Real estate legislation in Finland is governed by several key laws and regulations that cover various aspects of real estate ownership, transfer and use. Here is a short overview of the real estate legislation.

The Code of Real Estate outlines the essential legal principles related to the ownership, transfer, and encumbrance of real estate. It defines the rights and obligations of real estate owners. The Land Use and Building Act (will be replaced on 1 January 2025 by a new Regional Planning Act (752/2023), and a separate Building Act (751/2023)) regulates land use planning, building activities, and the use of land and water areas. It aims to ensure sustainable development and the efficient use of land. The Act on Commercial Leases governs the leasing of commercial real estate, including the rights and responsibilities of landlords and tenants. It provides a framework for lease agreements and dispute resolution. In addition, the Real Estate Tax Act sets out the rules for the taxation of real estate, including the assessment and collection of real estate taxes.

Ownership of real estate assets can be organized in a few different ways. Investors can acquire real estate directly through freehold or leasehold interests (direct ownership) or they can organize the ownership through the real estate investment company, mutual real estate company, limited partnership, or special investment fund (indirect ownership). Foreign investors face certain restrictions when acquiring real estate in Finland. Non-EU/EEA buyers may need to obtain a permit for real estate acquisitions, especially if the real estate is located in strategically important areas.

Recent legislative developments in Finland aim to make the real estate sector more transparent and sustainable. Key changes include updates to the Land Use and Building Act to simplify planning and promote sustainable development. The European Union’s ESG-regulation is increasingly affecting the Finnish real estate market and national legislation. The new EU regulation based on sustainable development goals and zero-emission targets will apply to the Finnish real estate legislation as well. Meeting ESG standards is becoming crucial for getting financing and attracting investors. Additionally, the EU’s data regulations impact how real estate companies handle and protect personal data.

In summary, the Finnish real estate market is going through significant changes driven by new laws and evolving EU regulations. Legal professionals and real estate owners, investors, stakeholders, developers and others involved in the real estate sector must stay informed about these developments to navigate the market effectively and seize new opportunities.

In Finland, The Code of Real Estate (540/1995) is the main legislation that defines the rights and obligations related to real estate ownership. This law regulates the transfer of ownership rights, the use and management of real estate, as well as mortgages and pledges on real estate.

Additionally, an important law related to real estate ownership include the Act on Transfers of Real Estate Requiring Special Permission (470/2019), which regulates real estate acquisitions in Finland by buyers from outside the EU and EEA. Investors and other real estate stakeholders should be noted that the Housing Transactions Act (843/1994) and the Act on Commercial Leases (482/1995) may also apply to the ownership of real estate. Additionally, the Tenancy Act (258/1966) should be noted regarding the real estate or housing company on leased real estate.

In Finland, significant changes have come into force since December 2023, and new laws of material importance to real estate investors and lenders are coming into force during 2025 and in the coming years thereafter.

The revised Code of Real Estate (540/1995) entered into force on 1 November 2024, and the Land Use and Building Act (132/1999) will be replaced on 1 January 2025 by a new Regional Planning Act (752/2023), and a separate Building Act (751/2023). The Regional Planning Act will regulate only regional planning in the future whereas building will be regulated in a separate Building Act. However, due to transitional periods, the regulation on building permit processing time guarantee, building carbon footprint calculation and building permit in the form of a data model will enter into force from 1 January 2026. Amendments have also been made to the Finnish Transfer Tax Act (931/1996) and to real estate taxation during 2024.

Below, we go through some of the most relevant issues relating to the above-mentioned changing legislation for real estate investors, owners, developers and others involved in the real estate sector.

The revised Code of Real Estate introduced several significant changes to the legislation. It allows for the implementation and registration of real estate management even when the real estate is still entirely owned by a single owner, clarifying the management rights and obligations for buyers of real estate shares. The reform also expands the scope of rights that can be registered, including the registration of negative pledges given by business operators to their creditors, thereby strengthening the lender’s position. Additionally, it promotes the status and financing conditions of construction projects targeting water areas by making temporary and transferable use rights for water areas registrable and eligible for mortgages, which can facilitate projects like offshore wind power, as the use rights can serve as collateral. The reform also allows for the registration of buildings or equipment on a real estate at times other than when they are brought to or constructed on the real estate. This allows for an efficient dissolution of the component relationship retrospectively, which can facilitate and clarify sale and lease back arrangements. Furthermore, it strengthens the possibility of making a preliminary agreement without a notary, so that a penalty clause can be validly agreed upon for breaching such an agreement according to the Code of Real Estate Section 2 Article 8. These new clearer and more flexible arrangements clarify and provides certainty about the current legal framework as well as strengthen and improve the position of the real estate owners, lenders, shareholders, investors and all other actors in the real estate sector.

The new Regional Planning Act and the Building Act means a fundamental reform of building and land-use regulatory framework, of which real estate owners, investors, developers and other actors in the real estate sector should be aware. The proposed new Regional Planning Act incorporates in practice the provisions of the old Land Use and Building Act. The aim of the reform is to promote smooth planning and digitalization. For instance, new regulations promoting digitalization will improve the flow of information between well-organized data repositories.  Information would be more accessible to those who benefit from it, such as private real estate and construction companies and organizations.

The Building Act aims to streamline construction and promote emission reductions and the circular economy, as well as reduce administrative burdens and bureaucracy, which will make the position of real estate investors and developers easier. For example, the permit system has been simplified by enacting a new unified building permit. The legislation also includes reforms aimed at digitalisation, such as the electrification of processes and the efficient use of information resources. Consequently, for example, companies will be required to submit construction plans to the authorities in data model format or other machine-readable format. Additionally, the Building Act introduces a new requirement for low-carbon buildings, imposing obligations on the design and construction of buildings. The background to the reform of Building Act is also affected by the varies requirements of EU regulation and, for example, the taxonomy regulation. It is important to notice that the Building Act contains a number of decree powers, for which regulations have been prepared in connection with the amendment of the Building Act.

It is also important to note that the Finnish Parliament has already accepted changes and amendments to the Building Act which will come into force starting from 1 January 2025. The amendments include, for example, a new provision on placement permit for clean transition industrial projects to streamline the building of clean transition industrial projects. This permit will speed up the process for qualifying industrial projects, as there is no need for a zoning phase. This allows construction to be timed more predictably in terms of the business cycle, even though all the same surveys have to be carried out as in the case of zoning.  In addition, the amendments to the Building Act introduce changes to the annexes and information to be submitted by business when applying for a building permit, and to the maximum time limits for handling building permit applications. According to the Government’s proposal, this is expected to provide a clearer and more predictable process for businesses, and companies applying for a permit can expect to see more consistent permit practices across the different building control authorities in Finland.  In particular, it would have the advantage of reducing the business risk of the time spent on permit processing. The building permit applicant could better predict when the construction site would start and there would be more predictability in terms of adherence to contract schedules. The goal of such a reform is to reduce cost of additional works and modifications due to delays in the permit process. The acceleration of the building permit process could affect the speed with which a company can invest in a planned project, with the economic benefit of earlier production.

Furthermore, two separate laws concerning zoning are being planned, Urban Development Act and Urban Building Act. A separate Urban Development Act is planned to regulate land policy, land transfer and redemption issues and land parcel allocation, and a separate Urban Building Act is planned to regulate public areas and their planning, construction, maintenance and sanitation and stormwater issues. As the legislation is still in the preparatory phase, neither the date of entry into force nor the exact obligations affecting real estate sector are known. Therefore, real estate owners, investors, developers, shareholders and others involved in the real estate market need to monitor the development of the legislation in this respect as well.

From tax perspective, several changes to the Finnish Transfer Tax Act came into force 1 January 2024. Among other changes, all transfer tax rates were reduced and currently share transfer of a real estate (holding) company is subject to a transfer tax of 1.5% (previously 2%) and real estate asset transfer is subject to transfer tax of 3% (previously 4%). These new rates are applied retroactively to acquisitions made on or after 12 October 2023.

Further, the Finnish Ministry of Finance is reforming the Finnish real estate taxation. The purpose of the reform is to ensure a better overall match between real estate tax values and the fair value of real estate properties. Currently, based on the draft government bill, the taxable values of buildings and soil have fallen behind the general price development. Hence, the plan is to implement a revaluation reform of real estate taxation of both soil and buildings, and a related government bill is expected to be presented during year 2025. As part of the reform, at the beginning of 2024, the general real estate tax rate on soil was differentiated from the general real estate tax rate and the lowest real estate tax rate on soil set by the municipalities was increased from 0.93% to 1.30%. As a result of this change, in 246 municipalities the lower limit of the general real estate tax rate on soil was increased in 2024 from the previous year.

Ownership of real estate can be verified from the Title and Mortgage Register. The Title and Mortgage Register is a public register that contains information about real estate owners, mortgages, and special rights related to the real estate. The register is maintained by the government authority, National Land Survey of Finland. The register is publicly available on the National Land Survey’s website.

According to the Code of Real Estate (540/1995), an application for registration of title to real estate in the Title and Mortgage Register must be submitted within six months of the execution of the deed or other document governing the transfer of ownership. The aim is to ensure that ownership information in the public register is up-to-date and as accurate as possible.

In principle, there are no restrictions on who can own real estate. Both private individuals and legal entities, regardless of nationality, can hold and exercise rights over real estate.

However, according to the Act on Transfers of Real Estate Requiring Special Permission (470/2019), acquiring real estate within the territory of Finland requires a permit if the transferee is an entity or a citizen whose domicile or nationality is outside the EU or EEA. Such a natural person or entity may acquire real estate within the territory of Finland only if the Ministry of Defence grants a permit for the acquisition. A permit for the acquisition of real estate may be granted if the acquisition is not deemed to hinder the organisation of national defence, the monitoring and safeguarding of territorial integrity, or the assurance of border control, border security, or supply security.

Additionally, the Finnish State and municipalities have reserved a pre-emption right for themselves under the Act on the State’s right of pre-emption in certain areas (469/2019) and Pre-emption Act (608/1977). The State has a pre-emption right in real estate transfers if the acquisition of the real estate is necessary for national defence, border control, or border security, or for the monitoring and safeguarding of territorial integrity. For municipalities, the right of pre-emption is a tool for the implementation of municipal land policy, by which the municipality has the right, subject to the conditions and limitations laid down by law, to redeem the transferred real estate by replacing the buyer named in the deed of sale. This may restrict, for example, a foreign company’s right to acquire certain real estate in Finland.

A proprietary interest equivalent to real estate ownership is often a usufruct on the land of another party, normally a land lease or building built on a leasehold plot. Among other things, the leaseholder can mortgage the real estate in the same way as the owner, who has full ownership.

In addition, instead of the whole real estate, the title of real estate may pertain to a share or a parcel of the real estate. A share refers to the joint ownership of a real estate in a fractional manner. For example, companies who buy a real estate own it in shares. By contrast, a parcel of real estate refers to the part of a real estate that has been transferred or otherwise disposed of by the owner of the real estate. In this case, the parcel is treated as a unit of ownership of the real estate.

In general, a building is considered to be part of the real estate as a component, so that ownership is joint for both the real estate and the buildings. According to the main rule, the owner of a building is considered to be the party who has a title to the real estate. Thus, when the real estate is sold, the principle is that all buildings on the real estate are automatically transferred to the new owner, who is registered in the Title and Mortgage Register.

It is also possible to own real estate and buildings separately. For example, the parties may own the same piece of land in separate parcels, in which case the real estate and its buildings may have different owners. It is also possible to have a usufruct on the land of another party and build a building on a leasehold plot. For example, instead of owning real estate, the alternative is to buy a leasehold plot, where one party retains ownership of the land, while the other party can pay lease for the plot and build a building on the plot, which is then in the ownership of the building party. The idea behind such an optional leasehold plot is that the plot or part of the plot can subsequently be redeemed. The terms and conditions for redemption are generally included in the land lease agreement. When buying a leasehold plot, investors should be aware of the most common risks associated with leasing a plot  and the key factors to consider when negotiating and drafting a lease agreement.

The most common ownership structures of commercial real estate in Finland are real estate limited company, limited partnership and direct ownership of real estate through a company. Further, funds investing in housing and real estate are a common form of commercial real estate ownership. Investors can make real estate investments either through unlisted investment instruments such as funds, companies or funds of funds, or through listed real estate investment trusts and funds.

In Finland, a mutual real estate company is also a common structure for ownership of commercial real estate. A mutual real estate company is deemed to exist where the articles of association contain a provision on how each share, alone or together with other shares, confers the right to control an apartment, commercial premises or any other part of the company’s building or real estate under its control. In a mutual real estate company, the premises or other parts of the building controlled under the shares are rented out in the shareholder’s name, and the rental income is received by the shareholder, which is then taxed as shareholders’ income. A shareholder is usually obliged to pay a consideration to the company to cover the company’s expenses. Expenses means, inter alia, the costs of acquiring and constructing the real estate, use and maintenance, management and alterations. A mutual real estate company is not intended to make a profit.

Under the Code of Real Estate (540/1995), the buyer cannot make claims that could have been noticed while inspecting the real estate when the real estate was being acquired. This obligation and general risk management requires a comprehensive legal due diligence process to be carried out on the real estate. The choice of the process depends on whether the object of the acquisition is a real estate or a real estate limited company.

When buying a real estate, the key element of the due diligence process is to understand that the real estate, with all its burdens and potential problems, will be transferred in its entirety to the buyer. For this reason, the legal due diligence process should include a comprehensive examination of at least the real estate’s registry entries, access, easement and joint arrangement agreements, licensing and administrative matters, lease agreements, the real estate’s environment and soil, financing and securities, taxation, and any other possible real estate-related agreements, such as various real estate service agreements and management agreements.

When buying a real estate limited company, the legal due diligence process goes beyond the real estate itself, as it also includes, among others, information from the trade register, the shares and shareholders, all contracts relating to the real estate, possible disputes, and the practices and materials of general meetings and board meetings.

In Finland, the legal due diligence process is not regulated by law. Nevertheless, the legal due diligence process is made easier by the reliable maintenance of and easy access to public registers and the fact that, according to the Code of Real Estate (540/1995), the buyer is not obliged to confirm the accuracy of the information provided by the seller about the real estate without a specific reason.

However, a common problem with the legal due diligence is that not all relevant information is known to be asked for and therefore cannot be answered by the seller. In particular, the technical side, ESG issues, adequate soil survey and taxation in the legal due diligence process can easily go insufficiently addressed. Regardless of the real estate or the real estate limited company being acquired, the legal due diligence process should be supported by legal expertise to ensure that all relevant issues are fully addressed.

Before the transfer of real estate, the buyer is obligated to investigate the real estate. Buyer should carefully examine the real estate being sold and the legal owners of the real estate. Please see Q9 above for a more thorough description of the legal due diligence process. Furthermore, if the buyer is from outside the EU or EEA, a permit must be obtained for the real estate before the transaction.

The transfer process starts with the preparation of a deed of sale. The deed of sale is normally made in writing when the acquisition or sale is carried out by the company. The deed of sale must be signed together with a notary in the presence of the parties. It is standard practice to agree in the deed of sale on the main terms, such as the price and the transfer of liability. The price is usually paid, and ownership is transferred to the buyer at the time of signing the deed of sale. Once the deed of sale has been signed, the buyer must register the ownership to the Title and Mortgage Register by applying for a title to real estate within six months of signing the deed.

It is common in Finland. The decision as to whether a real estate transfer is made through shares or through an asset transfer depends on the strategic purpose of the acquisition. The purpose of the real estate, and business, legal and tax considerations are all factors to be considered when deciding whether the transfer should take the form of shares or assets. For example, from a Finnish transfer tax perspective, shares of a real estate (holding) company are subject to a transfer tax of 1.5% and real estate asset is subject to transfer tax of 3% payable by the buyer.

The Code of Real Estate (540/1995) regulates the transfer of leases and the distribution of income between the buyer and the seller.  The seller’s obligation to transfer extends to the leases of the real estate held by the seller, which belong to the buyer as owner of the real estate. These documents must be handed over to the buyer immediately after the sale, even if the seller retains possession of the real estate. Typically, the transfer of contracts and documents is agreed separately in the deed of sale.

According to the law, the proceeds of the sale of the real estate before the agreed date of transfer of possession shall belong to the seller. Revenue means income from the real estate, such as rental income. For the purposes of income distribution, it is essential when the income is deemed to have been derived from the real estate. The seller is therefore entitled to the rental income under his right of possession, even if it is not received until a later date. It is common for the deed of sale to include an agreement on who will receive the income. The standard practice is to agree that the income belongs to the seller before the transfer and to the buyer after the transfer.

A right to real estate agreed in favor of a party other than the owner of the real estate may be registered as a special right. The right is valid for a limited period and belongs only to the party entitled to it. The Code of Real Estate (540/1995) contains provisions on special rights that can be registered, such as the right to register a lease and a joint ownership contract. Special rights are registered in the Title and Mortgage Register, and registration is applied for to the public authority, the National Land Survey of Finland. In practice, lease contracts are a good example of special rights that are typically registered.

The right to use real estate owned by another is called a right of use or an easement. An easement can be, for example, the right to use a well, a water or sewer pipe, or to keep a boat on someone else’s real estate. It is advisable to register an easement when there is a need to ensure the permanence of an agreement. Such an easement can be registered through an easement survey in the Real Estate Register, maintained by the National Land Survey of Finland. The right is permanent and is transferred to the next owner when the real estate changes hands. The Real Estate Formation Act (554/1995) provides for more detailed rules on real estate easements.

An easement may also be established on another real estate for the purposes of a plot or a real estate used as a building site, giving a permanent right to use a building or structure or to take corresponding action. Such a right is called a building easement. The establishment of a building easement requires a written contract, and that the building easement promotes appropriate development or use of a real estate, is needed by the easement holder and does not cause substantial harm to the encumbered real estate. A building easement may be established as a permanent or temporary right by registration in the Real Estate Register, maintained by the National Land Survey of Finland. The Land Use and Building Act (132/1999) and the Land Use and Building Decree (895/1999) regulate building easements in more detail. From 1 January 2025, the Land Use and Building Act will be replaced by the new Regional Planning Act (752/2023) and building easements will be regulated in the new Building Act (751/2023).

Split of legal and beneficial ownership of real estate is not recognized under Finnish law.

The ownership of real estate is registered in a public Title and Mortgages Register, which does not contain information on the beneficial ownership of any legal entity owning real estate.

However, most companies must file a beneficiary declaration with the Finnish Patent and Registration Office. The Finnish Patent and Registration Office is a government authority responsible for maintaining a register of beneficial owners. The obligation to report beneficial ownership information is based on the Money Laundering Act (444/2017) and EU directives.

There are three main taxes associated with real estate ownership and transfer of real estate.

Real estate tax is set by and paid to the municipality where the real estate is located. The amount of the real estate tax is imposed separately on soil and buildings, if any, and the amount depends on the value of the real estate. Currently, the real estate tax on soil ranges from 1.3% to 6% and on buildings from 0.41% to 3.1% depending on the purpose of the building. Real estate tax is regulated by the Real Estate Tax Act (654/1992).

Transfer tax is always paid on the acquisition of a real estate and any buildings on it. Currently, the transfer tax rate is 3% of the acquisition price of real estate asset and 1.5% of the acquisition price of real estate (holding) company shares. The transfer tax is regulated by the Transfer Tax Act (931/1996).

Capital gains arising from the sale of real estate are generally taxable income and losses are tax-deductible expense of the sales year. The amount of the capital gain is based on the difference between the undepreciated balance of the real estate sold and the sales price. Capital gains are subject to corporate income tax at a rate of 20% for companies. Corporate income tax is governed by the Corporate Income Tax Act (1968/360).

Both real estate and share transfers are exempt from VAT. However, real estate (share) transfers may affect on the deductibility of VAT expenses derived from real estate investments such as construction or renovation work done within last 10 years. Further, leasing real estate premises is in principle exempt from VAT. However, if the tenant is liable for VAT on its business operations conducted in the leased premises, the landlord may apply for VAT-liability and then the rent payable by the tenant is subject to VAT.

In Finland, the general rule for commercial leases is freedom of contract, which means that in principle the parties can freely agree on the terms of a lease in a lease agreement. For example, the landlord normally requires the tenant to provide a security deposit to guarantee compliance with the obligations of the lease. The security deposit is usually either cash collateral (3 months’ rent), a lease security deposit account or an equity guarantee from the parent company, if accepted by the landlord.

The Act on Commercial Leases (482/1995) lays down the general conditions of commercial leases unless otherwise agreed in the agreement. The lease agreement cannot contain terms that are expressly prohibited by law or otherwise. Furthermore, if the application of a term in a lease agreement were considered contrary to good leasing practice or otherwise unreasonable, the term could be modified or disregarded.

The lease is valid for a fixed or indefinite term, depending on the agreement. According to the law, the lease agreement and any amendments to it should be made in writing. The lease agreement can also be concluded orally, but the risks involved must be taken into account. If a lease of indefinite duration is terminated, it shall expire at the end of the period of notice, unless otherwise agreed or provided by law. The period of notice shall be calculated from the last day of the calendar month in which the termination is effected.

The rent shall be determined in accordance with what has been agreed. The rent may not be set at an unreasonable level, as it may otherwise be adjusted afterwards.

The transfer of the commercial premises to a third party by the tenant is subject to authorization. The tenant may not transfer the lease right without the permission of the lease agreement or of the landlord. However, the tenant may, without the landlord’s permission, sublease or otherwise make available up to half of the commercial premises to third party, if this does not cause the landlord any significant inconvenience or disturbance.

Under certain conditions, the parties are free to agree on the remedies available to the landowner for breach of the lease agreement. Contractual remedies include security deposits, the right to evict the tenant, a right to damages and a contractual penalty concerning for example, for delaying the transfer of control of the rental real estate back to the landlord. If the remedies are not agreed in the lease agreement, the provisions of the Act on the Commercial Lease (482/1995) will apply.

According to the law, the main remedies available to the landlord are termination of the agreement and compensation for damages. The landlord has the right to terminate the lease if the tenant fails to pay the rent within the legal or separately agreed period, and if the lease right is transferred or commercial premises or part of those are otherwise made available to a third party in violation of the law or the agreement. The landlord is also entitled to compensation from the tenant for any damage caused to the landlord by the termination of the lease.

Furthermore, the landlord has a right to terminate the lease, if the commercial premises are used for a purpose or in a manner other than that provided for in the lease, or if the tenant uses or allows the premises to be used in a disruptive manner. Termination is also permitted if the tenant mismanages or violates the rules or regulations for the maintenance of health or order in the premises, or if the tenant otherwise materially violates what has been agreed for the premises. In these situations, however, a prior warning is required before the lease agreement can be terminated. In these cases, the landlord is also entitled to compensation from the tenant for the damage caused to the landlord by the termination of the lease.

However, the landlord is not entitled to terminate the lease on the above-mentioned grounds if the conduct giving rise to the ground for termination is of minor importance. The landlord must invoke the ground for termination within a reasonable time after it has come to the landlord’s knowledge.

If the tenant’s assets have been declared bankrupt and the bankrupt’s estate has not, within a period of at least one month, declared its intention to take over the obligations arising from the lease after the commencement of the bankruptcy, the landlord is entitled to terminate the lease. The landlord is also entitled to compensation for damages.

The use, planning and zoning of real estate is regulated by the Land Use and Building Act (132/1999). From 1 January 2025, the Land Use and Building Act will be replaced by the new Regional Planning Act (752/2023), and the first changes to the new regulation are expected from the beginning of 2025 (please see Q3 for more information). Therefore, changes to the current provisions on use, zoning and planning restrictions may be introduced at a later stage. It is therefore important to keep track of legislative developments and to consult local lawyers on any questions relating to the current regulation.

Based on the current legislation, local master plans and local detailed plans are established to organize and control the use of land in the municipality. The local master plan indicates the main features of land use in the municipality. The local detailed plan indicates the organization of the use and construction of a part of the municipality.

All legally binding local master plans have an impact on other land use planning and authority planning. In addition, the local master plan imposes a conditional building restriction on real estate. When granting an existing building permit, the suitability of the proposed construction on the site and the fulfilment of essential technical requirements are considered. The provision on the building restriction will be renewed by the new Regional Planning Act, but the starting point for the consideration of a building permit will continue to be that the municipal building control authority will issue a building permit that includes both a land use consideration and an examination of the essential technical requirements.

The local detailed plan is a more specific plan established by the municipality than the local master plan. The local detailed plan defines, for example, the location, size and use of buildings, which limits the use of the real estate. The local detailed plan is planned and approved by the municipality.

The authorities responsible for preparing the plans must provide information on the plan in such a way that those affected have the opportunity to follow and influence it. When preparing a plan, the authorities must interact with persons and communities whose conditions or interests may be significantly affected by the plan. The decision to approve a plan may be appealed to the Administrative Court by means of municipal appeals in accordance with the provisions of the Local Government Act (410/2015).

Pollution of soil and groundwater and the treatment of contaminated sites are regulated by the Environmental Protection Act (527/2014) and Environmental Protection Decree (713/2014). These contains provisions on, inter alia, prohibitions on soil and groundwater pollution, the obligation to survey and treat contaminated sites and the official procedures for treatment. The assessment of contamination and the need for treatment is regulated separately. The treatment and disposal of excavated soil during the treatment process is regulated by the Waste Act (646/2011).

According to the Environmental Protection Act, the polluter is primarily responsible for the refining of the polluted soil and ground water. The refinement obligation of the soil and ground water is not dependent on whether the behavior was intentional or negligent. Hence the party responsible for the polluting activities is liable for both refining the polluted soil or ground water and limiting the pollution as much as possible. On the public interest’s point of view, it cannot be held acceptable that the polluted environment is left abandoned. Thus, in addition to the polluter there must be a party who can be held liable for the costs of refining the environment. Secondary, the party in possession of the real estate (practically the owner) may be held liable in case the polluter is not reached or held liable due to e.g. insolvency.

In Finland, it is common for companies owning real estate to include a detailed agreement in the deed of sale on potential liabilities related to environmental pollution. In addition, according to the Environmental Protection Act (139 §) a party transferring or renting land shall provide the new owner or tenant with any information available on the activity carried out on the land and any wastes or substances that may cause, or have caused, pollution of the soil or groundwater, along with any information on possible investigations conducted in the area or treatment measures carried out. Otherwise, the Code of Real Estate (540/1995) and the Sale of Goods Act (355/1987) allow the parties the freedom to agree quite freely on the division of responsibilities between the parties. It is usually agreed that the seller will be responsible for any soil and groundwater contamination that may be found in the soil of the real estate for at least a certain period of time. Often the deed of sale will also include the seller’s responsibility for any waste and rubbish that may be found in the soil, which is not covered by the Environmental Protection Act. However, in the case of environmental damage, there is no possibility of a contract binding on a third party, i.e. contractual arrangements do not prevent the authorities from acting.

According to the Environmental Protection Act and the Code of Real Estate, in the event of a change of ownership, the buyer is obligated to investigate the real estate. The responsibility of the environmental risk is transferred to the buyer, if the buyer knew or should have known about the pollution at the time of acquisition. This obligation to investigate the real estate, by reasonable means, must be fulfilled regardless of the fact that the seller is also acting under an obligation of informing the buyer of the activities that have been performed on the area and waste and substances on the area that may cause environmental pollution.

Ultimately the municipality is responsible for the treatment process. In so far as the party in possession of the contaminated site cannot be required to treat contaminated soil, the municipality shall assess the need for soil treatment and carry out the treatment of the soil. However, the municipality’s ultimate liability is limited to refining the soil, but refining ground water is still left as the real estate’s possessor’s responsibility, if the pollution of ground water is a consequence of the polluted soil on the real estate. If the soil has been polluted in earlier decades, the grounds for liability may in certain situations differ from the above mentioned, since liability questions are solved in accordance with the legislation that was in force at the time.

The energy performance of buildings must be assessed according to the law. In Finland, energy efficiency provisions are laid down in the Land Use and Building Act (132/1999) and in the Decree of the Ministry of the Environment on the energy efficiency of new buildings. From 1 January 2025, the Land Use and Building Act will be replaced by the new Regional Planning Act (752/2023), and energy requirements for buildings will be regulated in the new Building Act (751/2023). Finnish energy efficiency legislation is generally based on the EU directive on the energy performance of buildings (EPBD) and for example the low-carbon building control is directly linked to EU regulation. It is important to notice that the revised Energy EPBD entered into force on 28 May 2024, with the aim of reducing greenhouse gas emissions and final energy consumption in buildings by 2030. The scope of the Directive is quite broad, and it requires changes to the regulations for both new and renovated buildings also in Finland. The Directive has two years to be implemented, meaning that changes to Finnish legislation must be made by 29 May 2026. Revised EPBD buildings includes a new element of low-carbon management throughout the life cycle of buildings. EPBD will have an impact on the proposed building low-carbon building regulation, the scope of the climate report and the limit value guidance.

In Finland, buildings consume about 40% of all the energy we use. Energy efficiency is therefore directly linked to climate-warming carbon dioxide emissions. The regulations require that the developer of a building project shall ensure that the building is designed and constructed in a way that is compatible with its intended use and that energy and natural resources are used efficiently. The minimum energy performance requirements must be proven by calculations. The regulation is stricter for new buildings, which must be designed and built as near-zero energy buildings unless an exemption applies. Energy efficiency must be improved in the context of repair and alteration work or change of use of a building subject to a building or building measure permit, if this is technically, operationally and economically feasible.

The energy performance certificate is a tool for comparing and improving the energy performance of buildings in sales and rental situations. The building owner must obtain this certificate from a qualified expert when applying for a building permit for a new building. It is also necessary when a building or part of a building is sold or rented. The energy classification must be indicated in the sale and rental advertisements and, for certain buildings, the certificate must be made available for public inspection. Energy certification is regulated by the Act on energy certification of buildings (50/2013).

The new Building Act will bring into force new regulations and amendments to the Act on energy certification of buildings and the Land Use and Building Act (replaced by the Regional Planning Act, among others. For example, a new essential technical requirement for new buildings to be low carbon is to be added to the Building Act. The developer of a building project should ensure that the new building is designed and constructed not only as a near-zero energy building, but also as a low carbon building. In other respects, the new regulation of energy efficiency is mainly based on the current Land Use and Building Act.

The expropriation of real estate is possible. Act on the Redemption of Immoveable Property and Special Rights (603/1977) regulates the expropriation of real estate. However, expropriation is only possible when there is a public need for it. In expropriation, the ownership or right to use the land is transferred from the landowner to the State, a municipality or a company because of a public interest in the development of society, such as a road, a power line or a nature reserve. Expropriation may not be carried out at all if the purpose of the expropriation can be achieved just as adequately by some other means, or if the detriment caused by the expropriation outweighs the public benefit to be gained. The owner of the real estate to be expropriated is entitled to full compensation for the economic loss caused by the expropriation.

On application, the authorization for expropriation shall be granted by the Finnish Government or by another administrative authority authorized by the Finnish Government. In practice, it is usually the municipal redemption commission that decides on the right of expropriation and determines the compensation. Decisions on expropriation may be appealed to the Land Court.

Confirmation of the mortgage means registration in the Title and Mortgages Register. In principle, only the owner of the real estate can apply for a mortgage. Confirmation of the mortgage is one of the necessary conditions for a mortgage on real estate. On the other hand, a mortgage is not a sufficient condition. The establishment of the mortgage is carried out outside the registration procedure by the owner of the real estate by handing over to the creditor an electronic mortgage instrument as security for the claim.

The key feature of a mortgage is the special position of the mortgagee in relation to other competing creditors. This position is reflected in many ways when the creditor of the mortgage recovers his claims, especially when proceeding to enforcement. The right to payment and the right to recover the claim imply the right to obtain a ground for enforcement. In an auction in an enforcement procedure, the acquisition price of the real estate is distributed in order of priority, with the first claim in the order being paid in full first and then the next one as far as the acquisition price is sufficient. Thus, the mortgagee with the highest priority receives his claim first.

A mortgage handling fee (excluding VAT) is charged separately for each mortgage confirmed. For example, confirming or amending a mortgage costs 47 euros.

There is no trust structure for mortgage security in Finland.