Market spotlight

Trends and prospects

What are the current trends in and future prospects for the real estate market (both commercial and residential) in your jurisdiction?

The structure of the Finnish real estate market has gone through some significant changes in recent years. The market share of offices has decreased due to, among other things, the expansion of the investor base in other sectors. At the same time, the residential properties market has become stronger due to, for example, increased demand for rental apartments. It has also become more attractive to invest in public property in Finland, such as healthcare and educational properties.

Rights and registration


What types of holding right over real estate are acknowledged by law in your jurisdiction?

Direct ownership of real estate in Finland grants the owner an exclusive right to:

  • possess, use and manage the land; and
  • own any components or substances derived from the real estate.

However, some restrictions may limit the owner's rights – for example, planning legislation regarding land use.

Real estate can be jointly owned by more than one person or entity. The co-owners are subject to the detailed provisions set out in the Act on Co-ownership (180/1958, as amended).

Ownership of housing and corporate buildings in Finland is frequently arranged through indirect ownership by way of a limited liability company with the express purpose of owning the relevant real estate, including the buildings on it.

If the land and buildings on it are owned by different persons, the owner of the building or buildings usually has a tenancy right to use the land granted by the landowner under a fixed-term lease.

Are rights to land and buildings on the land legally separable?

If the land and buildings are owned by the same entity, they are in the same real estate unit. Hence, the buildings are not registered as separate units.

Which parties may hold and exercise rights over real estate? Are there restrictions on foreign ownership of property?

Private individuals and legal entities may hold and exercise rights over real estate.

Under Finnish law, there are no general restrictions on foreign ownership or occupation of Finnish real estate. However, in relation to indirect property investment (and as further defined in the Act on the Monitoring of Foreigners' Corporate Acquisitions in Finland, 172/2012, as amended)), foreign buyers must apply for prior approval from the Ministry of Employment and the Economy for an acquisition resulting in the buyer holding more than one-tenth, one-third or one-half of the voting power (or corresponding dominant control) of either:

  • a Finnish defence company; or
  • any other company or business that holds a key position in relation to maintaining vital functions of Finnish society.

Further, foreign persons are restricted from buying real estate located on the Aland Islands (an autonomous region of Finland), unless specifically allowed by the government of those islands.

How are rights, encumbrances and other interests over real estate prioritised?

Real estate mortgage holders have priority based on the filing date of the relevant mortgage. A mortgage with an earlier filing date is satisfied before mortgages with a later date.


Must real estate rights, interests and transactions be registered in your jurisdiction? What are the legal effects of registration?

Title transfers to the buyer in accordance with the parties’ agreement and is not dependent on registration of the buyer's title. However, a transfer of title must be registered with the Title and Mortgage Register maintained by the National Land Survey of Finland ( and prior registration has priority in case of conflicting transfers of title.

Further, certain land lease agreements and transfers of such leases must be registered with the Title and Mortgage Register.

What are the procedural and documentary requirements for entry into the national real estate register(s)? Can registration be completed electronically?

Under the Land Code (540/1995, as amended), title must be applied for within six months of signing a document transferring ownership, such as an acquisition agreement.

It is the buyer's responsibility to provide evidence of the acquisition, by providing the original agreement or a true copy of the agreement certified by an official representative or registration authority.

Electronic documentation and transfer of title are possible through electronic service systems.

What information is recorded in the national real estate register(s) and to what extent is such information publicly available?

The Title and Mortgage Register contains information on, for example:

  • ownership of real estate;
  • mortgages; and
  • rights over property.

Information submitted to the Title and Mortgage Register is public. The registration authorities are obliged to provide certificates from it on request. 

Is there a state guarantee of title?

Under the Land Code, the state is liable for damages caused by:

  • an obvious spelling or calculation mistake;
  • a mistake caused by a technical error; and
  • other similar errors or defects in the Title and Mortgage Register's records, or in extracts obtained from the relevant register.

If the damage is caused by an error in the information sent to the Title and Mortgage Register, the damage is not compensated by the state.

Errors in the Land Register are compensated by the registrar.

If an authority other than the National Land Survey of Finland has given an incorrect or inadequate certificate from the Title and Mortgage Register, and the error or defect is not caused by incorrect information in the register, that other authority is liable for compensating any damage incurred.

Sale and purchase


How are real estate brokers regulated in your jurisdiction (eg, through caps on commission or disclosure obligations)?

Real estate brokerage is regulated under the Act on Real Estate Brokerage Firms and Brokerage Firms of Rental Apartments (1075/2000, as amended). According to this act, only private traders or legal persons registered as real estate agencies may operate as real estate agents.

Further, the Brokerage Act (1074/2000, as amended) sets out provisions in relation to real estate brokers. The provisions in the Brokerage Act include, for example, limitations as to the maximum length of the relevant assignment agreement between the client and broker.

The Brokerage Act provides no cap, but a broker’s commission must be reasonable with regard to, among other things, the nature of the assignment and the relevant workload relating to the assignment.

When performing the assignment, the broker must take into consideration the interest of both the client and the client’s counterparty. Further, the broker has certain disclosure obligations both to the client and to the client’s counterparty as to relevant information that the broker knows, or should know, has an impact on the decision regarding the relevant sale purchase or lease.

Due diligence

What due diligence should be conducted before conclusion of a real estate sale contract?

Real estate due diligence is typically performed by the relevant professionals (eg, legal, technical, financial and tax advisers). The results of due diligence are often presented in reports, which include relevant findings and related recommendations.

Due diligence typically covers:

  • public registers relating to the real estate (including review of any possible encumbrances registered over the real estate);
  • leases relating to the real estate;
  • pending or threating litigation or other claims relating to the real estate;
  • environmental issues such as zoning provisions, building permits and contamination in the soil and groundwater;
  • technical investigations; and
  • tax and financial issues.

Preliminary agreements

Are any preliminary agreements typically entered into before conclusion of a sale contract?

Preliminary agreements typically entered into between the parties during the initial phase of the sale negotiations include:

  • letters of intent;
  • exclusivity agreements; and
  • non-disclosure agreements.

Unlike exclusivity agreements and non-disclosure agreements, a letter of intent mainly reflects the intention of the parties to agree on the proposed sale and is not usually legally binding. If any of the terms and conditions of the letter of intent are meant to be legally binding, this should be clearly stated in the letter of intent.

Real estate agents are often involved in the early marketing of real estate sales and usually prepare, for example, the information memorandum and other sales material.


Must sale contracts be concluded in writing? If so, must they be notarised?

The sale of real estate must be concluded in writing. The acquisition agreement must be signed by both parties and attested by a notary in the presence of all the signatories to the agreement. 

Can sale contracts be concluded electronically?


What provisions are usually included in a sale contract?

The acquisition agreement must include details of:

  • the parties’ intention to sell and purchase the real estate;
  • the real estate to be sold and purchased;
  • the identity of the  seller and the buyer; and
  • the price (to be paid in cash or other consideration).

If these provisions are not included or the agreement lacks other legal requirements, the sale will not be binding.

Further, the acquisition agreement usually also includes other provisions, such as:

  • warranties;
  • indemnities;
  • limitations of liability;
  • taxes;
  • insurance;
  • governing law; and
  • dispute resolution.

Obligations and liabilities

What are the seller’s disclosure obligations and other liabilities, and what are the consequences of breach?

Under the Land Code, the seller must disclose to the buyer relevant information which could have an impact on the use or value of the real estate or on the transaction as a whole. In addition, if the seller notices before entering into the sale agreement that the buyer has an incorrect understanding of relevant characteristics of the real estate, the seller must correct this.

Under the Land Code, the buyer has the right to price reduction and, in certain situations, damages as a result of the defect. In addition, the buyer may also terminate the sale of real estate in case the defect is material.

What contractual warranties are usually given by the seller?

The seller is bound under Finnish law by certain statutory warranty obligations regarding the sale of real estate, including those relating to:

  • valid title to the real estate; and
  • accuracy of the information disclosed to the buyer.

Additional warranties given to the buyer include those relating to:

  • the validity of any lease(s) relating to the real estate;
  • compliance with relevant laws and permits, such as environmental laws and building permits;
  • the condition of buildings located on the real estate; and
  • the absence of any encumbrances.

Are there any other obligations on the buyer, aside from paying the purchase price?

The buyer has no obligations at the outside aside from paying the purchase price, unless the acquisition agreement states otherwise. Further, under certain circumstances, the buyer may inherit certain environmental liability. 


What taxes are payable on the sale and purchase of real estate? Are any exemptions available?

A direct acquisition of real estate is subject to transfer tax at a rate of 4% of the purchase price.

The acquisition of shares in a Finnish real estate company, housing company or real estate holding company is generally subject to transfer tax at a rate of 2% of the purchase price (or other consideration) payable by the buyer.

The transfer tax base also includes any debts or liabilities assumed by the buyer based on the transfer agreement, provided that the seller benefits from this.

The most common method is to acquire the corporate vehicle which owns the real estate rather than the real estate itself (as transfer tax on a share transfer in a Finnish real estate company is 2%, while transfer tax on the direct acquisition of real estate is 4%).

Further, if shares in a non-Finnish holding company (indirectly holding Finnish real estate) are transferred between non-residents, transfer tax can be avoided.

Transfer of title

When does title in the property transfer?

Title transfers to the buyer in accordance with what the parties have agreed and is not dependent on registration of the buyer's title.


What is the typical duration of a sale transaction?

The duration of sale transactions varies depending on, for example, the characteristics of the object of sale and the issues which may arise during the due diligence. The duration may therefore range from a few weeks to several months (or even longer).



Must a lease agreement be concluded in writing?

Under the Land Tenancy Act (258/1966, as amended), all of the provisions of the lease, together with any amendments and assignments of the lease, must, as a rule, be in writing.

However, a lease can be made orally in some circumstances – for example, if it relates to certain types of agricultural land and the lease period is for less than two years. 

Are there any regulations setting out mandatory or prohibited provisions in lease agreements?

Most lease provisions are freely negotiable but in situations where a particular matter has not been agreed on by the parties, the Land Tenancy Act applies. Where a provision under the Land Tenancy Act is mandatory, any provision which departs from that provision is void.

What provisions are typically included in lease agreements?

Lease agreements typically include at least provisions regarding the parties, intent of the lease, rent and term of the lease.

What are the standard forms of lease agreement used in your jurisdiction?

Most lease agreements are made in writing and signed by both parties.

Length of term

Are there any regulations on minimum and maximum terms of leases?

In general, the parties are free to agree on the length of the lease term. However, the Land Tenancy Act provides for certain limits on the lease term, depending on the type of lease. For example, a lease of an urban plot must be for a fixed term of at least 30 years, up to a maximum of 100 years. If the parties have not agreed the term of the lease of an urban plot, the term is deemed to be 30 years.

When a lease of a residential area concerns an area which, according to the purpose of the lease, must be occupied mainly by buildings built by the tenant, the lease term must be at least 30 years. The lease term is deemed to be 30 years if not agreed otherwise by the parties.

If the parties agree on a lease for a longer term than allowed under the Land Tenancy Act, the term of the lease is considered to be the maximum length allowed for that type of lease.

Are long-term tenants accorded any special rights as to extension or renewal of leases?

The parties to a lease are free to agree on terms for the renewal of the lease. Long-term tenants are not automatically provided rights to extend the lease term under law. 


What regulations (if any) govern rent increases?

The parties are, at the outset, free to agree the rent level as well as the rent increases under the lease. However, the rent level can be adjusted in court or in arbitration if considered unreasonable, taking into account:

  • the general market rental value;
  • the use of the land;
  • the value of the land in the area; and
  • other relevant factors affecting the amount of the rent.

Further, under the Land Tenancy Act, the landlord has the right to increase the rent if the leased area has been essentially increased due to a reason not attributable to the parties. 

What regulations (if any) govern rent security deposits?

A rent security deposit is not a legal requirement, but it is usually required by the landlord.

Can the tenant withhold rent payments on any legal grounds?

The tenant may be released from rent payments or receive a reasonable reduction of the same in situations where the tenant has the right to terminate the lease with immediate effect – for example, if the leased real estate is not in the state of repair as agreed in the lease or if a public authority restricts the intended use of the real estate.


Under what circumstances is sub-letting typically allowed?

Finnish law does not per se recognise the sub-letting of land areas.

However, the tenant may always assign the lease with the landlord's consent. In some cases the Land Tenancy Act provides for an assignment of the lease without the landlord's consent unless otherwise expressly agreed. Further, a lease of an urban plot may always be assigned without the landlord's consent and an agreement to the contrary is void.

Obligations and liabilities

What are the general obligations and liabilities of the landlord in respect of the property and what are the consequences of breach?

The Land Tenancy Act sets out certain obligations of the landlord, such as to convey the leased real estate to the tenant at the date agreed by the parties and to convey the leased real estate to the tenant in the state of repair as agreed in the lease. The general consequences of a breach by the landlord are that the tenant is released from payment of rent or, in case of a material breach, the tenant may have a right to terminate the lease.

Most of the obligations and liabilities of the landlord may be agreed on by the parties under the lease. Therefore, the obligations and liabilities as set out in the Land Tenancy Act mainly apply in cases where the parties have not agreed on the relevant matter. As an example, the landlord is responsible for certain mandatory costs relating to the real estate unless otherwise agreed by the parties.

What are the general obligations and liabilities of the tenant in respect of the property and what are the consequences of breach?

Most of the general obligations and liabilities of the tenant as well as the consequences of a breach thereof may be agreed on by the parties. The main obligation of the tenant is to perform the agreed rent to the landlord. In addition, the tenant cannot, for example, use the leased real estate contrary to the purpose of the lease. Except for leases of urban plots, a landlord can terminate a lease (and claim compensation for possible damages) where the tenant has, among other things, not paid the rent on time or failed to keep the leased real estate in good repair.  


Are any taxes payable on rental income? If so, are any exemptions available?

Rental income is considered as regular business income for a corporation and taxed at a rate of 20% and capital income for individuals taxed at a rate of 30% (34% for income exceeding €30,000 a year).

Value added tax (VAT) is not payable on rent paid under a lease unless the lessor of a real estate opts for VAT.


Are the landlord and tenant bound by any insurance requirements?

At the outset, the parties are free to agree on the insurance. However, some activities by the tenant might require insurance by law. For example, according to the Environmental Damage Insurance Act (81/1998, as amended), environmental damage insurance must be obtained by private corporations whose operations involve a material risk of environmental damage or whose operations cause harm to the environment in general.

Termination and eviction

What rules and procedures govern termination of the lease by the landlord and the tenant’s eviction from the property?

Except for leases of urban plots, landlords can terminate a lease where the tenant has:

  • unlawfully or contrary to the provisions of the lease, assigned the lease or the right of possession of the leased real estate (wholly or partly) to another;
  • not paid the rent on time;
  • failed to keep the leased real estate in good repair; or
  • used the real estate unlawfully or contrary to the provisions of the lease.

The termination of the lease must be made by written notice stating, among other things, the grounds for the termination.

Eviction of the tenant is governed by the Enforcement Code (705/2007, as amended). Generally, an eviction requires a decision from the district court and is carried out by the relevant enforcement authority.


Finance providers

What are the typical providers of real estate financing in your jurisdiction? Are there any restrictions on who may provide financing?

The major local and Nordic banks (eg, Nordea Bank, Danske Bank and Skandinaviska Enskilda Banken AB) have been active real estate financiers. Debt finance is easily available for real estate investments and transactions. However, the volume of debt funds for real estate investments has been insignificant in Finland so far.

There has been an increasing interest in high yield bonds as an alternative to bank financing in the real estate market. Sale and leaseback arrangements are also occasionally used in relation to real estate.

To date, real estate securitisation has been uncommon in Finland.

Financing structures

What are the most common structures used to secure real estate financing and how are these security interests perfected?

Typically, lenders protect themselves by means of a security package which includes:

  • a real estate mortgage;
  • a pledge of rental income;
  • a pledge of shares (in case of indirect real estate ownership);
  • a pledge of the borrower's bank account; and
  • a pledge of insurance receivables.

A real estate mortgage is the most common security interest in relation to real estate.

The owner can apply to the National Land Survey for registration of the mortgage if the owner's title has been registered with the Land Register. The application can also be submitted electronically.

The registration of a mortgage instrument does not in itself create a security interest. A security interest in favour of a creditor is created only by pledging mortgage instruments to secure the payment obligation under the creditor's receivable.

Written form is required to create a mortgage instrument. No notarial deed is needed.

A mortgage instrument can be pledged to secure the owner's debt or to secure the payment obligation of a third party.

A pledge of mortgage instruments is not registered with the Land Register. Therefore, the Land Register does not show whether:

  • real estate is being used to secure payment of debt through a pledge of mortgage instruments;
  • the owner still holds them; or
  • they may be used in future to secure obligations.

The mortgage is perfected by the owner of the real estate pledging the mortgage instruments to the creditor under the receivable to be secured.

In addition, possession of the physical mortgage instruments (ie, if not issued in electronic form) must be transferred to the creditor or pledgee for the mortgage to be binding on third parties.

A pledge of mortgage instruments is created in a pledge agreement (declaration of will to pledge). There are no specific formal requirements for the pledge agreement, but written form is advisable for evidence purposes.

What covenants are typically made in financing agreements?

In addition to the security package referred to above, the lender typically requires the borrower to give various financial covenants. The main financial covenants are loan-to-value, interest cover covenant and debt service cover covenant.

Enforcement of security

How are security interests enforced in the event of default?

An enforcement outside bankruptcy or administration will require an enforceable court decision on the claim, followed by the sale of the mortgaged real estate by the public enforcement authorities. In some cases the public enforcement authorities may authorise the mortgagee, a third party or the debtor to sell the property.

What is the typical timeframe for the enforcement of security?

The enforcement of security is usually time consuming and may last for several months (or even longer) depending on the specific case.


Investment climate

What is the general climate of real estate investment in your jurisdiction?

The Finnish real estate market has been subject to increasing activity in recent years. The volume of the Finnish real estate transactions in 2016 exceeded €7 billion, which is the highest annual volume so far and represents an increase of 30% compared to 2015. 


Who are the most common investors in real estate?

In recent years, institutional investors, mainly pension insurers, have been the largest investor group in real estate in Finland. 

Are there any restrictions on foreign investment in real estate?

Finnish law is generally rather liberal in terms of foreign investment and allows direct investment in both property and domestic companies holding Finnish real estate.

Many foreign real estate investors originate from other Nordic countries, particularly Sweden, such as Sagax and Hemso Samhallsfastigheter.

Investment structures

What structures are typically used to invest in real estate and what are the advantages and disadvantages of each (including tax implications)?

The most common structure for Finnish institutional investors in indirect property investment is the limited partnership, where the fund management company usually functions as the general partner.

There are significant tax advantages to these structures, since limited partnerships are tax transparent structures and their investment income is taxed according to the relevant investor's tax status, provided that certain conditions are met.

The investment income of limited liability companies investing in real estate is subject to corporate taxation and could therefore be regarded as less favourable from a tax perspective.

Finnish legislation also enables the establishment of special investment funds that invest in real estate (Act on Common Funds (48/1999, as amended)). These funds are structures managed by a separate fund management company. They are not taxable entities and are considered as fully transparent for Finnish tax purposes.

Forming a tax-exempt listed company with a structure resembling a real estate investment trust is possible only for companies investing in residential rental property.

Under Finnish law, to maintain this tax exemption, the relevant company must, among other things:

  • pay 90% of its relevant annual profit as dividends; and
  • be listed within three years of its foundation.

Real estate investments can also be made through a foreign or non-resident company.

Planning and environmental issues


Which government authorities regulate planning and zoning for real estate development and use in your jurisdiction and what is the extent of their powers?

Regional councils are responsible for provincial planning, while the local authority of a municipality is responsible for land use planning, land policy and building guidance and control in its territory (the Land Use and Building Act (132/1999, as amended)).

Land use in municipalities is organised and steered by both masterplans and detailed plans. The masterplan sets out the outline for land use in the municipality and the detailed plan indicates how the use of land areas and buildings is organised. Local authorities can also draw up a joint masterplan.

What are the eligibility, procedural and documentary requirements to obtain planning permission?

Applications for planning permissions are approved by the local building supervision authority and must:

  • be in writing;
  • include a statement that the applicant controls the building site; and
  • include the master drawings signed by the architect.

The authority can require the applicant to provide additional information if needed.

The master drawings for the construction are approved in connection with the granting of the planning permission.

There is no set time limit for processing the applications, but under the Act on Administration (434/2003, as amended), authorities must generally handle matters without undue delay.

When an application for a planning permission is initiated, the owners or occupiers of neighbouring properties must be notified, unless this is clearly unnecessary.

The neighbours then have at least seven days to submit any comments regarding the application.

If necessary, the local building supervision authority can inspect the site to assess whether the building is, among other considerations, suitable for the local environment.

Can planning decisions be appealed? If so, what is the appeal procedure?

The following parties have the right to appeal against a planning decision:

  • owners and titleholders of adjacent and facing areas;
  • the owners and titleholders of other properties, if the construction or use of these properties may be essentially affected by the decision;
  • those whose rights, duties or interests are immediately affected by the decision; and
  • local authorities.

The appeals must be made to the relevant administrative court within 30 days from the service of the decision.  

What are the consequences of failure to comply with planning decisions or regulations?

If construction work or other measures are initiated against planning decisions or regulations, the surveyor or other authority has the right to suspend the work with a written notice and require the refractory person, possibly by imposing a conditional fine, to correct what has already been done or left undone. In addition, a fine may be imposed on certain violations as further defined in the Land Use and Building Act. 

What regime governs the protection and development of historic and cultural buildings?

Buildings, other constructions, groups of buildings or built areas can be protected if they are significant for, among other things (Act on Protection of Architectural Heritage 498/2010, as amended):

  • architectural history;
  • artistic merit;
  • construction technology; or
  • special environmental value.

The Centre for Economic Development, Transport and the Environment is responsible for processing proposals concerning protection of buildings.

Government expropriation

What regime applies to government expropriation of real estate?

Expropriation is allowed when required in the public interest, subject to certain exceptions. Permission for expropriation of land is granted by the government in its plenary session.

What is the required notice period for expropriation and how is compensation calculated?

The owner of the real estate subject to expropriation as well as the holder of a usufruct to the real estate must be given an opportunity to make a statement in relation to the expropriation before the granting of an expropriation right, unless a written consent has already been given regarding the expropriation. The time period for giving the statement must not be less than 30 days and not exceed 60 days from the service date of the application for expropriation.

If the land is expropriated, the owner of the land has a right to full compensation for economic losses due to the expropriation. The determination of the purchase price for the expropriated property is based on fair market value.

The applicant may take the expropriated real estate into its possession after the decision of expropriation has been declared and the applicant has paid the relevant compensation and, in certain situations, placed a security. The applicant may be allowed to take the real estate into its possession at an earlier stage due to some urgent schedule or other important reason(s). 

Environmental issues

What environmental certifications are required for the development of real estate and how are they obtained?

Applicants for building permits must obtain an energy certificate showing that the relevant building will meet the requirements for energy efficiency under the applicable laws (Act on Energy Certificates for Buildings (50/2013, as amended), the Land Use and Building Act and the National Building Code of Finland (2/1734, as amended)).

A valid energy certificate must also be obtained for selling or leasing a building (or any part of it).

An energy certificate may be obtained from a person with the relevant qualifications as set out in the Act on Energy Certificates for Buildings.

What environmental disclosure obligations apply to real estate sales?

Under the Land Code, the seller must disclose to the buyer relevant information which could have an impact on the use or value of the real estate or on the transaction as a whole. In addition, if the seller notices before entering into the sale agreement that the buyer has an incorrect understanding of relevant characteristics of the real estate, the seller must correct this.

Under the Land Code, the buyer has the right to price reduction and, in certain situations, damages as a result of the defect. In addition, the buyer may also terminate the sale of real estate in case the defect is material.

What rules and procedures govern environmental clean-up of property? Which parties are responsible for clean-up and what is the extent of their liability?

The liabilities for remediation and cleaning of contaminated areas are regulated by the Environmental Protection Act (527/2014, as amended). The liability for remediation of contamination lies with the party whose activity has caused contamination in the soil and groundwater or, if the party cannot be identified or is incapable of fulfilling its relevant remediation obligations, the party that possesses the contaminated area, if the relevant possessor knew or should have known, at the time of the purchase, about the relevant contamination or has given its consent to said contamination. Moreover, the materialisation of the second option is subject to certain reasonability criteria.

Are there any regulations or incentive schemes in place to promote energy efficiency and emissions reductions in buildings?

A 2009 government report (Foresight Report on Long-term Climate and Energy Policy) set a target to reduce Finland's greenhouse gas emissions by at least 80% from the 1990 level by 2050.

Please also see above regarding energy certificates.