Finnish municipalities demolish rental homes as populations shrink

Municipalities in regional towns and rural areas are preparing for a decline of about 100,000 tenant households over the coming decades, Yle reports. Some are demolishing older rental buildings and considering new ways to organise housing policy.

Asikkala, a municipality in Päijät-Häme, plans to demolish three old rental buildings at the beginning of next year. The buildings contain about 60 mostly small studio apartments. New homes are planned in their place, but fewer than before.

“Housing policy is vitality policy,” said Tarja Parviainen, Asikkala’s director of vitality.

The municipality expects the project to cost about six million euros through its housing company. It believes there will be enough demand because a rental apartment building completed more than a year ago received twice as many reservations as there were apartments available.

Asikkala’s three buildings were completed in 1973, 1981 and 1988. The leases for the Ehtookoto apartments were terminated in June, and their occupancy rate had been about 40 percent, according to Parviainen and Henri Vidgren, acting head of municipal premises services.

In municipalities where demand for housing is falling, rental income no longer covers the costs of rental housing companies. Some municipalities have had to support companies they own because of their weak financial position.

Others have begun adjusting their housing stock early by demolishing poorly located and run down buildings, then carefully building accessible housing in better locations, said Mirka Härkönen, development manager at the Association of Finnish Municipalities.

Municipalities are not legally required to provide rental housing. The state’s role in housing policy has also declined significantly, Härkönen said, adding that municipalities may not receive renovation loans because state authorisations for interest subsidy loans have been reduced considerably.

The Association of Finnish Municipalities is involved in the Kerrostalo 2000 project, which is seeking cheaper construction methods. The project aims for a construction price of about 2,000 euros per square metre.

Affordable rental housing is still needed in many areas, including medium-sized municipalities and regional towns. Härkönen said municipalities should understand their local labour and housing markets and carefully assess what kind of housing supply they need.

She also urged municipalities to consider closer cooperation with neighbouring municipalities, including whether each municipality still needs its own rental housing company or housing stock.