Legislative reform restricts foreign real estate transactions in Finland
From the beginning of 2020, buyers from outside the EU and the EEA need permission to buy real estate in Finland. The requirement applies throughout Finland, except for the Åland Islands, where Åland’s own land acquisition law applies.
Permission to purchase real estate is required when the assignee of the real estate is one of the following:
1. An individual who is not a citizen of an EU member state or of a European Economic Area (EEA) country.
2. A company or other body domiciled outside the EU and the EEA.
3. A company or other body domiciled in the EU or the EEA, but in which the individual or body referred to in point 1 or 2 has at least 10% ownership or equivalent effective influence.
What is decisive for the purposes of calculating ownership or influence is whether an individual entity has such ownership. Permit applications are submitted to the Ministry of Defence.
State pre-emption right on certain properties
At the same time as the law restricting foreign real estate transactions enters into force so does the State’s pre-emption right in real estate transactions near strategic sites. The right also applies to unseparated pieces of land or designated shares of the property. The State’s pre-emption right is not valid in the province of Åland.
The State’s pre-emption right applies only in very limited areas. The State’s pre-emption right applies to property located within, or within five hundred meters of, an area designated for the needs of the Defence Forces or the Border Guard.
In addition, the State has a pre-emptive right to property up to 1,000 meters from communication stations, radar stations, aerodromes, or sites serving the Defence Forces’ or Border Guard’s water traffic or aviation.
If the State exercises its pre-emptive right, it becomes the transferee instead of the buyer under the terms agreed in the deeds of the sale. If the property subject to the sale is located within the scope of the pre-emptive right, the right to lien on the property shall not be obtained until after the three-month period for exercising the pre-emptive right has expired or the State has stated that it will not use its pre-emptive right.
Redemption of immovable property in the name of national security
The third reform, which came into force at the beginning of the year, is the Act on the Redemption of Immovable Property and Special Rights, which serves the needs of national security. According to the Act, immovable property may be redeemed for national defence, territorial integrity, internal security, state management, border security, border control, security of supply, operation of essential social infrastructure, or any other comparable social benefit. For the asset to be redeemed, a full renumeration corresponding to highest current price of the asset shall be provided.