Don't make a bad investment in Finland

We've created a guide to help you avoid pitfalls, save time, and make the best long-term investment possible.

Buying property in Finland: scams and pitfalls

Last updated on 

risks pitfalls buying real estate Finland

Everything you need to know is included in our Finland Property Pack

Finland's real estate market is attracting more foreign buyers, thanks to its excellent education system and quality of life.

However, keep in mind that the local real estate market can be tricky for non-residents.

Our group of property buyers and local associates have voiced multiple issues to us. We've listed them all in our Finland Property Pack.

We’re going to take a closer look at a few of these in this article.

Is it safe or risky to invest in real estate in Finland?

Finland's reputation as one of the most transparent and least corrupt countries globally, as evidenced by its consistent high ranking in the Transparency International's Corruption Perceptions Index, is a strong indicator of the safety of property investment.

Unlike in some other nations, scams targeting foreign property buyers are rare in Finland, which speaks to the overall trustworthiness of its real estate sector.

The foundation of Finland's property market is its stringent legal system.

For instance, the Land Use and Building Act not only safeguards zoning rights but ensures that property owners are not left in a lurch due to unforeseen zoning changes.

Moreover, the thorough documentation at the National Land Survey of Finland provides a definitive ownership history, ensuring there are no hidden surprises or disputes about prior ownerships.

Foreign investors, while permitted to purchase Finnish property, must be aware of certain peculiarities.

A telling example is the requirement for separate permits in border areas. Originating from past national security concerns with neighbouring Russia, this additional layer of bureaucracy, although not prohibitive, is a reflection of Finland’s intricate geopolitical history.

One truly Finnish concept that has caught some foreign investors off guard is the 'everyman's rights' or 'jokamiehenoikeudet'. For an outsider, it might be surprising, if not unsettling, to find a local setting up a temporary camp or picking berries on their newly purchased property.

While this right speaks to Finland's deep-rooted connection with nature, it can be a source of confusion for the uninformed foreigner.

For instance, an American investor once recounted his bafflement upon finding a family picnicking on his lakeside property – a situation that would be nearly unthinkable in many other countries.

The Finnish government's role in the real estate market is a mix of support and regulation.

For example, Helsinki, grappling with rising housing prices, introduced policies to increase housing supply by fast-tracking construction permits.

While this move aimed at affordability, it inadvertently increased supply significantly, leading to short-term stagnation in property price growth – a situation potential investors should be aware of.

Language barriers can be a significant challenge.

A British couple once shared their experience of purchasing a property in Lapland, only to later discover that they had misunderstood the maintenance requirements of their property in extreme winter conditions, leading to unexpected costs.

Additionally, the unique Finnish sauna culture means many properties come with a sauna – and maintaining these can have its own set of requirements and costs.

Buying real estate in Finland can be risky

An increasing number of foreign investors are showing interest in Finland. However, 90% of them will make mistakes. Avoid the pitfalls with our comprehensive guide.

buying property foreigner Finland

Avoid these pitfalls when purchasing property in Finland

The concept of "Jokamiehenoikeudet"

When buying residential property in Finland, a common pitfall specifically relevant to Finland that you might not be aware of is related to the concept of "Jokamiehenoikeudet" or "Everyman's Rights."

This is a unique Finnish concept that allows everyone the freedom to roam in natural areas, including forests, lakes, and rivers, regardless of property ownership.

This right includes activities like picking wild berries and mushrooms, fishing with a simple rod and line, and even temporary camping, typically without the landowner's permission.

As a potential property buyer in Finland, you should be particularly mindful of this when considering the location and privacy aspects of your property. If you're seeking a private, secluded area, you might find that the Everyman's Rights could lead to more public accessibility to your land than you'd expect, especially in rural and wilderness areas.

This can sometimes be a surprise for foreigners who are not accustomed to such open access rights.

While Everyman's Rights are a cherished part of Finnish culture and are respected by most Finns, as a property owner, you might find yourself having to accommodate these rights, which can impact your enjoyment and use of the property.

It's not a frequent source of serious conflict, but it's an important aspect to consider, particularly if you value privacy and exclusive use of your land.

The concept of "Kiinteistövero"

Another unique aspect to consider when buying residential property in Finland, particularly as a foreigner, is the concept of "Kiinteistövero," which is the Finnish property tax.

This tax is calculated based on the value of the property and land, and it can vary significantly depending on the location and type of property.

You should be aware that in Finland, property taxes can be higher for properties located in desirable areas, such as major cities like Helsinki, or in popular holiday regions like the Finnish Lakeland. This is different from many other countries where property taxes might be more uniform or based on different criteria.

Additionally, if you're buying a property in a less developed area, you should check the future development plans with the local municipality ("kunta").

In Finland, municipalities have the authority to plan and zone areas, and they can levy additional fees or taxes for development. This means that if the area around your property is slated for development or improvement, you might face increased property taxes in the future.

It's also worth noting that property taxes in Finland are typically paid annually, and failing to pay them can lead to penalties.

As a property owner in Finland, you are advised to stay informed about your tax obligations and ensure timely payments to avoid any legal complications.

Don't lose money on your property in Finland

100% of people who have lost money in Finland have spent less than 1 hour researching the market. We have reviewed everything there is to know. Grab our guide now.

buying property foreigner Finland

The risks related to "Maankäyttö- ja rakennuslaki"

Another unique factor to consider when buying residential property in Finland, especially as a foreigner, is the impact of "Maankäyttö- ja rakennuslaki" (Land Use and Building Act).

This law governs zoning, land use, and building regulations in Finland and can significantly influence what you can and cannot do with your property.

As a prospective property buyer, you should be particularly cautious about the local zoning plans and building regulations in the area where you are considering purchasing. In Finland, each municipality has its own detailed plans that dictate not only what can be built, but also how buildings should be used, their size, and even their appearance to some extent.

These plans are more detailed and restrictive than in many other countries.

For instance, if you are buying a property in a rural area with the intent to renovate or build, you need to carefully review the local zoning plans. These plans might restrict changes to existing structures or land use in ways that are not immediately apparent.

This could include limitations on building extensions, restrictions on changing the property's use (e.g., from residential to commercial), or even specific aesthetic guidelines to maintain the area's traditional appearance.

Moreover, it's important to be aware that the process of obtaining building permits in Finland can be lengthy and complex, involving multiple stages of approval from the local municipality.

Ignorance of these regulations can lead to costly mistakes, such as investing in a property where your intended use or modification is not permissible.

The "Taloyhtiö" concept

A specific pitfall to be aware of when buying residential property in Finland, particularly as a foreigner, relates to the concept of "Taloyhtiö" (housing company) and the associated "Isännöitsijäntodistus" (property manager's certificate).

In Finland, many residential properties, especially apartments, are part of a Taloyhtiö, which is akin to a housing cooperative or condominium association.

When you buy an apartment, you're essentially buying shares in the Taloyhtiö, which gives you the right to use a specific apartment. The Taloyhtiö is responsible for the maintenance and management of the building, and decisions are made collectively by the shareholders at annual meetings.

The critical document here is the Isännöitsijäntodistus, which is a detailed report prepared by the property manager.

This document contains crucial information about the financial status and future liabilities of the Taloyhtiö.

It includes details about any upcoming renovations, known issues with the building, and the Taloyhtiö's financial health, including debts and reserves.

As a buyer, you must scrutinize the Isännöitsijäntodistus carefully. Failure to understand its contents can lead to unexpected expenses. For example, if the Taloyhtiö has planned significant renovations (such as roof repair or plumbing renewal), each apartment owner, including you, will be responsible for a share of the cost.

These costs can be substantial and are in addition to the purchase price of the property.

Get the full checklist for your due diligence in Finland

Don't repeat the same mistakes others have made before you. Make sure everything is in order before signing your sales contract.

buying property foreigner Finland

The risks whilst purchasing "Mökki" or summer cottage

When considering the purchase of a "Mökki" or summer cottage in Finland, you must be aware of several unique challenges and obligations specific to these properties.

Many Mökkis are located in remote areas, potentially leading to seasonal accessibility issues, particularly during winter when roads are less maintained. Unlike urban properties, Mökkis often lack access to municipal services, relying instead on wells and septic tanks, which require regular maintenance.

You should also be mindful of Finland's strict environmental laws, especially regarding properties near water bodies, as these can significantly impact potential renovations or activities like sauna construction.

Additionally, if the Mökki is not intended for year-round use, understanding how to properly winterize the property is crucial to prevent damage from the harsh winter conditions.

Beyond the practical aspects, owning a Mökki also involves cultural expectations, such as participating in communal activities and maintaining good neighborly relations.

It's advisable to consult with locals, real estate agents, or legal advisors who are familiar with rural properties to fully understand these unique responsibilities and to ensure that your Mökki experience is enjoyable and aligns with your expectations.

The concept of "Vesiosuuskunta"

When buying residential property in Finland, especially as a foreigner, one unique aspect you need to be aware of is the concept of "Vesiosuuskunta" (water cooperative).

In many rural areas of Finland, local communities manage their water supply through these cooperatives, rather than relying on municipal water services.

If you're considering purchasing a property in a rural or semi-rural area, it's important to check whether the property is part of a Vesiosuuskunta. Being part of such a cooperative means that you, as a property owner, will have certain responsibilities and obligations.

These can include participating in the maintenance of the water system, attending cooperative meetings, and contributing to the costs associated with the water supply system, which can vary based on the cooperative's operations and needs.

Unlike urban areas where water supply and maintenance are usually the municipality's responsibility, in a Vesiosuuskunta, these responsibilities fall on the members (property owners).

Failure to fulfill these obligations can lead to issues with your water supply and potential conflicts with other members of the cooperative.

Moreover, you should be aware that joining a Vesiosuuskunta or dealing with an existing membership can involve complex legal and administrative processes. It's advisable to thoroughly understand these aspects before completing your property purchase.

You might also want to consult with a local expert or lawyer to navigate these specifics effectively.

Don't sign a Finnish document you don't understand

Buying a property in Finland? We have reviewed all the documents you need to know. Stay out of trouble - grab our comprehensive guide.

buying property foreigner Finland

"Kuntotarkastus" or home inspection

A unique aspect of buying residential property in Finland that you, as a foreign buyer, should be aware of is related to the "Kuntotarkastus" (home inspection).

In Finland, the practice and standards of home inspections can differ significantly from those in other countries.

In Finland, a Kuntotarkastus is usually more thorough and technically detailed, often conducted by highly specialized inspectors. These inspections cover not just the visible parts of the property but also delve into aspects like the condition of the electrical systems, plumbing, insulation, and potential issues related to moisture and mold, which are common concerns in the Finnish climate.

However, it's crucial to understand that despite the thoroughness of a Kuntotarkastus, it does not always guarantee the uncovering of all potential issues. In Finland, the responsibility for any undiscovered faults after the purchase often falls on the buyer, not the seller or the inspector.

This is different from many other countries, where the seller might be held responsible for undisclosed defects.

Therefore, when buying property in Finland, you should not only ensure that a comprehensive Kuntotarkastus is carried out but also be prepared for the possibility of unforeseen issues.

You are advised to allocate a portion of your budget for potential repairs and maintenance tasks that may arise after the purchase.

"Lunastusoikeus" or pre-emption right

A specific and important consideration for you as a foreign buyer in the Finnish real estate market is understanding the implications of "Lunastusoikeus" (pre-emption right).

This is a right often associated with agricultural or forestry land in Finland, and it can significantly affect your property purchase.

Lunastusoikeus allows certain entities, such as other shareholders in a jointly owned land or the local municipality, to have the first right to purchase a property before the sale is finalized with an external buyer. This right is particularly relevant if you are buying land that is part of a larger estate or in areas where agricultural or forestry activities are prominent.

If the property you are interested in is subject to Lunastusoikeus, the sale can be delayed or even nullified if the pre-emption right is exercised.

This means that even after you reach an agreement with the seller, there is a period during which the entitled parties can step in and choose to purchase the property at the same terms you agreed upon.

As a foreigner, it's crucial to verify whether Lunastusoikeus applies to any property you are considering purchasing, especially in rural areas.

To navigate this, you should consult with a local real estate lawyer or agent who can confirm the status of the property and advise you on the likelihood and implications of the pre-emption right being exercised.

Thinking of buying real estate in Finland?

Acquiring property in a different country is a complex task. Don't fall into common traps – grab our guide and make better decisions.

buying property foreigner Finland

"Asunto-osakeyhtiölaki" or the Housing Company Act

As a foreigner buying residential property in Finland, another unique aspect you should be aware of is related to "Asunto-osakeyhtiölaki" (the Housing Company Act).

This law governs the operation of housing companies in Finland, which is particularly relevant if you're purchasing an apartment in a multi-unit building.

In Finland, when you buy an apartment, you are essentially buying shares in a housing company, which grants you the right to occupy that specific apartment. This system is quite different from owning real estate in many other countries, where you directly own the property.

The Asunto-osakeyhtiölaki sets out the rights and responsibilities of shareholders (apartment owners) and the housing company.

A key aspect of this is the maintenance responsibility.

The housing company is typically responsible for the building's exterior, common areas, and major systems like heating and plumbing.

However, the shareholder is responsible for the interior of the apartment, including renovations and repairs.

"Rasitukset" risks and awareness

Another unique aspect that you, as a foreign buyer, should be aware of when purchasing residential property in Finland involves understanding the implications of "Rasitukset" (encumbrances or burdens) on the property.

This is a crucial concept in Finnish property law.

Rasitukset refer to legal obligations or restrictions registered against a property, which can significantly affect your use and enjoyment of the property.

These encumbrances can include rights of way, building restrictions, utility easements, or other legal obligations that the property must adhere to. For instance, there might be a right of way allowing neighbors to cross the property, or an easement for utility lines that could restrict where you can build or plant on the property.

It's important to thoroughly investigate any such rasitukset before finalizing your property purchase in Finland. These encumbrances are typically registered in the property title documents and are legally binding on the current and future owners of the property.

Failing to understand and respect these obligations can lead to legal disputes and could potentially devalue your property.

When considering a property purchase in Finland, you should consult with a local real estate expert or a lawyer to review the title documents and explain any registered rasitukset.

They can provide insights into how these might impact your use of the property and advise on any potential legal complications.

Make a profitable investment in Finland

Better information leads to better decisions. Save time and money. Download our guide.

buying property foreigner Finland