Optional leasehold land gives you more choice regarding living costs
Some of our apartments are built on land owned by the housing company, some on leasehold land. What options does this give you?
In housing companies built on their own land, the plot price is included in the apartment price. In a housing company built on leasehold land, the lease for the plot is paid as part of the maintenance charges. Leasehold land plots have long lease contracts, e.g. for a 50-year period. Optional leasehold land gives you the opportunity to decide for yourself when you pay the apartment-specific redemption of ground rent.
What does optional leasehold land mean?
In the Helsinki metropolitan area, some of the housing companies are built on optional leasehold land. That means that instead of a monthly charge for your apartment's share of the leasehold land, you can also pay off your apartment's share of the plot leased by the housing company as a lump sum. After this, your apartment's share of the leasehold land will be owned by the housing company.
When buying an apartment in a housing company built on optional leasehold land, you can decide, according to your financial situation, whether to pay your apartment's share of the leasehold land as a monthly charge or to invest capital in the leasehold land now or later. The share of the leasehold land cannot be paid in instalments; it is always paid off in its entirety. If you decide to pay the share of the leasehold land as rent, the purchase price of the apartment is lower and you can buy the apartment with less initial capital.
When can you redeem ground rent?
You can redeem ground rent upon the completion of the housing company, after which the opportunity for redemption is available once a year.
Paying the monthly charge for your apartment's share of the leasehold land does not reduce the amount of the apartment-specific redemption of ground rent. Consequently, if you first pay the monthly charge and later decide to redeem apartment-specific ground rent, the redemption price is not reduced by the amount of charges you have paid.
If you sell your apartment later on without having redeemed ground rent, the new owner may redeem it if he/she wishes to.
What charges are there associated with the redemption of ground rent?
The redemption price of ground rent increases annually in line with the cost-of-living index, but general increases in the plot or apartment price level do not affect the price. Up-to-date price details can be obtained from the property manager after the completion of the housing company.
An index-based increase, the asset transfer tax for a property transaction and other redemption-related costs (such as the fee of the notary and the registration of title to property fee) are added to the redemption price of ground rent. These constitute the total redemption price of ground rent, for which you still need to pay the asset transfer tax.
On the information pages for housing companies and apartments, the price details of each apartment show the price for the redemption of ground rent and information about the monthly charge for the apartment's share of the leasehold if ground rent can be redeemed in the housing company in question. Please note that the debt-free price of an apartment does not include the redemption of ground rent; it will be announced separately.