The annual payments for state-subsidized loans taken out for the construction, purchase or renovation of rental and right-of-occupancy housing depend on the change in the consumer price index of July of the previous year. The fluctuations of the consumer price index have been quite moderate in recent years: in July of 2015 and 2021, the change in the consumer price index varied between -0.2 and 1.9 percent. In July 2022, the change in the consumer price index was 7.8 percent. Without this decision, the adjustment of annual payments from March 1, 2023 would be 7.8 percent, and for renovation loans 9.3 percent.
“We are easing the costs of housing. State-subsidized loans play an important role in securing affordable housing. This winter, the cost of living has risen painfully high, which is also reflected in the consumer price index, which determines annual payments. We decided not to do an index check on the annual payments of state-subsidized loans in order to avoid such an excessive increase,” says the Minister of Environment and Climate. Maria Ohisalo.
The decision applies to all borrowers who have taken out a government-subsidized loan. Loans from the Finnish Housing Fund in accordance with the State-Subsidized Housing Loans Act (ARAVA) were granted between 1994 and 2007. Recipients of state-subsidized rental apartments and right-of-occupancy loans are municipalities and other public entities, as well as the non-profit housing associations and subsidiaries they own. At the end of September 2022, the loan portfolio was approximately 2.4 billion euros and the number of borrowers was 680. About three quarters of the loans are for rental housing and one quarter for owner-occupied housing.
Most of the loans in the portfolio are collected in annual installments. The State Treasury checks the amounts of these payments every year in March. The expenses incurred from the loans affect the rents and management fees paid by the residents.
In most housing communities, rents and maintenance fees for 2023 have already been confirmed. The decision not to change the annual fee mitigates future pressures, increases them and helps plan the finances for the coming years. In many residential communities, the general increase in costs may further increase the need for financial restructuring.
The temporary amendment to the regulation on state-subsidized mortgages concerns § 35 and is valid from 1 March 2023 to 29 February 2024.
Source: Ministry of the Environment
Source: The Nordic Page