New Urban Development Act would streamline implementation of local detailed plans and increase predictability in land use policy
The Government submitted a proposal for the Urban Development Act to Parliament on 15 September 2026. The aim is to ensure that local detailed plans are implemented smoothly. New elements to be introduced include provisions on municipal land use policy programmes.
“The Urban Development Act will modernise legislation on the implementation of plans and create a better framework for the development of municipalities. A municipality's land use policy programme would transparently outline the targets and principles of its land use policy This would make land use policy more transparent, facilitate dialogue and increase predictability in the planning of investments,” Minister of Climate and the Environment Sari Multala says.
Urban Development Act creates a framework for implementing plans
The act will reform the municipalities’ tasks related to land use policy and zoning. The act would lay down provisions on:
• compensating for the costs of urban construction,
• municipalities’ land use policy,
• development areas,
• plot division and
• conveyance and expropriation of land and the related compensation.
More predictable land use policy in municipalities
Municipalities would have to prepare land use policy programmes, update them and monitor their implementation. In the programme, a municipality would outline the principles and practices to be applied in its land use policy. This would make municipal land use policy more transparent and predictable to investors, for example.
The majority of Finnish municipalities with more than 20,000 residents already voluntarily prepare a document similar to the land use policy programme. The act would harmonise the practices of municipalities and the content of their programmes. Land use policy measures include land acquisition based on contracts, expropriations carried out to implement plans, land use agreements, development compensation and assignment of plots.
No major changes to compensating for costs of urban construction
There would be no major changes regarding compensation for the costs of urban construction. Landowners would still contribute to the costs of urban construction through the land use agreements and development compensation. The obligation to contribute would arise if the landowner significantly benefitted from the local detailed plan to be prepared.
The obligation would mainly be based on the land use agreement between the municipality and landowner. Development compensation determined unilaterally by the municipality would continue to be a rare exception.
The scope of the land use agreement and its relationship to the development compensation would be clarified and the balance between the parties to the agreement would be improved. A limited option would be introduced to use land use or development compensation in connection with the derogation under the Construction Act in areas covered by a local detailed plan. This means that in certain situations a municipality could choose a simpler permit procedure than zoning, instead of the choice of the procedure being determined by the possibility to receive compensation.
Costs of urban development and construction dating back no more than 15 years would be included in the development compensation. Costs incurred before that could be taken into account only in exceptional cases. Municipalities would also be obliged to carry out the actions the development compensation is based on within 15 years.
Obligation to convey street areas free of charge abolished
The current obligation to convey street areas to a municipality free of charge in the area covered by the first local detailed plan would be abolished. This means that, in future, compensation would be paid to landowners for the conveyed areas. In the same way as now, the compensation would be based on a contract between the landowner and municipality, or an expropriation procedure if the parties could not reach an agreement. The amount of the compensation would be determined in accordance with the Act on the Expropriation of Immoveable Property and Special Rights.
Acts complete the reform of the Land Use and Building Act
The new acts on land use will complete the reform process concerning the Land Use and Building Act that started in 2018. The new Land Use Act is currently under consideration in Parliament. The government proposal for the Urban Construction Act is to be submitted to Parliament later in the autumn. The Urban Development Act and the Urban Construction Act are scheduled to enter into force on 1 January 2028 and the Land Use Act on 1 January 2027.
Inquiries:
Samuli Alppi
Senior Ministerial Adviser
tel. +358 295 250 036
[email protected]
Emma-Stina Vehmanen
Special Adviser to the Minister of Climate and the Environment
tel +358 40 847 1992
[email protected]