Annual payments of state-subsidised loans not raised in 2023 - aim to ease cost pressures related to housing
The Government has decided to keep the annual payments of the state-subsidised rental housing and right of occupancy housing loans (ARAVA) at the same level as in 2022. No adjustment according to the consumer price index will be made in 2023. The decision will curb the pressures to raise rents and management fees in the current situation where the property management costs and the residents’ living costs are also rising rapidly.
The annual payments of state-subsidised loans taken out for the construction, procurement or renovation of rental and right of occupancy housing depends on the change in the consumer price index in July of the previous year. The fluctuations in the consumer price index have been quite moderate in recent years: the change in the consumer price index in July of years 2015 to 2021 varied between -0.2 and 1.9 per cent. In July 2022 the change in the consumer price index was 7.8 per cent. Without this decision the adjustment to the annual payments effective as from 1 March 2023 would be 7.8 per cent and in renovation loans 9.3 per cent.
“We will ease the costs of housing. State-subsidised loans have an important role in ensuring reasonably-priced housing. This winter the costs of living have risen painfully high, which is also reflected in the consumer price index that determines the annual payments of the loans. We decided not to make the index adjustment in the annual payments of state-subsidised loans to avoid such an excessive rise,” says Minister of the Environment and Climate Change Maria Ohisalo.
The decision applies to all borrower entities that have taken out state-subsidised loans. Loans from the Housing Fund of Finland under the Act on State-Subsidised Housing Loans (ARAVA) were granted in 1994–2007. The recipients of state-subsidised rental housing and right of occupancy housing loans are local governments and other public bodies and non-profit housing communities and subsidiaries owned by these. At the end of September 2022 the loan portfolio was about EUR 2.4 billion and the number of borrowers was 680. About three quarters of the loans are for rental housing and one quarter for right of occupancy housing.
Most of the loans in the portfolio are collected in annual payments. The State Treasury reviews the amounts of these payments every year in March. The expenditure due to the loans affect the rents and management fees payable by the residents.
In most housing communities the rents and management fees for 2023 have already been confirmed. The decision not to adjust the annual payment will ease the future pressures to raise these and will help in planning the finances for the coming years. In many housing communities the general rise in costs may still increase the need for financial restructuring.
The temporary amendment to the Decree on State-Subsidised Housing Loans concerns section 35 and it is in force from 1 March 2023 to 29 February 2024.
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