Finland: Overview

RENTAL YIELDS

Moderate yields in Helsinki

Yields for apartments and detached houses in Helsinki are moderate, at around 4.5% to 6.2%

The private rental market is still relatively small and private rentals are distorted due to the large social housing sector (half the country’s 740,000 rental dwellings are owned by social housing institutions). Government subsidized rents are 25% lower than private rents in Helsinki, and 14% cheaper for Finland as a whole.

Read Rental Yields  »

TAXES AND COSTS

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%, with income-generating expenses deductible.

Capital Gains: Capital gains are considered as income from capital and are taxed at 28%.

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

Residents: Residents are taxed on their worldwide income.

Read Taxes and Costs  »

BUYING GUIDE

Buying costs are low in Finland

Roundtrip transaction costs, i.e., the cost of buying and selling property, are around 7.7% to 10.2% 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 required to register a property.

Read Buying Guide  »

LANDLORD AND TENANT

Finland's tenant protection laws are neutral

Finnish law and practice is neutral between landlord and tenant.

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 which have existed for less than a year.

Read Landlord and Tenant  »

ECONOMIC GROWTH

IT and Telecoms drive the strong economy

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$35,559 and it is the only Nordic country that adopted the euro as official currency.

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

The World Economic Forum declared Finland to be the most competitive country in the world for three consecutive years (2003–2005) and four times since 2002. Finland was also ranked as the third most innovative economy in 2006 by the European Innovation Scoreboard (EIS), with scores well above that of the EU25 average and the United States.

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.

The inflation environment remained generally manageable. Real wages have been rising annually and unemployment has been cut to half.

Interest rates have risen strongly and indeed this is the explanation for the house price slowdown. The average interest rate on new housing loans in December 2007 was 4.94%.

In Finland, over 90% of household loans are variable-rate loans, so a majority of the borrowers carry themselves the risk of an increase in interest rates.

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. With a surplus estimated at 5% of GDP in 2007, it is planning tax cuts worth €2.2 billion spread over the period 2008-2010. The government will also moderately increase spending on health and social services.