State support retreat strains Finland’s affordable rental housing

Finland’s state-supported rental housing system is under growing strain as repair costs rise and state support recedes, housing reporter Karla Kempas writes in an analysis for Yle.

Subsidised landlords are dealing with costly renovations, vacant apartments and reduced government support. The situation became clear to Kempas while reporting on the sale of hundreds of homes intended for low-income tenants to a property investor.

The Y-Säätiö foundation, Finland’s largest nationwide provider of affordable rental housing, said the sales were necessary for its survival. It owns more than 10,000 rent-regulated homes and is not in crisis according to its latest financial figures, but its management is considering how to secure the foundation’s future.

“In the long term, we have to think about the company’s financial stability from the perspective that we would never collapse onto taxpayers’ shoulders,” chief executive Teija Ojankoski told Yle.

Y-Säätiö is not the only subsidised landlord facing an uncertain future. Population decline has caused problems in some places, while rental apartments are also vacant in large cities. Rent regulation can make the homes difficult to let: under the cost-price principle, rents can cover only the actual costs of the properties.

That can force landlords to raise rents to pay for renovations. A substantial share of state-supported housing is now reaching the age when repairs are needed. More than 100,000 homes were built with state support in the 1990s, and about 65 per cent of rent-regulated homes were built before 2000.

At the same time, many privately financed rental homes are available. A construction boom driven partly by property investment added large numbers of apartments in growth centres, keeping private rents flat or pushing them down. In some places, rents in subsidised homes are now higher than those on the private rental market.

Tenants also have less money available for rent, as some benefits have been reduced and the cost of living has risen.

The government led by Prime Minister Petteri Orpo has narrowed the state’s role in financing housing. State interest-subsidy loans are no longer granted for new right-of-occupancy homes, though they remain available for renovations. Cuts to general housing allowance affect what tenants can afford, and an income limit for state-supported rental homes took effect at the start of 2025.

The Housing Finance and Development Centre of Finland, known as Ara, stopped operating as an independent agency in 2025. Its former duties are now handled by Varke, the Centre for State-Subsidised Housing Construction, under the Ministry of the Environment. The State Housing Fund was also dissolved as a separate fund.

State interest subsidies are being reduced, affecting both new construction and repairs to existing homes. In a report by Varke, landlords said the subsidies would not cover all their repair and building needs.

Y-Säätiö sold about 900 homes over two years to fund repairs and build new affordable rental housing. Ojankoski said the foundation had to take responsibility for arranging its own financing because state support could no longer be relied on.

“We no longer have a clear expectation that the state will strongly support organisations like ours,” she told Yle.