Right-of-occupancy housing is an alternative to rented housing and owner-occupied housing. To receive right of occupancy, the resident must make a right-of-occupancy agreement and pay part of the purchase price of the apartment as a right-of-occupancy payment. The residents continue to pay a residence charge while living in the apartment.
Right-of-occupancy apartments are available in major cities and municipalities. State-subsidised right-of-occupancy apartments are owned by municipalities, non-profit corporations and right-of-occupancy associations.
Right-of-occupancy housing principles:
- The apartment cannot be redeemed. Occupancy right holders can assign their right-of-occupancy or change apartments.
- House owners cannot terminate the right-of-occupancy agreement.
- Residents pay a right-of-occupancy payment on making the agreement and a monthly residence charge.
- Under 55-years old applicants of right-of-occupancy housing produced through State-subsidised interest or loan schemes must be under weath limits. The residents of houses produced with other financing schemes are selected by house-owners.
- Right-of-occupancy apartments must be permanently inhabited by the resident or by the resident’s family. However, the apartment can be assigned to another party if occupancy right holder is temporarity residing in another locality for example because of his or her work or study,for a maximum of two years.
- The house-owner is responsible for apartment maintenance. If the resident wants to alter the apartment, the alteration works must be agreed on with the owner.
Right-of-occupancy housing costs
The amount of right-of-occupancy payment is determined by the apartment size and price per square metre. A tenant may apply for a loan to finance the payment,part of the interest on which is tax deductible like housing loan. The capital value of the agreement may be used as security for the loan. The house-owner must be notified of pledging.
The monthly residence charge covers the capital expenses and maintenance costs of the right-of-occupancy house. The amount of the residence charge is based on the absorption principle and it may not exceed the rental prices for apartments of similar quality in the same municipality. The resident may receive housing allowance for the residence charge.
Increases to residence charges are determined by the house-owner. Tenants have the right to participate in the administration of the right-of-occupancy apartment building and decision-making pertaining to residence charges at least in accordance with the Act on Joint Management of Rental Buildings (649/1990).
Assignment of occupancy rights
Occupancy rights can be assigned by notifying the house-owner, who makes a right-of-occupancy agreement with the assignee and cancels the agreement of the assignor. Occupancy right can only be sold to a person approved by the municipality. If a lawful buyer cannot be found within three months of notification, the owner shall redeem the right of occupancy. The assignor must request the redemption.
The maximum assignment price is the original right-of-occupancy payment for the apartment with an increment corresponding to the change in the building cost index. The maximum price may include the value of improvements made in the apartment at the time of assignment. The apartment is always redeemed at the maximum price.
Occupancy rights may be assigned without the municipality’s approval to a spouse, a relative in direct line of descent or ascent, or a member of the family who is permanently living in the apartment at the time of assignment. Also in these cases, the price of the apartment cannot exceed the maximum price.
The assignor is obliged to pay the residence charge until the occupancy right has been assigned to the new resident or redeemed by the house-owner, the termination of the assignor’s right of occupancy has been entered in the agreement and the assignor has moved out of the apartment. If the house-owner fails to pay an outstanding redemption, the redemption price shall be subject to a penalty interest in accordance with the Interest Act, until the payment is made fully.
More information
Senior Ministerial Adviser Anu Karjalainen, Ministry of the Environment, tel. +358 (0)40 590 8089, firstname.lastname@ym.fi