Finland: Overview

RENTAL YIELDS

Last Updated: Aug 13, 2008

Helsinki, poor to moderate

Yields for apartments in Helsinki are poor to moderate, at around 3.7% to 5.8%. It seems that the smaller the property, the higher the yield. Difference being, 1.01% between 40 and 80 square metres and 1.09% for 80 and 120 square metres.

Prices per square metre range from €5,090 to €6,880 and average at €6,027.

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TAXES AND COSTS

Last Updated: Oct 28, 2008

Rental income taxes are generally high in Finland

Effective Tax Rate on Rental Income
Monthly Income	€1,500	€6,000	€12,000
Tax Rate	23.8%	23.8%	23.8%
Click here to see a worked example
Source: Disclaimer

Rental Income: Rental income is taxed at a flat rate of 28% and income-generating expenses are deductible from the gross rental income.

Capital Gains: Capital gains are taxed as capital income at a flat rate of 28%.

Inheritance: Inheritance tax is imposed at progressive rates of 10%, 13% and 16%.

Residents: Residents are taxed on their worldwide income.

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BUYING GUIDE

Last Updated: Mar 08, 2007

Buying costs are low in Finland

Roundtrip transaction costs are around 8.66% to 9.88% of the property’s price. Real property transfer tax of 4%, usually paid by the buyer, is sometimes included in the selling price especially if the transaction involves an agent. It takes about 14 days to complete the three procedures needed to register a property.

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LANDLORD AND TENANT

Last Updated: May 30, 2006

Tenant protection laws are lenient

Finland law and practice is neutral between landlord and tenants.

Rent: Tenancies are generally unregulated. Landlord and tenant may freely negotiate rents, but the courts may reduce the existing rent if it significantly exceeds the current average market rate charged on comparable apartments in the area.

Tenant Security: The landlord must give a termination notice of at least six months if the tenancy has continuously existed for more than a year, and a three-month notice is mandatory for leases existing for less than a year.

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ECONOMIC GROWTH

Last Updated: Sep 04, 2008

Weakening economy due to global slowdown

Finland is one of the Nordic countries in northern Europe. It has a population of 5.2 million and a huge land area (338,145 sq. km) covered with forests; making it one of the least dense countries in the world. Finland’s GDP per capita stood at US$42,878 in 2007 and it is the only Nordic country that adopted the euro as its official currency.

Finland went through a severe crisis when the Soviet Union collapsed in 1991. Though Finland enjoyed a liberal democracy and a free market economy since World War II, economically, it was a backdoor import channel for the Soviet Union for decades. Almost half of Finland’s foreign trade till the end of the 1980s was with the Soviet Union.

Recent high economic growth has begun to decelerate. The economy is vulnerable to the fortunes of the information and communications technology sector, which has been a major driver of GDP growth since the mid-1990s.

Finland has recently experienced very strong growth, much higher than the euro area average. However, the economy is rapidly cooling. Economic growth was 4.3% in 2007 down from 4.8% in 2006. In 2008, it is expected to slow further to around 2.8%. In Q2 2008, GDP fell 0.2% year-on year.

The major cause of the slowdown is weak export growth due to the global economic slowdown. Export growth was sluggish at 4.8% in 20007, down from 11.8% in 2006. In 2008, export growth is expected to slow down even further to 3.5%.

The parliamentary election on March 18, 2007 resulted in a change of government. The previous centre-left governing coalition was replaced by a centre-right coalition consisting of the Centre Party (KESK), the Conservatives (KOK) and two smaller parties, the Greens (VIHR) and the Swedish People’s Party (RKP), which is once again being led by Matti Vanhanen (KESK) as prime minister.

Mr. Vanhanen’s government main economic policy priorities are increasing employment, particularly by entrepreneurship; improving energy efficiency; and maintaining Finland's lead in new technologies. The government is planning to cut taxes in order to boost the economy. The government will also moderately increase spending on health and social services.