Terminology related to buying and selling a property
Asunto-osakeyhtiö = Housing company
A housing company is a limited liability company. The Articles of Association of a housing company define its purpose as follows: to possess and manage a building or part of it in which a minimum of half of the floor area consists of dwellings. The shares owned by the shareholders of a housing company entitle them to possess a certain part of the building. Housing companies may possess and manage any residential buildings: blocks of flats, row houses and even one-family houses.
Asunto-osake = Housing company share
A housing company owns the building(s) and all the flats and other facilities in it/them.
Each share or stock of shares in a housing company entitles its owner to possess a certain flat or another part of the building(s) or property of the housing company.
In terms of law, a housing company share is movable property, and the sale of housing company shares is regulated by the Housing Transactions Act. Housing company share certificates can be used as security for a loan. Housing company shares are not mortgaged in the same way as real estates. They are given in pledge.
Asunto-osakeyhtiölaki (AOYL) = Housing Companies Act
The regulations of the Housing Companies Act are applied to all the limited liability companies that are registered as housing companies in accordance with Finnish law. The reformed Housing Companies Act that entered into force on 1 July 2010 contains significant alterations concerning maintenance obligations etc.
Energiatodistus = Energy certificate
The new Energy Efficiency Act entered into force on 1 June 2013. According to the Act, an energy certificate must be presented for all residential blocks of flats and for houses completed and accepted for occupancy in 1980 or later when they are sold or rented out. The houses completed and accepted for occupancy before 1980 were not subject to the Act before 1 July 2017.
The energy certificate shows the amount of energy consumed by the building and its energy efficiency is graded from A to G, The certificate can be used to compare the energy efficiency of buildings. In certain cases, a so-called lenient process may be applied to the certificate requirement. In this case, the energy efficiency of the building is graded as H.
Energy efficiency can be improved by increasing insulation, heat recovery in the ventilation system or by using renewable energy. An energy certificate should always be drawn up by a qualified professional.
Ennakkomarkkinointi = Pre-marketing
Pre-marketing is used to estimate demand for a possible new construction project. At the pre-marketing stage, interested parties may make non-binding reservations. Construction is usually started when a sufficient number of reservations have been made. At this stage, binding reservations and reservation fees are confirmed. If the project does not attract sufficient interest, it is also possible that the project is not implemented at all.
Erillistalo = Detached house/building
A detached house/building means a detached house or block of flats that is managed as a housing company or through an agreement on the division of a joint property.
Hallinnanjakosopimus = Agreement on the division of a joint property
An agreement on the division of a joint property defines how the ownership of a plot and shared facilities located on the plot are divided between the parties. A typical example is a semi-detached house. The agreement defines the dwelling-specific and shared responsibilities of the two parties.
Hankintameno-olettama = Presumed acquisition cost
In taxation, presumed acquisition cost can be used to calculate the capital gain as an alternative to using the actual non-depreciated acquisition cost and sales-related costs, if the alternative is more beneficial for the taxpayer. Tax value, which is used in determining the inheritance and gift tax, is also regarded as actual acquisition cost and is therefore an alternative for the presumed acquisition cost. As the sales-related costs are included in the amount to be deducted as presumed acquisition cost, they cannot be deducted in addition to presumed acquisition cost. The amount of presumed acquisition cost is always a minimum of 20% of the sale price of the transferred property, but if the seller has owned the property for at least 10 years, the deductible amount is 40% of the sale price.
A natural person, Finnish death estate and certain consortiums, such as road maintenance associations and collective forest units, are entitled to use the presumed acquisition cost alternative.
Hitas is a housing price-and-quality control system used in Helsinki. Its purpose is to ensure that housing prices are based on real production costs. The regulation of the maximum prices is applied to both new and old Hitas homes. The Hitas register is maintained and the resale of Hitas units is managed by the Housing Affairs Division of the City of Helsinki Real Estate Department. Hitas homes can only be bought by private persons, not by business enterprises. One person can only own one Hitas home at the same time. The City of Helsinki has the right to redeem Hitas homes.
Hoitolaina = Maintenance loan
A maintenance loan is a long-term loan of a housing company, used for annual maintenance projects in the property that the company owns.
Hoitovastike = Maintenance charge
Maintenance charge is a fee charged to the shareholders by the housing company to cover the cost of regular maintenance, unscheduled repairs and various running costs of the building. The Annual General Meeting of the housing company decides on the amount of the maintenance charge on an annual basis.
Hyvä välitystapa = Good brokerage practice
Good brokerage practice is a set of rules and guidelines for property brokerage prepared and published by the Central Federation of Finnish Real Estate Agencies (KVKL). The Act on Real Estate and Housing Agency Services requires that real estate agents comply with the good brokerage practice.
Isännöitsijäntodistus = House Manager’s certificate and its appendices
The house manager’s certificate with its appendices is the most important document when a flat is sold or bought. The house manager’s certificate is a document that contains detailed information on the housing company and the flats it manages. It can be issued by the house manager of the housing company or in special cases by the Chairman of the housing company Board. The contents of the house manager’s certificate are defined in a Government Decree. The house manager’s certificate contains following information: shareholders, loans of the housing company and the share of the loans allocated to individual flats, information on completed and future maintenance and repair measures, ownership of the plot etc. The appendices of the house manager’s certificate include the Articles of Association, balance sheet book (previous full financial period), long-term and medium-term plans, energy certificate, possible property condition report, etc.
The house manager’s certificate can be ordered by:
- Owner of shares entitling to the possession of a flat
- Holder of shares based on a pledge agreement
- Estate agent that has a valid share sales assignment or an assignment to rent out a flat in the housing company.
Jyvitetty pinta-ala = Assessment-based floor area
Assessment-based floor area is an adjusted floor area used in most of the buildings completed before 1992 to accommodate differences in the quality, location or building costs of flats with the same floor area.
Kauppahinta = Purchase Price
Purchase price (See also Sale price) is the price paid by the buyer. It does not include the possible share of the housing company’s loans allocated to the flat.
Kauppakirja = Deed of sale
A deed of sale is a contract between the seller and buyer of a flat. It should always be drawn up in writing. The deed of sale contains the details of the parties to the contract, object of sale, sale price and payment terms, transfer of ownership rights etc. Usually, the main terms of the deed of sale have already been determined earlier in the purchase offer.
Kiinteistöosakeyhtiö is a limited liability company. The Articles of Association of a real estate company define its purpose as follows: to possess and manage a building or part of it in which a minimum of half of the floor area consists of business or equivalent premises. The main purpose of the premises may be any other purpose except residential.
Kuntoarvio/kuntotutkimus = Condition assessment/inspection
In a condition assessment, the condition of a property and possible repair needs are assessed visually, leaving the structures intact. Typical areas assessed in a flat are wet-rooms and rooms with a water supply point. The assessment also includes certain measurements. It is a good idea to have a condition assessment performed by an expert and request a written assessment report.
A condition inspection is a more thorough inspection than a condition assessment. If necessary, it includes measures that interfere with the structures of the building.
The purpose of a condition assessment and a condition inspection is to provide the House Manager, Board and Annual General Meeting of a housing company with necessary information to support decision-making.
Käsiraha/vakiokorvaus/sopimussakko = Deposit/fixed compensation/contractual penalty
To confirm the offer, the buyer may pay a deposit, which may be a maximum of 4% of the whole purchase price. This enhances the validity of the contract. The deposit is paid into the bank account of the estate agent or the seller.
A fixed compensation condition in the purchase offer means that the party submitting the offer agrees to pay an agreed fixed compensation to the seller in case it withdraws from the contract after the offer has been accepted by the seller. By accepting the offer, the seller also agrees to pay the fixed compensation amount to the buyer in case the seller withdraws from the contract after accepting it.
Lunastusoikeus/lunastuspykälä = Redemption right/redemption clause
In general, the shares of a housing company can be transferred freely, but according to the Housing Companies Act, a housing company may restrict the transfer of its shares by a redemption clause. If the Articles of Association of the housing company contain a redemption clause, the existing shareholders or the housing company has the right to redeem the shares if they are being sold to a third party. The redemption terms are the same as the terms of the original purchase contract and the redemption must be conducted in accordance with the rules set in the Articles of Association.
LKV = Licensed real estate agent
A person who has passed the examination organised by the Central Chamber of Commerce Board of Examiners for Real Estate Agents has the right to use the title LKV. A person who has passed the examination organised by the Central Chamber of Commerce Board of Examiners for Letting Agents has the right to use the tile LVV.
LVI-remontti/LVI-saneeraus/putkiremontti = LHVAC renovation
In a HVAC renovation, the heating, ventilation, air conditioning and plumbing systems of the building are renovated. The term “putkiremontti” is also used for the project.
LVIS-remontti = HVAC&E renovation
A HVAC&E renovation is a combined renovation of the HVAC and electrical systems of the building. The combined renovation is often a cost-effective alternative.
Myyntihinta = Sale price
The sale price (See also Purchase price) is the asked price of the flat. It does not include the possible share of the housing company’s loans allocated to the flat.
Myyntivoitto = Capital gain
A capital gain is created if a flat or a property is sold at a price that is higher than the original purchase price.
Myyntivoiton verotus = Taxation of a capital gain
A capital gain is created if a property, securities, such as housing company shares or listed shares, or other movable property is sold or exchanged at a higher price than the original purchase price. Apart from money, also other forms of compensation may be used in the sale or exchange of a property. In taxation, the costs involved in the creation of the capital gain, such as acquisition, safekeeping or sales costs, may be deducted from the sale price in the calculation of the capital gain. These costs also include commissions, capital transfer tax, fee for a certificate of registered title, etc. Apart from certain exceptions, the basic tax rate on a capital gain is 30% , and 34% on an amount exceeding 30 000 euro.
If the flat has been continuously occupied by its owner for two years, the possible capital gain is tax-free.
Additional Information: www.vero.fi »
PTS/KTS = Long-term/Medium-term maintenance plan
A long-term maintenance plan is usually prepared on the basis of a condition assessment. A condition assessment and long-term maintenance plan provide a good general picture of the condition and future repair needs of the property and the estimated time of repairs. According to the Housing Companies Act, which entered into force in 2010, the Boards of Directors of all housing companies must present a written report on the repair needs in the property to the annual General Meeting.
Rahoitusvastike = Charge for capital costs
The charge for capital costs is a fee charged to the shareholders of a housing company towards paying off the long-term capital loan of the housing company.
Taloyhtiö = Housing company
Have a look at “asunto-osakeyhtiö”.
Tarjouksen tekeminen = Making a purchase offer
For clarity, purchase offers on flats must be submitted digitally or in writing. Only written purchase offers are recommended. It is also possible to make purchase offers on Myyntiturva properties digitally by signing the offer with your online banking credentials.
A purchase offer must contain detailed terms: price, date on which the flat becomes vacant, cancellation terms, any cash paid, possible contractual penalties, validity period of the offer, etc. A written purchase offer is always binding.
Suullinen tarjous = Verbal offer
In principle, a verbal offer is also binding, but its verification may be difficult in problem situations.
Tarkistusmittaus = Verifying measurement
Verifying measurement is performed to establish the floor area in accordance with the current SFS 513 Standard. A written report should be prepared on the measurement.
Uudiskohde/uudistuotanto = New building project
New building project is a term used for a block of flats or other property that is under construction or completed recently. There are certain special legal requirements concerning the sale of flats in a new building project. The developer has to surrender the documentation related to construction project and the housing company to a bank recommended by the Finnish financial institutions’ consultative committee or to the county government and lodge securities as required by law to fulfil its legal obligations during the construction period and after the completion of the project.
Valtiontakaus = Government guarantee
If the collateral of a housing loan applicant is not sufficient to cover the whole loan, it is possible to cover the necessary share by a government guarantee. A government guarantee is granted in connection with the housing loan decision, if certain conditions are met. A government loan is not applied for separately and it does involve income or net asset restrictions. The bank and the borrower may agree that the housing loan terms will include a government guarantee.
A government guarantee is a secondary guarantee. If the realisable value of the flat does not cover the bank’s loan receivable, the government provides supplementary guarantee.
Varainsiirtovero = Capital Transfer Tax
The capital transfer tax is imposed on the transfer of ownership rights to shares in a property or a housing company. Until 1997, the capital transfer tax was known as “stamp” tax. The tax rate on the free-of-debt selling price of housing company shares is 2% and 4% on the free-of-debt selling price of a property. A person who is under 40 years old and has not previously owned half or the larger share of a housing company unit (e.g. flat) or real estate is exempt from the capital transfer tax.
Velaton hinta = Debt-free price
A debt-free price means the price of a flat that includes both the purchase price and the share of the possible loans of the housing company allocated to the flat.
Yhtiövastike = Housing company charge
A housing company charge includes the maintenance charge and the charge for capital costs. It is a charge defined in the Articles of Association of the housing company, and it is collected to cover the expenses of the housing company.