WHAT IS HOUSING COMPANY LOAN?

In contrast to the personal bank loan, the housing company loan does not require any personal loan arrangement nor any pledge. A housing company loan is a loan that is the liability of the housing company but not direct liability of the shareholder personally. It comes automatically with the apartment purchasing and is fixed in the purchasing agreement.

For the foreign buyers the housing company loan is often an efficient tool for the apartment purchasing, as they do not have any bank relationship in Finland. For the investor this loan is an efficient financial leverage, as the loan interest and principal are often deductible from the rental income.

Based on the recent practice, the initial stage (1-3 years) of the housing company loan repayment consist of only interest payments, while the loan principal will be due few years later after completion of the apartment building.

A housing company loan is divided between its shareholders in accordance with the quantity of shares owned by each of them (usually proportional to the number of square metres of each apartment).

The share in the housing company loan and related interest are to be paid by the shareholder of the housing company in the form of monthly payments (see below Charge of financial costs) in line with other instalments (management/maintenance charge, charge for plot rent). The loan can also be paid off in full at any time in accordance with the housing company regulations regarding the date of acceptance of repayments.

In newly-built apartment blocks, the loan amount provided by Lehto Group Oy is usually up to 75 percent of the price of the apartment.

Charge for financial costs / charge for capital costs (Rahoitusvastike / Pääomavastike) is a monthly payment to be made by housing company shareholders. The payment applies to the both the principal and the interest on the housing company loan. When the housing company loan is paid in full, the charge for financial costs does not apply any more.

Maintenance / Management charge (Hoitovastike) is a monthly payment to be made by the housing company shareholder. The payment applies to housing company management, maintenance, utilities, waste management, cleaning, real estate tax and insurances.

Charge for plot rent is a monthly payment to be made by the housing company shareholder. The payment applies to the costs arising from the lease payments for the plot of land rented by the housing company.

 

HOUSING COMPANY MONTHLY CHARGES

Housing Company Charges are set in the Housing Company  articles of association.

A Housing Company shareholder is obliged to reimborse to the Housing Company his/her share in the Housing Company expences, based on the principle set in the articles of association of the housing company. The charges mentioned above shall not be mixed with any lease or over similar payments.

 

Housing Company expences , which are in line with housing company law, articles of association or contract can be covered by the charges mentioned above.

 

Such expences are Real Estate acquisition and construction; usage and maintenance; plot of land lease; heating, water supply and waste handling; cleaning and lighting of the common areas of the housing company; management and maintenance companies fees; real estate insurances and taxes ; repair costs; additional construction or major renovation costs.

Basis for the Monthly Charges

The basis for the charges shall be set in the articles of association. Apartment square, for example, can be choosen as the basis for the charges. Additionally,  water, electricity, heating or other commodity  which is possible to calculate based on factual consumption or reliably  estimate can be the basis for the charges. A Housing Company shareholders meeting shall decide on the  amount of a charge. The meeting determines the unit price of the charge. Housing Company Monthly charges (Yhtiövastike) consists of Maintenance/Management Charge (hoitovastike) and possible Charge for financial costs / charge for capital costs (Rahoitusvastike / Pääomavastike).

Maintenance/Management Charge (hoitovastike) covers the Housing Company real estate maintenance costs. Charge for financial costs / charge for capital costs (Rahoitusvastike / Pääomavastike) in its turn covers Housing Company loans related costs, such as interest and principal of those.

Usually, depending of the article of association and/or  decision of  the shareholders meeting of a housing company, the shareholder has an opportunity to repay the housing company loan by, for example, one time payment at any time.

In addition to the mentioned above a Housing Company can collect different charges such as water, parking places, internet connection and common sauna usage.

In accordance with the Housing Company law (of 1.07.2010) The board of a Housing Company is obliged to present the shareholders' general meeting a written report of the maintenance needs of the company's buildings and property in the period of five years following the meeting. Therefore, a long-term repair programme can be drawn up for the company, usually by the housing company board and property manager together or by an independent expert in building care. Usually, this occurs in practice with the help of building condition assessment and a technical long-term maintenance plan. The plan defines likely service life, repair need, repair me

Housing Company Charges are set in the Housing Company  articles of association.

A Housing Company shareholder is obliged to reimborse to the Housing Company his/her share in the Housing Company expences, based on the principle set in the articles of association of the housing company. The charges mentioned above shall not be mixed with any lease or over similar payments.

 

Housing Company expences , which are in line with housing company law, articles of association or contract can be covered by the charges mentioned above.

 

Such expences are Real Estate acquisition and construction; usage and maintenance; plot of land lease; heating, water supply and waste handling; cleaning and lighting of the common areas of the housing company; management and maintenance companies fees; real estate insurances and taxes ; repair costs; additional construction or major renovation costs.

Basis for the Monthly Charges

The basis for the charges shall be set in the articles of association. Apartment square, for example, can be choosen as the basis for the charges. Additionally,  water, electricity, heating or other commodity  which is possible to calculate based on factual consumption or reliably  estimate can be the basis for the charges. A Housing Company shareholders meeting shall decide on the  amount of a charge. The meeting determines the unit price of the charge. Housing Company Monthly charges (Yhtiövastike) consists of Maintenance/Management Charge (hoitovastike) and possible Charge for financial costs / charge for capital costs (Rahoitusvastike / Pääomavastike).

Maintenance/Management Charge (hoitovastike) covers the Housing Company real estate maintenance costs. Charge for financial costs / charge for capital costs (Rahoitusvastike / Pääomavastike) in its turn covers Housing Company loans related costs, such as interest and principal of those.

Usually, depending of the article of association and/or  decision of  the shareholders meeting of a housing company, the shareholder has an opportunity to repay the housing company loan by, for example, one time payment at any time.

In addition to the mentioned above a Housing Company can collect different charges such as water, parking places, internet connection and common sauna usage.

In accordance with the Housing Company law (of 1.07.2010) The board of a Housing Company is obliged to present the shareholders' general meeting a written report of the maintenance needs of the company's buildings and property in the period of five years following the meeting. Therefore, a long-term repair programme can be drawn up for the company, usually by the housing company board and property manager together or by an independent expert in building care. Usually, this occurs in practice with the help of building condition assessment and a technical long-term maintenance plan. The plan defines likely service life, repair need, repair method and anticipated repair cost for each building element. The condition assessment ad maintenance plan give the shareholders of the housing company an overall picture of the condition of the property and buildings, future repair needs, their recommended repair schedule and estimated costs.