"There is a need for diverse, market-driven housing construction and for state-subsidised, affordable housing production to supplement it"

3.1.1 Housing policy

Current situation

More than a third of the greenhouse gas emissions generated in Finland are caused by construction and buildings, while around a fifth come from transport. Finland must reduce these emissions in order to achieve its national and international climate objectives.

In the Greater Helsinki region and other growing urban areas, high housing costs and a housing shortage hamper labour supply and business growth. People suffer as a result of high housing prices, as many have to spend too large a proportion of their income on housing. Rented housing has become more common, while rents have increased faster than living costs.

There is a need for diverse, market-driven housing construction and for state-subsidised, affordable housing production to supplement it. The student housing situation in some cities and towns is poor, and there are not nearly enough student flats for all applicants. Homelessness is concentrated to the Greater Helsinki region and other major growth centres.

At the same time, dwellings in regions of net out-migration are left vacant, leading to deterioration of the housing stock. As the population ages, there is an increased need for accessible housing. In addition to older people, accessible housing benefits other population groups as well.

Renovations are needed to ensure the technical condition of the building stock. We have not been able to significantly reduce the negative effects of indoor air problems. There are issues with the quality of construction, the division of responsibilities and the housing solutions available to people suffering from indoor air problems and the resulting illnesses.

Objective 1

Building a carbon neutral society and improving the quality of construction

The Government will build a carbon neutral society by reducing the carbon footprint of construction, land use and transport and by supporting a sustainable community structure. We will improve the quality of construction and reduce the rate of indoor air problems and the resulting adverse effects on health.

We will make the existing building stock more energy-efficient and implement low-carbon solutions. We will double the use of wood in construction during the Government term. The use of wood will have a positive impact on both the climate and Finnish labour.

We will resolve and prevent indoor air problems in buildings and work to improve the lives of those suffering from their adverse health effects. We will develop the legislation and national support schemes in order to achieve a significant decrease in indoor air problems and the resulting health issues and illnesses. We will improve the quality and monitoring of construction and clarify the responsibilities related to construction.


Reform of the Land Use and Building Act

We will finalise the reform of the Land Use and Building Act in the parliamentary preparations. The main objectives of the reform are to create a carbon neutral society, strengthen biodiversity, improve the quality of construction and advance digitalisation. It is also important to take into account the economic and social sustainability of community structures. We will preserve municipalities’ monopoly on land use and the land use planning hierarchy, advance the simplification of the land use planning process and strengthen municipalities’ land policies. Land use planning must be based on comprehensive impact assessments. The oversight of the legality of land use will continue to be carried out by authorities and at least at the current level.

We will take the mitigation of climate change into account in land use planning, construction and the maintenance of the building stock. Community structures must support adaptation to climate change and motivate people to choose walking, cycling or public transport, particularly in urban areas. We will safeguard cultural environments and strengthen biodiversity, including in urban environments. We will improve people’s opportunities to participate in society. We will establish a national digital register and data platform for the built environment to be utilised in the decision-making and processes related to land use and building. We will promote the use of electronic services for municipal building permits and notifications according to the one-stop-shop principle.

Advancing wood building and low-carbon construction

We will accelerate the implementation of the low-carbon construction roadmap and promote the circular economy in construction. We will continue the wood building action plan until the end of 2022. We will set goals for wood usage in public construction.

We will advance wood construction expertise and continuing education in the construction sector and promote research, product development and exports related to wood construction.

We will promote the use of wood in the construction of housing financed by the State Housing Fund (ARA housing) in land use, housing and transport (MAL) regions by offering increased startup grants.

Support for repairs and renovations

We will promote renovation of the ARA housing stock and improvements to its energy efficiency by implementing renovation startup grants tied to interest subsidy loans and granted for renovations that make buildings more energy-efficient. The maximum grant per flat will be EUR 4,000.

We will continue to develop the electronic residential and commercial property information system. We will look into the possibility of including a calculation of the repair debt of a property in the property manager’s certificate in order to improve the consumer protection of the buyers of homes in limited liability housing companies.

The guarantee scheme for renovations of limited liability housing companies will be revamped into a well-functioning support model. We will introduce grants for carrying out building inspections and drafting renovation plans.

We will investigate the possibility of making the residential building provision tax-neutral to enable limited liability housing companies to better prepare for necessary renovations, particularly those that reduce emissions.

Addressing indoor air problems

We will continue the 'Healthy Premises 2028' programme. We will make the programme more ambitious and examine its target-setting and scope so it can solve indoor air problems more effectively. We will ensure that the programme leads to the necessary actions and amendments to legislation during this government term. As part of the Healthy Premises 2028 programme, we will look into establishing a centre of expertise specialising in renovations.

We will review the position previously approved by Parliament concerning mould and moisture issues in buildings and ensure that they are carried through to completion.

We will improve the quality and supervision of construction and clarify the related responsibilities, particularly in connection with the overall reform of the Land Use and Building Act. The new Act will assign the main responsibility for construction to the main contractors. This will include liability for any building defects and for repairing them.

We will improve guidance on how to prevent and repair indoor air quality problems based on research. We will increase the level of renovation expertise through continuing education where necessary. We will focus on studying indoor air problems and finding solutions.

We will expand the powers of health inspectors and occupational safety and health authorities to require renovations. We will include condition inspections in the scope of legislation and set qualification requirements for inspectors.

Helping people affected by indoor air problems

We will investigate what kind of help and support people need to break the cycle of mould-related problems. We will explore whether the state can provide support for fixing indoor air problems in buildings and for building new, clean buildings for people suffering from illnesses due to poor indoor air quality.

We will examine whether there is a need to strengthen the legal protection of buyers of homes with indoor air problems through binding legislation. We will investigate the need for and conditions of renovation grants for privately owned residential buildings. The building must have a confirmed indoor air quality problem in order for the owner to be eligible for investment grants.

Objective 2

We will support sustainable urban development and increase housing construction in growing urban areas

We will support sustainable urban development and increase the volume of housing construction in urban areas to respond to the growing demand for housing, bring housing prices down to a more reasonable level and facilitate the mobility of the labour force.

Meeting the needs of growing areas will require a wide range of measures to increase the volume of housing construction and lower construction costs. We will increase the volume of state-subsidised, affordable housing to supplement the market-driven and private housing supply and to balance fluctuations in the market. We will take into account the significance and special needs of the Greater Helsinki region. The emphasis in urban policy will be on preventing segregation and developing suburban areas.

It is important to recognise the very different housing markets that exist within this country and to respond to the needs brought on by sudden changes. The goal of ecologically, socially and economically sustainable long-term housing policy is to increase the supply of a wide range of housing in growing areas. At the same time, the majority of Finland consists of areas with shrinking populations, where the needs of the ageing population are becoming more significant. We will make sure that living conditions are developed throughout Finland.

We will take into account the diverse housing needs of different age groups and population groups. We will ensure that there is sufficient state support for housing for special groups. We will develop communal housing.


Long-term development of housing policy

We will prepare a comprehensive, goal-oriented housing policy development programme extending over eight years. The programme will be based on a comprehensive report investigating the most important areas of improvement in housing policy. The programme will be submitted as a government report to Parliament by the end of 2020.

We will implement the ten measures listed in the 'Areas for development in housing policy' study carried out by the Audit Committee and approved by Parliament in 2018.

MAL agreement procedures

We will continue the urban development partnerships between the central government and large urban regions through 'Land use, housing and transport' (MAL) agreements and make the agreements more binding. We will build carbon neutral urban regions, boost the volume of housing production and increase the proportion of sustainable means of transport.

We will work to combat segregation and homelessness and diversify the resident structure of neighbourhoods. The state will ensure sufficient investments in public transport and grants for municipal engineering construction and will allocate its land property especially to produce affordable housing and to build sustainable transport links.

MAL agreements will ensure that municipalities have sufficient land use volume to allow for diverse housing production in the long term. MAL agreements will promote infill development and the transition to market-driven parking solutions.

The agreement procedure can be broadened to include new regions, with the state increasing its participation accordingly. The term of MAL agreements will be extended to 12 years and the agreements will be converted to rolling agreements.

We will increase the volume of state-subsidised, affordable ARA housing to supplement the market-driven and private housing supply and to balance fluctuations in the market. We will expand startup grants for long-term interest subsidies to include all areas with MAL agreements. The amount of the grants is EUR 10,000 per dwelling in the Greater Helsinki region and EUR 3,000–5,000 per dwelling in other MAL regions. We will introduce startup grants with a bonus of 20 per cent for wood construction. The goal is to increase the proportion of affordable ARA housing production to at least 35 per cent, however in such a way that does not lead to areas with only one mode of housing possession.

The MAL agreement for the Greater Helsinki region will take into account the growth challenges of the region and include measures to combat segregation.

State-subsidised housing production

When it comes to state-subsidised housing, the Housing Fund of Finland will retain its position as an extra-budgetary fund and we will seek new sources of income for the fund. We will ensure that the state support system promotes innovative, environmentally friendly housing solutions.

We will reform the long-term interest subsidy programme for affordable housing to create better incentives and improve transparency. We will increase the amount of state support and retain the current 40-year restriction period. The reform will take into account new housing solutions and the increasing trend towards housing as a service. The tenant selection criteria for ARA rental flats will remain unchanged.

We will renew the right-of-occupancy housing system in a way that ensures reasonable housing prices, improves transparency and strengthens residents’ ability to have their voices heard. We will renew the tenant selection process.

We will safeguard the position of A-Kruunu Oy as a producer of affordable rental housing.

We will increase the operating appropriations to be allocated to the Housing Finance and Development Centre of Finland (ARA) because of its increased duties.

Measures in growing urban regions

We will increase the volume of affordable ARA housing production in growing urban regions and carry out more renovations on the existing housing stock. We will set a target of producing at least 10,000 newbuild flats with long-term state interest subsidies per year, more than half of which will be located in the Greater Helsinki region. As a general rule, interest subsidy lending for newbuilds will be targeted at areas where the demand for housing will continue in the long term. Areas undergoing positive structural change will also be taken into account.

We will promote the construction of affordable housing in growing urban regions by adopting grants for changes in the purpose of use of buildings, through which the existing building stock, such as offices, can be converted into ARA housing.

Measures in areas with shrinking populations

Rental housing corporations built with state support in areas with shrinking populations require special support to develop living conditions and reduce the financial risk for the state.

We will assist municipalities and communities in adapting their property stock to the decrease in demand and in renovating their existing ARA housing stocks to meet the needs of the ageing population. To further adapt the property stock, we will, for a fixed period, raise the amount of the demolition subsidy and increase the authorisation to grant demolition subsidies and the authorisation to make arrangements with creditors. Conversion loans will make it easier for rental housing corporations to merge their loans.

Housing for special groups

We will improve the housing situation of special groups by ensuring that investment grants to develop ARA housing for special groups are at a sufficient level. We will increase the volume of youth and student housing construction and raise the lowest support category of the ARA investment grant for housing for special groups from 10 per cent to 15 per cent.

As part of the new programme on ageing for the Government term, we will implement a separate action plan on housing for older people. Together with municipalities, we will develop good housing solutions for older people, such as communal living and the construction of community homes. We will promote accessibility by offering grants for installing lifts and improving the accessibility of housing, which will benefit many other population groups in addition to older people. We will take into account the special needs of people with memory disorders and the safety and security of the ageing population at home.

We will complete the dismantling of inpatient care for persons with intellectual disabilities and enable young people and adults with intellectual disabilities and on the autism spectrum to become independent by supporting them in finding housing to suit their individual needs and by building housing for people with special needs in ordinary residential areas.

We will improve the housing situation of mental health and substance abuse rehabilitees.

Development of suburbs and sustainable urban development

We will continue to develop suburban areas comprehensively while also advancing local democracy. We will promote social inclusion and curb the polarisation of residential areas. We will also work to create sustainable transport solutions, promote infill development, combat segregation and increase the appeal, community spirit and safety of neighbourhoods. We will ensure that sufficient resources are allocated for this. Carbon neutrality and green areas will be a top priority when developing neighbourhoods.

We will launch a horizontal programme for suburban areas, which will aim to promote residents’ wellbeing and participation opportunities, increase the vitality of neighbourhoods and prevent segregation. We will continue to implement the national sustainable urban development programme.

New forms and costs of owner-occupied housing

We will promote and support joint building ventures and cooperative construction. We will continue the ongoing cooperative housing pilots and draft legislation on cooperative housing. We will advance joint building ventures by passing legislation on guarantees for the building period.

We will investigate factors that affect construction costs, such as regulations on parking places and civil defence shelters, in order to promote more affordable construction. Any deregulation measures we adopt must not have a negative impact on the quality of construction or on the health or safety aspects of buildings.

We will explore the possibilities for the state to promote affordable owner-occupied housing, such as through state-subsidised housing loans.

Strengthening the position of tenants

In order to strengthen the position of tenants, we will draw attention to measures that can prevent disproportionate rent increases within the limits of the current legislation. We will strengthen the position of tenants by amending the Act on Joint Administration in Rental Buildings, which regulates the decision-making power of residents in state-subsidised rental and right-of-occupancy housing companies.

We will conduct an international comparison of housing support, legislation and rental markets as part of our eight-year housing policy development programme.

Objective 3

Eradicating homelessness within two government terms

We will halve homelessness during the government term and eradicate homelessness within two government terms, in other words, by 2027. We will continue to operate according to the 'Housing First' principle, which has proved to be effective. We will focus especially on making housing advice more readily available and on preventing homelessness, particularly among young people and migrants.


We will launch a programme to cooperate with the main urban regions, service providers and organisations with the goal of halving homelessness by 2023 and eradicating it by 2027. We will integrate the goal of eradicating homelessness into the national MAL agreement and the agreements of urban regions.

To improve access to housing advice, we will make it a statutory service and allocate sufficient resources for it. We will work with the local authorities to ensure sufficient housing advice services. Housing advice services must be available to all, irrespective of the form of housing.

We will develop the collection of statistics on homelessness. We can do this, for instance, by building a system for collecting statistics on homelessness based on national databases, such as the Kanta service, which, in addition to producing real-time statistical information, would also produce information on individuals’ paths to homelessness and the factors that lead to homelessness.