04-14-2010, 11:15 AM
It was two decades ago when the so-called “ right of occupancy” housing system was introduced in Finland, not surprisingly, as a Swedish model, a safe Scandinavian way of providing moderate expense housing to ordinary people who were not home owners. Back then the new system was hailed as a step towards providing those in need with a realistic and affordable housing alternative. Ordinary wage earners were given this new attractive possibility - suitable housing with a small capital contribution of 10 to 15 % of the price of the home at the moment of purchase.
The background of the Finnish housing politics explains the initial enthusiasm, as far as the new “right of occupancy” housing system is concerned. It was at the end of the eighties when suddenly housing prices rose sharply and mortgage interest rates ranged between 10-15%. Rental housing in Finland, especially in the capital Helsinki, was hard to obtain due to high yield demands, which in their turn were the result of rent control and high interest rates. The “right of occupancy” housing system was introduced to facilitate the ordinary wage earners’ housing situation. The Swedish model clearly stated that the respective house occupants owned their house through their housing association. In Finland, however, the first legislative act (as of 1990) stated that the right to occupy housing was to be controlled by the building companies. This was done according to the Finnish builders' particular demands and requirements. From then on, new proprietors established themselves on the Finnish market - proprietors that had not invested a single penny in their new profitable business. They were all big Finnish-owned building corporations, named “housing corporations of general interest”, in the style of a typical welfare society, such as Finland. These companies started building real estates using state-subsidized housing loans and “right of occupancy” monthly instalments paid by the occupants.
The law entered into force in the autumn of 1990 and many new such homes were ready by the mid-nineties. Some conservative doubts were expressed about the need for such a system, but at the turn of the century it had already gained ground.
What occupants did not notice enough was that it was in 1994 when a new, revised law stepped into force, according to which the occupants’ formed housing associations had also obtained the right to build and own “right of occupancy” real estates. So far, there is only a handful of real estates built by housing associations in Finland. The reason for this is clear: in their four-year head start the big building corporations had had enough time to conquer the ”right of occupancy” market, so that housing associations were dwarfed in comparison.
In the beginning of the 21st century there was a change in the trend: suddenly the intensive construction of new “right of occupancy” houses ended and only a few new such real estates were built. This cleared the path for the building corporations to go on with their profit-orientated politics. Things that were promised once to the occupants started to sound utopia like. At the beginning occupants were promised secure control of the costs of living, so that people could remain solvent in the long run and not have to leave their homes, for example, when they retire. Such promises were clearly unfounded. And yet – this was the most essential point, the reason for the introduction of the “right of occupancy” system in the first place!
Since then most “right of occupancy” corporations have been collecting profits and dividends through their housing politics and businesses. However, such activities do not meet the residents’ paid and state-subsidized production of houses and their intended use. Profits and dividends cannot be considered as occupants’ caused outlay. In addition, most such “right of occupancy” companies have not given clear annual reports to the occupants explaining the constant rise in the costs of living.
That is why the big questions in front of Finnish politicians as well as ordinary wage earners and occupants of such homes are: What will happen in the future? Will the housing expenses rise even more? Or will the costs of living go down once the loans are paid off? Will proper legislation be introduced in Finland to allow for the fair use of the “right of occupancy” system?
For this is what people expect of course, the very same wage earners who were once promised housing in an affordable, owner-occupied manner.
The background of the Finnish housing politics explains the initial enthusiasm, as far as the new “right of occupancy” housing system is concerned. It was at the end of the eighties when suddenly housing prices rose sharply and mortgage interest rates ranged between 10-15%. Rental housing in Finland, especially in the capital Helsinki, was hard to obtain due to high yield demands, which in their turn were the result of rent control and high interest rates. The “right of occupancy” housing system was introduced to facilitate the ordinary wage earners’ housing situation. The Swedish model clearly stated that the respective house occupants owned their house through their housing association. In Finland, however, the first legislative act (as of 1990) stated that the right to occupy housing was to be controlled by the building companies. This was done according to the Finnish builders' particular demands and requirements. From then on, new proprietors established themselves on the Finnish market - proprietors that had not invested a single penny in their new profitable business. They were all big Finnish-owned building corporations, named “housing corporations of general interest”, in the style of a typical welfare society, such as Finland. These companies started building real estates using state-subsidized housing loans and “right of occupancy” monthly instalments paid by the occupants.
The law entered into force in the autumn of 1990 and many new such homes were ready by the mid-nineties. Some conservative doubts were expressed about the need for such a system, but at the turn of the century it had already gained ground.
What occupants did not notice enough was that it was in 1994 when a new, revised law stepped into force, according to which the occupants’ formed housing associations had also obtained the right to build and own “right of occupancy” real estates. So far, there is only a handful of real estates built by housing associations in Finland. The reason for this is clear: in their four-year head start the big building corporations had had enough time to conquer the ”right of occupancy” market, so that housing associations were dwarfed in comparison.
In the beginning of the 21st century there was a change in the trend: suddenly the intensive construction of new “right of occupancy” houses ended and only a few new such real estates were built. This cleared the path for the building corporations to go on with their profit-orientated politics. Things that were promised once to the occupants started to sound utopia like. At the beginning occupants were promised secure control of the costs of living, so that people could remain solvent in the long run and not have to leave their homes, for example, when they retire. Such promises were clearly unfounded. And yet – this was the most essential point, the reason for the introduction of the “right of occupancy” system in the first place!
Since then most “right of occupancy” corporations have been collecting profits and dividends through their housing politics and businesses. However, such activities do not meet the residents’ paid and state-subsidized production of houses and their intended use. Profits and dividends cannot be considered as occupants’ caused outlay. In addition, most such “right of occupancy” companies have not given clear annual reports to the occupants explaining the constant rise in the costs of living.
That is why the big questions in front of Finnish politicians as well as ordinary wage earners and occupants of such homes are: What will happen in the future? Will the housing expenses rise even more? Or will the costs of living go down once the loans are paid off? Will proper legislation be introduced in Finland to allow for the fair use of the “right of occupancy” system?
For this is what people expect of course, the very same wage earners who were once promised housing in an affordable, owner-occupied manner.