Financial crisis threatens Saarijärvi seniors’ housing savings

Residents of a right-of-occupancy housing building in Saarijärvi could lose 30,000 to 40,000 euros each if its owner goes bankrupt, Yle reports. Most of the approximately 20 residents are over 80, and a solution must be found within weeks to prevent Finland’s first bankruptcy of a right-of-occupancy housing association.

The building, Omatoimi, is owned by the Saarijärvi Region Right-of-Occupancy Housing Association. Its residents pay a right-of-occupancy fee of up to 15 percent of the purchase price. The fee is returned, adjusted according to the construction cost index, when the resident leaves.

“Of course it feels difficult when residents are at risk of losing 30,000 to 40,000 euros. That is a lot of money for these people,” said 82-year-old Eero Hämäläinen, who has lived in Omatoimi since it was completed in 2015 and remains involved in its administration.

The association was established in Saarijärvi in 2009. Omatoimi has 24 apartments, five of which are currently vacant and three of which are becoming vacant.

Rising costs have driven residents away

The association has almost two million euros in loans from Kuntarahoitus, a lender. Rising interest rates have increased its annual debt-servicing costs by 40,000 euros.

As a result, the building’s monthly charges have risen above the rent level on the open market, prompting residents to move out.

The City of Saarijärvi has guaranteed the association’s loan and would have to pay it if the association went bankrupt.

The association proposed restructuring the loan so that part of the debt would be transferred to the city. Under the proposal, Omatoimi would have remained responsible for the building’s official value, while the city would have taken responsibility for the rest of the loan.

The city council rejected the proposal, saying it was legally and contractually impossible. The association has considered filing an appeal, but that would be a slow option when decisions are needed quickly.

Heikki Kauppinen, chair of the association’s board, said a solution must be found by mid-October.

Association seeks alternatives to bankruptcy

The association previously proposed selling the building to the City of Saarijärvi, but that plan did not proceed. It then sought an outside buyer.

The sale is complicated by conditions attached to a 1.2 million euro investment grant from the Finnish Slot Machine Association, known as RAY and now called STEA. If a buyer does not meet STEA’s conditions, the grant could be reclaimed.

In its latest proposal, the association has suggested that the city buy Omatoimi for a price corresponding to the potential grant repayment. Omatoimi would apply to have the repayment reduced, citing its difficult financial situation, and the building would be transferred to the city’s rental housing company.

The proposal is linked to a government bill that would reform the right-of-occupancy housing law from the beginning of 2027. Under the bill, a building could be released from the restrictions applying to it if there was no longer sufficient demand for its apartments.

Under the proposed arrangement, residents’ right-of-occupancy fees would be preserved. Kauppinen said the option has not yet been discussed with the city.

Omatoimi cost more than four million euros to build and received more than one million euros in assistance from RAY.