Financing social housing in Finland

Abstract

Provides information on the state of the social rental housing in Finland as of 2003. Municipality and state guarantee on free market right-of-occupancy and free market rental production; Alternatives for the type of repayment of interest subsidy loan; Increase in share of social housing during the 1990s. Social housing in Finland is financed either with state housing loans or interest-subsidised commercial loans. Budget pressure led to the introduction of securitisation in 1995. These transactions packaged and sold subsidised loans to fund new housing loans. An important question for Finnish housing finance is whether the current system of providing both direct loans and subsidised commercial loans will be maintained. The author suggests that the answer may be provided by the market; for the past few years owners have been converting the state housing loans to market loans reflecting their more favourable terms.