Real Estate Subsidies

The real estate market in Finland offers good prospects for investors and constructors. According to the Emerging Trends in Real Estate Europe 2018 report, from 2015 onwards, the investment prospects have been rising and Finland offers investors and constructors a place with opportunity.

Finland has a comprehensive subsidy system for real estate. Subsidies can be granted to projects of new construction, renovation and purchase of housing. Subsidies can be granted to enterprises, non-profit organizations, and public authorities. They can be granted by local ELY Centres (Economic Development, Transport and Environment Centres) and local Leader groups (community-led local development (CLLD) groups), which aim at developing the rural areas of Finland. However, most of Finland is considered rural, covering 95 % of the total area of Finland, only excluding the centres of the biggest cities. The ELY and Leader subsidies are not specific for real estate but can be used for all types of projects that develop the rural areas, including housing construction, renovation and purchasing.

Subsidies are also granted by ARA (The Housing Finance Development Centre of Finland), who is responsible for the implementation of government subsidies for housing construction, purchasing and renovation, granting subsidies to non-profit building projects with the aim of fostering affordable, high-quality and sustainable housing.

ELY subsidy

The local Economic Development, Transport and Environment Centres (ELY Centres) grant financial support for projects aimed at developing the rural areas in Finland. The subsidies are part of the continental Finland development programme for the years 2014-2020. The subsidies are meant for projects on the countryside, but 95 % of Finland is within this definition.

ELY-subsidies are granted to projects which develop rural areas and its livelihood. The subsidies can be enterprise subsidies, development and investment subsidies or a combination of these in the form of cooperation subsidies. Enterprise subsidies are granted to SMEs for company start-ups and investment. Development subsidies are granted to non-profit investment projects, non-profit development projects and education or communication projects. Cooperation subsidies are granted to groups for R&D.

For enterprise subsidies the subsidy applicant must be an SME. The enterprise does not need to be an agricultural company, but the investment or project needs to take place on a rural area and aim to develop the area. For development and investment subsidies the applicant must be a registered association, municipality, foundation or non-profit organization. Cooperation subsidies can be granted to groups formed by any types of actors.

The subsidy for enterprises can cover up to 50% of the costs, for investments up to 75% of the costs, for development projects up to 100% of the costs, and for cooperation projects up to 100% of the costs. The subsidies are paid only for costs arising after the application for the subsidy has been issued, and they are only paid afterwards if the project has been carried out in line with the conditions set in the application and decision on the project, expect for non-profit organizations who can apply for 20% advance payment.

Examples of what the subsidies have been granted to include the construction of new business premises, construction and renovation of rental holiday villas and hotels.

Leader subsidy

The Leader programme is an EU-initiated support programme for the development of rural areas. There are 54 different local Leader groups in Finland who offer guidance and finance for projects on local level. Leader subsidies are similar to those of ELY subsidies and are granted to projects with the aim of developing local areas, and both the ELY subsidies and the Leader subsidies in Finland are administered the Agency of Rural Affairs. The Leader subsidy is paid from the Structural and the Rural Development Funds of the EU, and thus granted most often to projects on the countryside, but some cities in Finland are also within the scope of the subsidy and subsidies have been granted to projects in the cities as well.

The subsidies can be granted to organizations, local authorities and small enterprises (maximum 10 employees) for non-profit development, investment and business projects. The subsidy can be used to cover up to 90% of the costs of the project. The exact percentages and criteria differ from one local Leader group to another, based on the local development strategy.

Examples of what the subsidies have been granted to include the construction of a sports halls, construction and renovation of village halls, and investments in local tourism.

ARA subsidy

ARA, The Housing Finance and Development Centre of Finland, grants subsidies, grants and guarantees for housing and construction. It promotes ecologically sustainable, high-quality and reasonably priced housing. The loans can be granted to local authorities or other public corporations as well as to non-profit organizations or their subsidiaries.

ARA can grant interest-subsidy loans (giving state guarantee and paying interest subsidies) for new construction, renovation and purchase of housing. Subsidies for new construction are only granted when the building is on areas of growth and only to where there is long-term need for affordable housing. Renovation subsidies are granted to areas where the housing stock needs renovation. The subsidies can be used to cover up to 85-95% of the costs, which include both investment costs and costs that may occur during the lifetime of the housing.