Housing | There is a model pending in Helsinki where you could get your own home for a few thousand euros

With a middle income a person from Helsinki may soon have the opportunity to buy an owner-occupied apartment with relatively small savings. The city of Helsinki has already advanced a long way in preparing the new rent-to-own model.

The new model is one of the attempts to replace the scorned and run down slow, i.e. price-regulated, housing production.

The city has ordered a report on the new form of owner-occupied housing by Pelarcon housing consultant. That’s the deputy referee Samuel Kopperoinen recommends to the city a model in which the residents claim their rental apartments as their own.

For ten years the new housing production, based on renting and then owning the apartment, was supposed to be introduced already this year.

However, the rent-to-own model is still being prepared. Helsinki’s politicians wore a model on Monday in the city council. Its implementation has not been decided, and the details of the model are subject to change.

A year ago in June, Helsinki’s leading politicians admitted that they cannot replace the defunct slow train with one new model.

The draft rent-to-own model is therefore only one way of trying to ensure the production of affordable owner-occupied apartments in Helsinki.

Creativity is also forced by the Finnish government’s determination to reduce the state’s role in housing policy.

For example, the government’s decision to end the interest subsidy for right-of-occupancy apartments practically stops the construction of right-of-occupancy apartments.

New model the purpose is to facilitate the purchase of a new owner-occupied home. The key way to do that is to reduce the share of self-financing required from the resident.

In the rent-to-own model, the resident is required to contribute a significantly smaller amount of their own financing than for apartments under market conditions.

In the draft, the share of own financing is five percent of the purchase price of the apartment. For example, a two-room apartment worth about 150,000 euros could be turned into an owner-occupied apartment with initial savings of about 7,500 euros.

That is, significantly less than in apartments based on market-based financing, where, according to the draft, at least 30 percent of own financing is always required. At Helsinki’s price level, this almost invariably means tens of thousands of euros.

Apartments would be financed with a short-term i.e. ten-year government interest subsidy.

It is possible to lower the price of apartments with an interest subsidy, but based on the draft, it is not yet possible to accurately estimate the full price of housing costs in the rent-to-own model.

A new affordable rent-to-own apartment could be obtained with a monthly gross income of no more than 3,540 euros in one-person households and no more than 6,020 euros in two-person households.

The income limits would therefore cut off some of the home buyers in Helsinki.

How would the resident claim the apartment as his own?

In the model, the right to use the apartment is based on the lease agreement. The apartments would first be used as rental apartments.

The resident would claim the home as his own ten years from now, when the limitations of the government’s interest subsidy loan have ended. The redemption price would be the original purchase value of the apartment, from which the loan repayments made during the rental period would have been deducted.

Claiming it as your own would be made possible by a supplementary agreement to the lease agreement. Separate payment obligations would be recorded in it, with which the resident would have rights and obligations to his home that are more extensive than the usual lease agreement.

The resident would commit to pay the self-financing portion, i.e. five percent of the purchase price of the apartment. Rent would be based on actual maintenance and financing costs.

The payments agreed in the ancillary agreement, on the other hand, would be used in full for the self-financing portions of the projects.

The rental period required to claim the home as your own is long. If the resident wanted to give up the apartment in the middle of the contract period, the original self-financing portion would be returned to him according to the nominal value of the apartment.

What The role of the city of Helsinki would be? According to the draft, the city would build the apartments on its rental plots. A rental plot is a prerequisite for an interest subsidy loan

The city would rent the plots at the market price to separately established housing stock companies. The shares of the housing stock company would be owned by the city or a separately established subsidiary.

The city or the subsidiary should agree on the financing of possible returns of the apartments already when making the contracts.