Government to decide on support for flagging construction sector

Plans to boost construction of rental homes

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The government is drafting a bailout package in order to secure employment in the construction industry.
     
At the same time, the government is preparing a possibility to turn a number of completed buildings and some of those under construction into right-of-occupancy houses. The amendment would primarily apply to several hundreds of detached houses and terraced dwellings which have remained unsold.
      The move would require an amendment to the Act on Interest Subsidy.
      ”The change in the form of ownership was possible under the Act on State-Subsidized Housing, the so-called Arava Act, while the Act on Interest Subsidy does not recognise it”, says Development Director Markku Tahvanainen from the Ministry of the Environment.
      Tahvanainen stresses that the purpose is not to give any support to construction companies or non-profit corporations.
     
The most anxious to call for an amendment to the act has been Avara, which has given up its status as a non-profit corporation.
      The core business area of the parent company of the Avara Group is real estate investment, and it serves its customers’ needs with versatile housing services, while owning both rental and right-of-occupancy apartments across the country.
      Currently, Avara has nearly 75 unsold homes in Vantaa’s district of Ilola.
      Teija Ojankoski, the Director of the Housing Department in the City of Vantaa, regards the potential amendment to the Act on Interest Subsidy as welcome.
      ”No new right-of-occupancy homes have been built in Vantaa for years, even though applicants are lining up for such residences”, Ojankoski reports.
     
Based on the information given by the Confederation of Finnish Construction Industries RT, the number of unsold completed residences in the entire country is around 1,730 today.
      However, the accurate figure could be several hundreds higher, as the information gathered by RT only covers some 75 per cent of the contractors of new homes.
     
According to information gathered by Helsingin Sanomat, the matter is to be discussed in the ministerial working group on socio-political issues already today - Tuesday.
      The ministerial working group will assess all decisions relating to the aims to supplement the budget proposal for 2009.
      Prime Minister Matti Vanhanen (Centre) reported in Parliament on Thursday of last week that the supplementary budget proposal would focus on two issues in particular: promoting construction activities in order to create jobs and promoting business and export financing.
     
Residential constructors and developers expect that the government should also amend the guidelines for non-profit corporations as to how many years the residences have to be rented out before they can be sold.
      According to the current regulations, the state-subsidised constructors are not allowed to sell the homes for dozens of years, but they have to be rented out.
      This is one reason behind the fact that many building companies find the construction of non-profit housing less interesting.
      The Ministry of the Environment is to set up a working group within the next few days, which is to assess the guidelines for non-profit construction. The issue has been recorded in the Government Programme.
     
The Government is also planning to boost the construction of rental homes by investing approximately EUR 20 to 30 million in Municipality Finance, the public sector-owned credit institution specialising purely in the local government sector, including the construction of schools and hospitals.
      This move would offer funding for the projects of municipalities and non-profit housing corporations now that banks have closed their loan taps.
      The Government also intends to increase other construction activities in order to prevent the employment propects in the construction business from collapsing.
      An enterprise under the Ministry of Finance, Senate Properties, has been promised supplementary financing of dozens of millions of euros.
      ”The extra funding will be used to advance certain renovations initially scheduled for a later date. We will also build some new warehouses for the Finnish Defence Forces in two or three localities”, says Managing Director Aulis Kohvakka from Senate Properties.
      One of the properties to be renovated is the Swedish Theatre in Helsinki.


Links:
  Senate Properties
  Avara
  Confederation of Finnish Construction Industries
  Municipality Finance

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