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Everything you need to know is included in our Finland Property Pack
Finland, with its breathtaking scenery, rich cultural history, and welcoming locals, attracts many foreigners looking for real estate investment opportunities.
However, navigating the complexities of buying property in a foreign country can be daunting, especially when it comes to the legal framework and regulations in place.
That's why this guide is here to help! We'll explain how the property market works in Finland in an easy-to-understand manner, covering all the information you need.
Also, for a more in-depth analysis, you can check our property pack for Finland.Can you purchase and own a property in Finland as a foreigner?
If you are American, we have a dedicated blog post regarding the property buying and owning process in Finland for US citizens.
Yes, foreigners can buy and own property in Finland.
There are no general restrictions on foreign ownership or occupation of Finnish real estate. It's because, in the 1990s, Finland removed restrictions on foreign ownership as a result of its EU membership.
However, if you're not from the European Union (or the EEAA) and you want to purchase a land plot with a house, you will need permission from the Ministry of Defence of Finland.
Buyers from outside the EU and EEAA
Buyers (individual and entities) from outside the EU and EEA (like American people) will need a permit to buy property in Finland.
It's not the case if:
- you have dual citizenship with one from an EU or EEA country.
- a couple (married or living together) buys property together, and one of them is from an EU or EEA country.
- the property is on leased land or part of a housing company is being sold.
- the property is being sold by a close relative (parents, child, spouse, or partner).
You should apply for a permit as soon as you commit to the real estate transaction, but no later than two months after the transaction. You have to pay a processing fee of €170 for each real estate unit, when your application is received.
If a permit is denied, the buyer must sell the real estate within six months. If not, the authorities will sell it (you can appeal a decision to an administrative court).
Note that each real estate purchase requires a separate permit.
However, and it might be useful to know, a permit is not necessary when buying shares in a housing company, which is how most apartments are owned in Finland.
State's right of pre-emption
In Finland, the government has a special right to buy land near important places. If the government uses this right, it becomes the owner of the land instead of someone else who wanted to buy it.This rule only applies to certain areas in Finland. So, it doesn't affect most land sales.
The government can buy land that is:
- Near places in the plan like defense bases or border areas, or within 1,000 meters of them.
- Within 1,000 meters of communication stations, radar stations, airports, or ports, or other important sites used by the Defense Forces or Border Guard.
- Within 1,000 meters of Defense Forces or Border Guard properties that have special security needs, but are different from the places in the first two points.
This rule doesn't apply in the Åland Province.
If the land is in one of these special areas, the sale can only be completed after waiting for four months. During this time, the government can decide to buy the land or not.
If you're interested in land in one of these areas, you should ask the owner to ask the Ministry of Defence if the government plans to buy this land first. There's a fee of 100€ for this information.
Åland Province
The Åland Islands, an autonomous region of Finland, have their own land acquisition legislation called "Åland's Land Acquisition Act".
This law makes rules about who can buy and control land in Åland. If you're not from Åland or a local organization, you need permission from the Provincial Government to buy or control land there.The purpose of these rules is to ensure that land is primarily owned by persons who are resident in Åland.
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Can you become a resident in Finland by owning a property?
Owning a property in Finland does not automatically grant you residency.
While property owners may receive advantages when applying for a residence permit, owning land, property, or shares in a housing company in Finland is not sufficient grounds for being granted a residence permit.
To become a resident in Finland, you need to obtain a valid residence permit, which can be granted on certain grounds such as work, studies, or family ties.
Owning a property might help your application, but it is not a guarantee for residency.
How is the property market in Finland?
Market metrics
You can find fresh and updated data in our pack of documents related to the real estate market in Finland.
By taking a closer look at the GDP per capita indicator, it becomes apparent that Finnish people have become 3.2% richer over the last 5 years.
When the population experiences an increase in wealth, it tends to create a higher demand for real estate, which in turn has the potential to drive prices up in the future.
Looking at the data reported by Numbeo, we can see that rental properties in Finland offer gross rental yields between 1.7% and 4.4%.
While they may not provide significant profitability, these moderate yields offer stability and a steady income stream over time.
To know more, you can also read our dedicated article: is it a good time to buy a property in Finland?
The life of an expat in Finland
Life as an expat in Finland can be both rewarding and challenging.
On the one hand, Finland is a safe and peaceful country with a high quality of life and a well-developed infrastructure. There are plenty of job opportunities, and the cost of living is relatively low.
The Finnish people are friendly and welcoming, and the country is known for its commitment to gender equality.
On the other hand, Finland can be a difficult place for expats to adjust to. The language barrier can be a challenge, as Finnish is not widely spoken outside of Finland. The winter months can be long and dark, and the culture is quite different from many other countries. However, with time and effort, expats can find a place in Finland and make the most of their time there.
What are the best places to buy a property in Finland?
This table summarizes some of the best places to buy a property in Finland.
| City / Region | Population | Average Price per sqm (EUR) | Strengths |
|---|---|---|---|
| Helsinki | ≈ 650,000 | 4,000 - 8,000 | Capital city, cultural hub, vibrant city life, job opportunities |
| Tampere | ≈ 235,000 | 3,000 - 6,000 | University city, lakeside location, technology and innovation |
| Turku | ≈ 190,000 | 3,000 - 6,000 | Historic city, archipelago, cultural events, strong education sector |
| Oulu | ≈ 200,000 | 2,500 - 5,000 | Technological center, vibrant startup scene, nature activities |
| Espoo | ≈ 290,000 | 4,000 - 7,000 | High standard of living, nature reserves, proximity to Helsinki |
| Vaasa | ≈ 67,000 | 2,500 - 5,000 | Coastal city, renewable energy hub, maritime heritage |
| Rovaniemi | ≈ 62,000 | 2,500 - 5,000 | Arctic Circle city, Santa Claus Village, winter activities |
Do you need a lawyer to buy a property in Finland?
When purchasing a property in Finland, engaging a local lawyer can provide valuable assistance in navigating the legal aspects and ensuring a successful transaction.
One crucial document they can help you with is the Purchase Agreement (Kaufvertrag), a legally binding contract between the buyer and seller that outlines the terms and conditions of the sale.
The Finnish lawyer can also assist with conducting a Title Deed Search (Kiinteistörekisteriotteen tarkistus) to verify the property's ownership status and identify any potential legal issues or encumbrances.
Furthermore, they can guide you through the process of obtaining necessary permits and approvals, such as approval from the local Land Registry Office or relevant authorities.
They will ensure that all applicable taxes and fees, such as the Property Transfer Tax and Notary Fees, are paid correctly and in compliance with Finnish laws and regulations.
What are the risks when buying real estate in Finland?
We've got an article dedicated to the risks associated with purchasing property in Finland.
When buying a property in Finland, there are a few risks that are not common in other countries. One of these risks is the relatively high transaction costs. In Finland, the costs of buying a property include notary fees, legal fees, and taxes, which can add up to a significant amount.
Another risk is the potential difficulty in obtaining a mortgage. In Finland, it can be difficult for foreign buyers to obtain a mortgage, as the banks may be more stringent in their lending criteria.
Finally, there is the risk of dealing with a seller who is not fully transparent. In Finland, it is common for sellers to hide certain information from buyers, such as the condition of the property or any potential problems. This can make it difficult for buyers to make an informed decision.
Everything you need to know is included in our Finland Property Pack
What is the list of documents needed for a real estate transaction in Finland?
When buying a property in Finland, the documents required will vary depending on the type of property. Generally, the following documents will be required:
1. A valid ID (passport, identity card, residence permit, etc.)
2. A duly signed and completed purchase agreement, which should include a description of the property, the purchase price, the payment terms, and other relevant details.
3. An energy certificate, which is mandatory for all residential properties.
4. A copy of the deed of sale and/or a certificate of ownership.
5. A copy of the property’s tax and mortgage payments.
6. A copy of the property survey.
7. A copy of the title deed.
8. A copy of the building permit and/or any other relevant permits.
9. A copy of the utility bills.
We review each of these documents and tell you how to use them in our property pack for Finland.
How should you approach negotiations with Finnish individuals?
When negotiating to purchase a property in Finland, it is important to understand and respect Finnish culture, which values honesty, efficiency, and egalitarianism.
Finnish culture appreciates straightforwardness and open communication. It is recommended to approach negotiations with a direct and honest manner, expressing your expectations and terms clearly. Finnish individuals value transparency and appreciate factual information, so providing accurate details and data during negotiations is important.
Respect for personal space and privacy is highly regarded in Finnish culture. It is essential to give individuals their personal space and avoid excessive physical contact during negotiations. Maintaining a polite and professional demeanor demonstrates respect for their boundaries.
Finnish culture emphasizes equality and consensus-building. Decision-making is often a collective process, and it is important to engage in open discussions and consider different perspectives. Respecting everyone's opinions and being open to compromises can contribute to a successful negotiation outcome.
Punctuality is highly valued in Finnish culture. It is important to be on time for meetings and appointments, as tardiness can be viewed as disrespectful. Being well-prepared and organized demonstrates your commitment and professionalism during negotiations.
Familiarizing yourself with the local real estate market and legal procedures is essential. Conduct thorough research on property regulations, zoning laws, and any associated costs such as taxes, fees, and maintenance expenses. This knowledge will empower you during negotiations and ensure compliance with Finnish regulations.
Lastly, embracing Finnish culture and showing interest in their traditions and customs can create a positive impression. Learning about Finnish holidays like Midsummer (Juhannus) and understanding their love for nature and outdoor activities can help establish rapport and foster a harmonious negotiation process.
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.
Can foreigners obtain a bank loan in Finland?
Yes, foreigners can obtain property loans in Finland. The Finnish banking system allows non-residents to apply for property loans, subject to certain conditions and requirements.
The specific conditions and requirements for a foreigner to obtain a property loan in Finland may vary, but typically they need to have a valid residence permit, provide necessary documentation, such as proof of income and identity, and fulfill the criteria of the lending institutions in the country.
Some banks in Finland that can grant mortgages to foreigners include Nordea Bank Finland, OP Group, and Danske Bank Finland.
The mortgage situation in Finland is particularly interesting as the 20-year interest mortgage rate stands at a remarkably low (0-3%), making it highly attractive and accessible for borrowers in the country.
What are the taxes related to a property transaction in Finland?
Here is a breakdown of taxes related to a property transaction in Finland.
| Tax | Description | Calculation | Who pays |
|---|---|---|---|
| Real Estate Tax | Annual tax on the property ownership | varies from 0.41% to 6% of the property value, depending on the municipality and type of property | Owner |
| Rental Income Tax | Tax on rental income generated from the property | Between 30% and 34% of the rental income after deducting total costs | Owner |
| Real Estate Transfer Tax | Tax on the transfer of property ownership | Typically 4% of property value or sale price | Buyer |
| Capital Gains Tax | Tax on the capital gain from the sale of a property | Varies from 30% to 34% on the net capital gain (the difference between sale price and acquisition cost) | Seller |
| Value Added Tax (VAT) | Tax on the sale of new residential properties | 24% VAT for new properties, exemption for existing properties | Seller |
For a more detailed calculation, refer to:
- the Finnish Tax Administration's website
What fees are involved in a property transaction in Finland?
Below is a simple breakdown of fees for a property transaction in Finland.
| Fee | Description | Calculation | Who pays |
|---|---|---|---|
| Registration Fee | Fee for registering the transfer of the right of possession to a property | Around 0.05% of the property value | Buyer |
| Real Estate Agent Fee | Fee charged by real estate agents for their services | Negotiable, typically around 3-5% of the purchase price | Seller |
| Notary Fee | Fee for notarizing the property transfer documents | Between 200 and 500 euros depending on the complexity of the transaction | Seller and Buyer |
-Buying property as a foreigner in Sweden: the guide
Don't lose money on your property in Finland
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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.