Difficulty in acquiring loans for essential pipe renovations has become a critical issue, according to the Isännöintiliiton Pipe Renovation Barometer 2023. This situation poses a problem, particularly in areas where migration is negative. Isännöintiliiton believes that Finland needs a functional model for the orderly shutdown of apartment buildings. The Barometer report suggests that it is difficult for some of the apartment buildings to obtain loan financing for significant repairs.
This is particularly true for buildings in areas with negative migration. The report reveals that around 9% of professional real estate managers responding to the survey reported that they were unable to complete renovations due to financial difficulties. In addition, 9% of respondents stated that some of their client apartment buildings require an orderly shutdown of the building.
According to Olli Rekonen, an expert on Isännöintiliiton, a managed shutdown of an apartment building could be a wise solution, particularly in areas with negative migration, where the financial difficulties of apartment buildings are greatest. "I am referring specifically to areas that are losing the most population, where apartment buildings are already heavily indebted and in need of renovations. Banks do not grant apartment building loans for such renovations, and some buildings are already half-empty. It's a vast and significant social issue that needs to be addressed, at least by creating a cross-ministerial study group," Rekonen said.
Even in cases where pipe renovations have been financially feasible, the process has not always been straightforward, according to recent reports by Isännöintiliiton. Several of the latest pipe renovation projects have required additional financing beyond the apartment building loan. This has necessitated personal loans or financing by shareholders (6%) or, due to funding constraints, a smaller and less expensive renovation than originally planned (8%). Additionally, 13% of pipe renovation projects have required additional research into funding after the initial request.
Furthermore, only one bank has financed 35% of pipe renovations. This indicates that property owners' choice of financing source is restricted, and the ability of smaller banks to offer loans for renovation projects is limited. The challenges of acquiring funding for essential pipe renovations can have a severe effect on the overall condition of an apartment building, and it is a significant issue that needs to be addressed.