Cities are the growth engines of the whole of Finland. The lack of apartments must not become an obstacle to their development. Everyone should have the opportunity for affordable housing that meets their needs.
Our goal
- We will ensure the realization of housing production goals by improving the position of first-time home buyers and owner-occupiers, and by preparing more efficient financing models for the construction of rental apartments.
- The regulation of the housing market or the regulation of related financing will not be tightened. We will monitor the effects of the tightening of housing association lending and, if necessary, make changes to it.
- The interest deduction right will be restored, which encourages long-term savings in the form of owner-occupied housing. This is used in other Nordic countries.
- The transfer tax will be abolished, which increases moving costs and, according to studies, reduces both moves within and between labor market areas.
- Let's take advantage of Ara housing production in a counter-cyclical way to even out the construction industry's business cycles. Let's ensure that the housing needs of low-income and special groups are met with state-supported housing production.
- A joint growth vision of the state and large urban areas will be developed from MAL agreements, in which cities are obliged to use land more efficiently and the state to invest in transport connections within and between urban areas.
Availability of financing
The effects of the implementation of the so-called Basel III standard were tight for the real estate and construction industry, and the special features of the Finnish housing finance system were not taken into account. The law limiting household indebtedness, on the other hand, limits the maximum length of housing loans and the use of housing association loans in new construction.
The availability of financing has become a bottleneck for both new housing production and renovation projects. EU-level and domestic regulation regarding the banking sector and mortgages has increased strongly. The availability and conditions of financing have been tightened with several different measures, the effects of which are aimed at construction firms performing foundation contracting, building societies, consumers and investors.
Housing association loans reduce the capital requirement of construction companies and enable projects to be started. They have increased competition and made it possible for small and medium-sized construction companies to enter the capital city market, for example. For consumers, a housing association loan lowers the threshold for changing apartments and buying a new apartment, when the apartment can be purchased with a smaller share of self-financing.
Housing lending is also affected by Fiva's recommendation on the upper limit of the loan servicing burden.
State-supported housing production (ARA)
At best, government-subsidized housing production can be used as an equalizer for the cyclical situation in the construction industry. In a high economic cycle, ARA production should be kept moderate, because there is a shortage of resources, costs rise and housing supply increases according to market conditions. In a downturn in construction, ARA production can be used to compensate for the decrease in housing starts, when the market does not have the conditions for self-financed production
ARA's funding decisions are multi-generational and the processing is too slow. The speed of processing applications is critical, especially when the operating environment and cost levels change rapidly. Funding approval processes should be enhanced and accelerated.
Streamlining planning and permit processes
Urban land use and zoning play a significant role in the implementation of housing-related goals. The availability of apartments is greatly influenced by the municipalities' zoning and permit processes, which should be smooth and predictable. Sufficient and necessary plot supply is a prerequisite for the start of housing projects. The land shortage is one of the biggest factors holding back housing production.
See also
More information
Anu Kärkkäinen
Director, Economic Policy Affairs
anu.karkkainen@rt.fi + 358 50 337 6699Building Construction Industry Association