YLE: In Helsinki’s high-end neighbourhoods, 10–30% of houses are empty

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YLE: In Helsinki’s high-end neighbourhoods, 10–30% of houses are empty

A sunset in Lauttasaari, Helsinki, in February 2021. (Jussi Nukari – Lehtikuva)

AN AVERAGE of six to eight per cent of homes are unoccupied in Helsinki.

YLE on Saturday revealed that the proportion of empty homes is substantially higher in the most sought-after neighbourhoods of the Finnish capital – standing at 15 per cent in Kamppi, 16 per cent in Kruununhaka, 16 per cent in Ullanlinna, 23 per cent in Kaartinkaupunki, 27 per cent in Kaivopuisto and 38 per cent in Kluuvi.

In 2020, the proportion rose by two percentage points in Kruununhaka, four points in Kluuvi and five points in Kaivopuisto.

The surge in unoccupied homes in certain high-end neighbourhoods is indicative of a new phenomenon, views Juhana Brotherus, the chief economist at the Mortgage Society of Finland (Hypo).

“Statistics suggest that wealthy folk are buying second homes in expensive neighbourhoods in Helsinki but continue to live primarily in other parts of Finland,” he told YLE.

Such people are typically close to retirement age and driven by a desire to have a second home closer to their children and grandchildren or cultural services.

“[You could talk about] ‘opera houses’ for the wealthy elites of provinces,” described Brotherus.

With the first waves of the coronavirus pandemic halting short-term rentals on platforms such as Airbnb, the increase in unoccupied houses is unlikely a result of houses being offered to short-term tenants. The traditional rental market, meanwhile, did not begin to slow down the traditional rental market until later in the pandemic.

“It’s these statistics that indicate that we’re talking specifically about people buying second homes,” said Brotherus. “In a short period of time, the number of empty homes has increased in expensive neighbourhoods by at least hundreds if not thousands.”

Also real estate agencies have detected the phenomenon, according to YLE.

“Our real estate agents have definitely run into this from time to time in the most expensive neighbourhoods of Helsinki. When you have wealth, you can buy a home in the city to be closer to your children and grandchildren,” said Kirsi Tenhunen, the managing director of OP Koti.

She pointed out that although such people are buying primarily a second home, they are also making an investment.

“If you decide to buy a house that you’ll be mostly be keeping empty somewhere, there are few places as good in terms of appreciation than downtown Helsinki,” she explained.

Maarit Pietarila, the managing director of Kiinteistömaailma Ullanlinna, said some buyers have sold their large flats in the capital to buy smaller ones and move to the countryside or overseas to work remotely or enjoy retirement.

“They then come back to the city to take in cultural events, meet friends or drop in at the office. They don’t keep a big flat for that,” she said to the public broadcasting company. “Some may live in the provinces, but their children have moved to the city, so they buy an urban home for the visits. Also people living abroad have bought homes in southern Helsinki for their visits to Finland.”

Unoccupied properties pose a problem, reminded Brotherus. Helsinki will lose tax revenue if flats in expensive neighbourhoods are used as second homes, as their owners will pay municipal tax in whatever is their municipality of primary residence. They also drive up house prices by reducing supply, thereby possibly slowing down migration, and diminish the potential clientele of brick-and-mortar shops and services.

“Expensive downtown flats would be occupied by high-income people who’d on average pay relatively lot in municipal tax and use fairly little municipal services,” he elaborated.

In Vancouver, Canada, the problem was tackled by introducing a higher property tax rate for unoccupied homes in 2017. The introduction has led to an over 25-per-cent decline in empty homes and boosted tax revenue significantly.

Brotherus believes levying higher property tax rates on empty homes is a good way to tackle the issue as it targets wealthy people and does not inhibit employment or entrepreneurship, for example.

Aleksi Teivainen – HT

Source: www.helsinkitimes.fi

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