subsidies for housing production for special groups are decreasing from 4 million euros in 000 to 2023 million. The cut will especially affect housing production for the elderly and students. There would be demand for significantly greater funding."
This year, ARA's grant mandates will fall to around 80 million euros from last year's more than 350 million. In the following years, the level will only be around 30 million. Also, the grants granted on the basis of the Repair Grants Act will be significantly reduced already this year. The reduction in grant percentages is aimed, for example, at accessibility improvements such as the construction of elevators.
Even in Eastern Finland, ARA's financial situation is challenging, as there are currently a total of 270 million in support reservations and applications. for the euro, but the funding authority is nowhere near this amount. In the last two years, 24 loan decisions have been made, and they concern 1 apartments. There are four partial decisions and loan reservations each. Eleven applications are pending.
According to Rossilahti, the leveling off of the increase in construction costs is positive. In the first half of the current year, costs have increased by only 0,5 percent. In previous years, many funding applications received by ARA were rejected due to the too high price of the construction project. In the Kuopio region, the construction costs of projects supported by ARA have dropped by up to 11,2 percent, which is the top in Finland. The average for the entire country is 6,5 percent.
ARA's tasks will be transferred to the Ministry of the Environment next year in 2025, and the agency of about 60 people will be abolished. The agency's mission has been to promote socially and ecologically sustainable housing so that everyone has the opportunity to live well.
There is a willingness and ability to finance Eastern Finland
The construction industry has brought to the public, especially, the financing problems of renovation construction, when banks have not granted loans to builders, housing associations or private citizens. Building industry Eastern Finland district manager Kimmo Anttonen interviewed OP Pohjois-Savo bank manager Antti-Jussi Pitkälä said that at least the Co-operative Bank Group has not made decisions to tighten the loan taps due to changes in bank regulation such as solvency regulations or otherwise. The interest margins have not substantially increased either.
"Financial decisions are still made on a case-by-case basis. Of course, they are affected by the current and estimated future economic situation of the builders, housing association or citizens based on reality. The lowering of interest rates has started to affect, for example, the demand for mortgages," Pitkälä stated. He recommended collecting self-funding well in advance of the repair projects, because it makes it easier to obtain top-up financing from banks. He also had no "wisdom stone" about the lowering of the collateral value of apartments and building societies for the problems of more remote regions and residential areas.
A renewing and competent Eastern Finland
Finance manager of ELY center in Etelä-Savo Timo Ollila told about the EUR 3,16 billion Renewable and competent Finland 2021-27 program, part-financed by the European Union, which is supposed to promote employment and well-being in the regions. The program can apply to the construction industry in the form of support for the built environment: The support can apply to new innovations and competence development in, for example, energy efficiency, circular economy and wood construction. Ollila called for activity in the construction industry, as funding is still very well available in Eastern Finland. The projects started so far are expected to create almost 7 new jobs and 000 new products or methods. The European Social Fund especially needs business-oriented projects.
According to Kimmo Anttonen, wide-ranging cooperation within the construction industry as well as with public administration officials and decision-makers must be intensified in Eastern Finland. The ever-increasing recession requires new and special measures to secure the future of jobs and companies. Construction never ends, but it is important to get it going, because the positive radiation effect of the industry on other industries and society is exceptionally large.
Text and pictures: Ilpo Lommi