The Finnish Property Market 2009 - KTI

Tenants’ rights are quite limited in the commercial
property market – for example, a tenant has no statutory
right to a lease renewal. There are, however, a variety of
different options that are exercised on this issue.
Traditionally, rental agreements are for “gross rent”,
which includes net rent plus a service charge covering
typical operating costs and minor repairs 1 . Gross rents are
very common in multi-tenant buildings in all property types.
In some specific property types, such as business parks,
the lease agreements typically include a varying amount of
business services offered to tenants. In these cases, the total
rent includes the base (net) rent as well as a separate service
charge. In single-tenant buildings, it is more common to
apply net rents.
In some cases, the rental agreement is for net rent, but the
landlord takes care of the management and maintenance of
the building, the costs of which are then charged separately
from the tenant. This kind of agreement is sometimes called
a “shared rent”.
Rents can be indexed freely in all indefinite leases and in
fixed period leases where the term exceeds three years. The
Consumer Price Index is the most commonly used index.
Turnover-based rents are becoming more common in
shopping centres, and they usually consist of a minimum
base rent supplemented by an agreed share of turnover.
However, the turnover-based part of the rent is typically
quite low, as the landlord wants to secure a stable base for
their cash-flow.
3.3 Planning
Land use in Finland is regulated by the Land Use and Building
Act, which came into force at the beginning of 2000. The
system has three levels of land-use plans including a regional
land-use plan, local master plan and detailed local plans.
The national level principles of land use are reflected in
the regional plans, which embrace structural, functional and
environmental considerations. Regional plans are confirmed
by the Ministry of the Environment. The local master plan
is an instrument for guiding and co-ordinating land use at
a general level. It is produced by local authorities, but the
Regional Environmental Centre must be consulted in order
to ensure that national targets are taken into account in local
plans. Detailed local plans are used to regulate the building
and formation of the physical townscape. In addition, every
local authority has its own building ordinance, the content of
which is defined according to local needs.
In the current act, local authorities have extensive powers
to make independent decisions in land-use planning matters.
It is also possible to agree on joint master plans between
municipalities forming a homogenous urban area. These
joint master plans require the approval of the Ministry of
the Environment. Together with the increased co-operation
and integration of the municipalities, these kinds of plans are
becoming more common.
The Land Use and Building Act obliges municipalities
to adopt an open and interactive approach to planning. The
local planning process is aimed at facilitating the involvement
of all those concerned in planning: landowners, residents and
businesses in the area. In practice, this new interactive process
has been proven to lengthen the planning processes.
Building permits are approved by municipalities. A
building permit may be granted if the plan allows the type
and size of building that is being applied for. Special permits
to exceed or change the use of the planned space can also be
granted, although these are becoming increasingly difficult
to obtain.
17
“Sustainability and
urban structure issues
are discussed actively
with regards to
planning”
1 Gross rents are where the land rent, insurance, property taxes and most service expenses are paid by the owner. This means that management and
maintenance costs for both indoor and outdoor areas of the building are the owner’s responsibility. This is also the case with heating, water and waste
disposal. When it comes to cleaning and electricity, the owner is responsible only for the public areas of the building. Normally, tenants have their own
energy and cleaning agreements regarding the space they use. The owner is also responsible for repair and replacement costs if caused by normal wear
and tear.
The Finnish Property Market 2009