Limitations to Foreigners
1. Are there in your national system any limitations to foreigner citizens or foreign companies/companies controlled by foreign citizens regarding the acquisition of immovable properties? If yes:
1.1. Which legal regulations regulate in your country the prohibitions or limitations for foreigners’ acquisitions in case of transfer of property? Please specify the legal regulation and/or the range of the regulation that contains the prohibition.
Act on the State’s right of pre-emption in certain areas.
Act on Transfers of Real Estate Requiring Special Permission.
Kindly note that you can find the unofficial translation here:
https://www.finlex.fi/en/laki/kaannokset/2019/en20190469.pdf
https://www.finlex.fi/fi/laki/kaannokset/2019/en20190470.pdf
1.2. What do these limitations consist of?
1.3. Do these limitations apply to any foreign citizen, regardless their nationality, or only to non-EU Members national citizens?
Answer to both, 1.2 and 1.3.
Buyers from outside the EU and EEA will need a permit to buy property in Finland.
A permit must be acquired when one of the following parties buys a real estate:
1. A private individual who is not a national of a state belonging to the European Union or the European Economic Area (EEA). Note! People with dual nationality do not need to obtain a permit if one of the nationalities is in an EU or EEA country.
2. A company or other entity domiciled outside the EU and the EEA.
3. A company or other entity domiciled in the EU or the EEA, but in which a private individual or entity referred to in paragraph 1 or 2 has ownership of at least 10% or equivalent effective influence in the entity.
When assessing ownership or influence, separate owners are not counted together. Therefore, the fact that a total of at least 10% of an entity’s ownership is outside the EU and the EEA does not necessarily result in an obligation to apply for a permit. The decisive factor is whether one of the individual parties has a shareholding or an equivalent de facto influence.
Exceptions to permit requirements:
• Spouses or cohabiting partners purchase a property together, one of whom has the citizenship of another EU Member State or EEA country
• The property is located on leased plot or a part of a housing company is being traded
• The seller/party handing over the property is a relative (own parents, child, or spouse or cohabiting partner).
Furthermore, Åland regional citizenship is a precondition for owning and occupying land in Åland. The Government of Åland can grant exceptions from the requirement of regional citizenship for owning real estate. In order to own land in Åland a person or a company must apply for and get a special land acquisition permit, from the Government of Åland if he/ she does not have Åland regional citizenship.
1.4. Do these limitations have?
- «A defensive/protective purpose: Mainly the purpose is for defensive/ protective purpose concerning the buyers from outside the EU and EEA. However, Åland’s home region rights are based on a compromise decision made by the League of Nations in 1921, in which the administration of the province was given to Finland on the condition that it guaranteed the local population its Swedish language, culture, local customs and self-government system.»
- An economic purpose
- Both economic and defensive/protective purposes
- Other purposes (please specify)
2. To which kind of land registry unit do these limitations apply? (Example: only land plots, only rural areas, only foreign borders, dwellings and homes, other buildings?
Limitations apply to all land registry units when the property is located in Finland.
3. To which kind of transfers or burdens do these limitations apply? (Example: to every transfer, non-free transfers, differently in case of inheritance than in case of purchase, mortgages in favor of foreigners….)
Finland has also legislation on the State´s pre-emption of immovable property (Act on the State´s right of pre-emption in certain areas 469/2019).
The State has the pre-emptive right in real estate transactions in the immediate vicinity of strategic sites. If the State exercises its right, it becomes the acquirer of the real estate instead of the purchaser on terms agreed in the deed.
Since the State’s right of pre-emption is only valid in strictly limited areas, it affects a very small proportion of real estate transactions in Finland. If the real estate being traded is located in an area where the State has the right of pre-emption, registration of title to real estate will be issued only after the four-month period set for the exercise of the pre-emptive right to buy the real estate has expired or the State has declared that it will not exercise its right.
The State has the right to buy real estate located or part of which is located in areas designated in the regional plan, local master plan or local detailed plan for the needs of the Defence Forces or the Border Guard or at a distance not exceeding 1000 metres from them;
At a distance of not more than 1000 metres from communications stations, radar stations, aerodromes or ports, or from lesser sites than these serving the water traffic or aviation of the Defence Forces or the Border Guard under normal conditions, during incidents or emergencies; At a distance not exceeding 1000 metres from real estates, used by the Defence Forces or the Border Guard, that are not the same as those referred to in paragraphs 1 and 2, where the activities carried out require a protected area.
The State’s right of pre-emption is not valid in the province of Åland. However, this regulation on pre-aemption applies to everyone, regardless of their nationality (also Finnish citizens).
5. To what extent the land registrars’ controls in a deed of transfer the prohibitions imposed to foreigners to acquire land and buildings in your country?
5.1. Do you only check if the transfer administrative authorization requirement is met, or do you also confirm that the authorization is valid? For example, do you consider property type, like rural or forestry classification, which might limit foreign transfers? Or do you verify the percentage of foreign land ownership in a specific area, especially if there are restrictions on the number of buyers or land size?
Land registrars control in all applications the nationality of the property buyer. If the buyer’s nationality is outside the EU and the EEA, the applicant is asked to provide a permit to buy property from the Ministry of Defense in Finland.
In Finland there is no restrictions on the number of buyers, the size of the property, or the type of the land. If the buyer is from outside EU/EEA a permit is needed and always requested.
5.2. What would happen if an authorization were needed, and it does not come with the title submitted for registration?
If the applicant does not submit a permit as an annex to the application, the application will be left in abeyance and the applicant is given a request to acquire a permit. The application will be rejected if the permit is not granted. If the permit is acquired, the application for registration of title is accepted.
5.3. What would happen in case a deed of inheritance in favor of a foreigner transfers property over land or buildings subject to limitations for foreigners’ acquisitions in your country?
The restriction on buying property in Finland does not apply to inheritance or family acquisitions. The restrictions apply only on acquisitions by conveyances (purchase, gift, or exchange of properties).
5.4. If the states have preemption right in case of transfer, would you reject the registration if no notification to the state to enhanced it right is done?
The possible existence of the right of pre-emption will be clarified before the ownership is registered. The states decision on the exercise of the right of pre-emption must be made and communicated to the National Land Survey of Finland within four months of the confirmation of the transfer. The ownership cannot be registered until the 4-month period has passed.
Once the decision on the exercise of the right of pre-emption has gained legal force, the State is deemed to have replaced the buyer on the closure of the transaction at the previously agreed-upon terms. After this the state is obligated to register the ownership.
In case the first buyer does not cancel the application, it will be rejected by the LR. Land registrars has the information on which properties are located in an area where the state have pre-emption right.
6. Do you expect any legal modifications on this issue?
There is actually at the moment pending a modification to the Act on Transfers of Real Estate Requiring Special Permission. It has been suggested that the law should be modified so that permission to buy real estate in Finland can´t be given at all to Russian citizens or Russian legal persons. It will probably take to the end of this year 2024 before there is any decisions in this matter.
