Part-ownership housing

Part-ownership housing brings home ownership within the reach of many more people, especially those unable to purchase a house of their own. Initially, the residents of part-ownership housing pay only a share of the purchase price of the apartment and consequently, own a corresponding share of the apartment. The builder of the property owns the majority share.

At first, residents live in the apartment on rent. At the end of the tenancy period, residents may redeem the entire apartment.

_{© Janne Ulvinen}

Part-ownership housing is produced both by State-subsidised schemes and in the open market. State-subsidised part-ownership housing is subject to the law effective from 1 March 2002. The terms and conditions relating to part-ownership apartments financed before this date, as well as housing produced in the open market, are based on the agreements between residents and producers. Resident selection for part-ownership housing produced through interest subsidy schemes is based on the same criteria as with rental apartments.
Part-ownership apartments produced through interest subsidy schemes are provided by municipalities and non-profit housing associations. The selection of residents is based on social factors.

Interest-subsidised part-ownership apartments

Housing costs are divided so that initially, the resident pays 15% of the purchase price of the apartment and becomes the holder of the corresponding amount of shares. The builder of the house owns the majority share of the apartment. Part-ownership may be used as security for a mortgage if necessary.

At first, the minority shareholder lives in the apartment on rent during a fixed-term tenancy. The rent is kept reasonable throughout the period. It is determined by the absorption principle, meaning that the rent covers the management costs of the apartment, the capital expenditure resulting from the interest subsidy loan along with other expenses incurred from the apartment to the majority shareholder.

The tenancy period in part-ownership housing varies from 5 to 12 years, based on the agreement between the minority and majority shareholders.

Buying additional shares of the part-ownership apartment is possible, upon agreement with the house builder. Residents may increase their ownership of the apartment up to 49%, as agreed in the part-ownership agreement.

The majority shareholder of a part-ownership apartment produced through an interest subsidy loan scheme is obliged to pay off the debt incurred from building the apartment with the additional share paid by the resident, which lowers the interest costs of the loan. Since the rent is based on the absorption principle, it will become lower, as well.

Redeeming a part-ownership apartment is possible at the end of the tenancy period, at a price based on the original purchase value of the apartment. The redemption price is calculated by reducing the initial instalment and the potential additional shares paid by the resident from the original purchase price of the apartment. Thus, the fluctuation of real estate prices does not affect the price of the part-ownership apartment. Instead, the residents know the eventual price of the apartment upon making the part-ownership agreement.

After the apartment has been redeemed by the minority shareholder, it is treated as a traditional limited liability housing company apartment. The residents own the apartment on the basis of shareholding, they pay a maintenance charge to the limited liability housing companies and exercise their right to speak and decide at the shareholders’ meeting. They are free to sell or rent the apartment at any time.

Residents may leave the part-ownership apartment in the middle of the tenancy period if their housing needs change and they no longer want to redeem the apartment. Finding a new resident is the responsibility of the majority shareholder. If the majority shareholder fails to find a new resident within three months after the part-owner has given their notification, the majority shareholder shall redeem the part-owner’s share. This ensures the residents will always be refunded their initial instalments.