There are currently around 40,000 right-of-occupancy apartments in Finland.Young applicants are badly treated under the present system, according to critics.

THE RIGHT-of-occupancy apartments systems is in urgent need of a comprehensive overhaul to make it less rigid and unjust, critical industry insiders say. The sector’s umbrella organisation Asumisoikeusyhteisöt ry would above all like to see the present, two-decade-old queuing system done away with as being highly unfair to younger applicants.

Applicants must be above the age of 18 to get a queue number, and jumping the queue for any reason is out of the question. “Nowadays many people see queuing as completely hopeless,” reports Asumisoikeusyhteisöt ry vice chairman Panu Kärnä.

According to the organisation, the State should appoint a working group to develop the right-of-occupancy queuing system, which is widely slammed as dysfunctional. The organisation’s chairman Marko Pyykkönen suggests that a fixed-term queuing system would help, as would stricter monitoring of applicants’ genuine accommodation needs.

Around 40,000 right-of-occupancy apartments

• The most distinctive feature of the right-of occupancy, or housing cooperative, system is that the apartments can be acquired for 15 per cent of their original price. In addition to this sum, residents pay a monthly charge for use and maintenance.

• There is no income limit for right-of-occupancy applications, but there are assets limits on applicants below the age of 55. Applicants will not be accepted if their assets would be sufficient for purchasing an apartment in the same locality. The assets limit on over-55s was abolished in 2006.

• Finland currently has approximately 40,000 right-of-occupancy apartments, in around 50 municipalities. Two-thirds of right-of-occupancy accommodation is in or near the Helsinki metropolitan area.

• The rate of construction of right-of-occupancy apartments has fluctuated wildly over the past decade: construction reached a peak of 3,000 in 2003, with less than 300 being built in 2006. A major obstacle to steady construction has been low interest rates, and this favours the building of owner-occupied apartments.

• Just under 4,000 right-of-occupancy apartments are being built in 2011, but Asumisoikeusyhteisöt ry, the umbrella organisation representing this sector of the housing industry, wants to see an annual target of 5,000 such apartments being built. Of these, half would be built in the metropolitan area and the remainder in various other parts of the country.

Recessionary relief

The right-of-occupancy market has its roots in the difficult housing situation during the boom years of the late 1980s. In the capital region in particular, rental accommodation was in short supply, and rents were exorbitant. In pre-euro times, widespread acquisition of owner-occupied apartments helped keep interest rates down. The right-of-occupancy system was developed as an attempt to resolve the discrepancy between the rental and owner-occupied sectors.

This type of accommodation became popular throughout the 1990s, but the pace of construction in the past decade has been erratic.

About 40,000 right-of-occupancy apartments have been built in Finland, only around 1.4 per cent of the total number of apartments nationally. Many have questioned the need for the right-of-occupancy system; the branch’s representatives, however, are in no doubt. There were over 25,000 applications for such apartments last year.

“The queues are growing all the time, and supply is never enough,” Kärnä says, adding that failed State housing policy is the root cause of the problem.

5000-apartment target

Right-of-occupancy cooperatives urge more consistency and far-sightedness in the government’s approach to this sub-sector of the housing industry. “Apartments should be built outside of recessionary times too, which would relieve much of the pressure on the rental sector.

We want a coherent housing policy, with an even and predictable amount of construction,” Pyykkönen says, adding that 5,000 new apartments a year would be an ideal rate of increase.

The right-of-occupancy cooperatives demand that the State support the production of right-of-occupancy housing with “soft”, i.e. interest-subsidised loans. “The municipalities already have the land, all that’s needed now is the funds,” says managing director of AVAIN Asumisoikeus Oy Maarit Toveri.