Funding Cuts Impact New Student Housing Projects in Finland

The construction of new student housing is becoming increasingly difficult in Finland due to a significant reduction in state funding for these projects. Starting next year, the government will provide minimal assistance for student housing construction. Last year, the Housing Finance and Development Centre of Finland (ARA) allocated 120 million euros in special group investment support for housing for students, the elderly, the homeless, and people with disabilities. This amount dropped to 63 million euros this year and will plummet to just 15 million euros in 2024.

This reduction means that funding will no longer be sufficient to support housing projects aimed at students and the elderly. Previously, aid covered 15% of construction costs, a crucial financial lifeline.

Despite the challenges, there is a pressing need for student housing. For instance, in Lappeenranta, the demand surged this autumn, leaving some students seeking temporary accommodation. According to Joonas Grönlund, director of the Lappeenranta Student Housing Foundation (Loas), an additional 600 units need to be built by the end of the decade to accommodate the university’s growth.

If funding continues to decline, rents for new student apartments could increase significantly. In Lappeenranta, rents for new studios might rise by over 200 euros, while in Helsinki, they could increase by about 100 euros. Current studio rents in Lappeenranta exceed 400 euros per month, potentially reaching 600 to 650 euros. This escalation could compel students to rely on parental support or income from jobs to afford housing costs.

Portable housing assistance between projects with and without ARA funding will be limited under current regulations, although exceptions may be granted. Meanwhile, Loas is applying for funding for two new student housing projects in Lappeenranta, which could bring nearly 330 additional student units if approved.