Shortage of rental apartments looming in Greater Helsinki area
Investors lured by high prices
A shortage of rental apartments is again looming, as investors, lured by high prices, have sold about 20,000 rented homes in recent years, mainly in the Greater Helsinki area, some experts report.
Particularly pension funds and trusts have been willing to get rid of their rental properties, while also private investors have wanted to return their profits from increasing prices.
For example, the Pharmacists’ Pension Fund has decreased the number of its rental apartments from 1,200 to less than 300.
Even though a large number of rented homes have been turned into owner-occupied apartments, large providers of rental apartments, such as Sato and VVO, have not built new rental apartments in the Greater Helsinki area for many years.
"Today’s construction costs are so high that the rent per square metre for new apartments would be prohibitively expensive", says Director Raimo Pulkki, who is in charge of investments at VVO.
The cities’ own production of rental apartments has also collapsed.
The monthly EUR 250 second-home allowance proposed by the government will increase the demand for residential units, notes Director Ilkka Lehtinen from Statistics Finland.
Moreover, the new allowance is bound to raise the level of rents, he predicts. This will happen particularly in the Greater Helsinki area, as a large number of people working in the capital have permanent residences elsewhere.
The Central Union of Tenants VKL is already seeing signs of a tightening market. When renting an apartment, a financial guarantee is demanded, and the tenants of houses facing major repairs - with the attendant inconveniences that reglazing or bathroom refits bring - are no longer granted any rent reductions.
The increase in interest rates has already forced some 500 families to sell their homes and apply for accommodation at the city-owned rental apartments in Helsinki and Espoo, further exacerbating the local supply and demand problem.
Previously in HS International Edition:
Helsinki housing programme seen as unrealistic by many politicians and civil servants (15.8.2007)