YLE: Many real estate investors are taking a break in Finland

“In the old , tenants took the apartment they happened to get. Now tenants can look at several apartments and choose the one that suits them best; The landlord has to do more to rent out his apartment. ” Joonas Oravaan investor in several real estate portfolios, summed up on Thursday.

Finnish Broadcasting Corporation emphasized that different trends in the housing market can be dangerous, especially for high-risk investors. Interest rates and property costs will rise while landlords will have to compete for tenants, increasing the risk that rental income will no longer cover service and property costs.

“If a real estate investor uses a high level of gearing and isn’t prepared for rising interest rates and costs, there may be challenges ahead when interest rates and costs rise at the same time,” he said. Markus Aaltoneneconomist at the .

However, the number of such investors in the market is difficult to estimate.

Statistics have not yet provided any indication that real estate investors are crumbling under their debt burden. The Bank of Finland’s statistics show that taken out for investment purposes have less repayments than ordinary mortgages.

He added that the statistics include repayments more than 90 days late.

“Despite the and other uncertainties, the problems with residential equity or investment real estate loans have not increased in recent months. They are very moderate, Aaltonen said. “In , household indebtedness has risen to a record high. This increases the vulnerability of borrowers to rising interest rates. “

Sakari RokkanenThe economist of the Finnish Landlord Association saw in the same way that it is unlikely that everyone involved in the real estate boom during the interest-free era will survive the new reality without difficulty.

“Sure, there are people who aren’t prepared for the situation, but we’re talking more about individual cases than the big challenge. A wave of forced sales is not in sight, “he said.

Rokkanen reminded that the majority invests in real estate on a relatively small scale: investors typically have a portfolio of real estate that they are trying to use to save for retirement. They usually have enough financial buffers to cope with the risks.

Instead, investors with dozens of properties in their portfolios often act at least semi-professionally and have hedged themselves against risks by taking out fixed-rate loans or loans with, for example, interest rate breaks to hedge against rising interest rates.

Aaltonen from the Bank of Finland reminded that real estate investors accumulate debt, especially through housing company loans, which encourages the use of gearing.

It has been possible to buy an apartment in a new property with little self-financing, as up to 80 percent of the debt-free price has come from a housing company . Monthly repayments may also have been small because housing loans for new properties are often constructed without repayment in the first few years.

The Finnish announced last week their proposals reform the rules on housing loans.

Loans should not exceed 60 percent of the debt-free price of the property and should not provide payment leave during the first five years of construction completion.

Aleksi Teivainen – HT

Source: The Nordic Page

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