The cornerstone of unity

67 HOUSING COMPANY MODEL
The manner in which apartment block ownership and administration can be effectively managed is an issue 
which has come to the forefront in the privatisation process of new EU member states. In these cases 
attention is given to ensuring the continuous maintenance and renovation of communal structures and 
facilities, such as the roof, walls, stairwells and lifts, and of utilities, such as water, sewage and electrical 
systems. 
The issue has also been a topic of interest in several old EU member states, where the legislative solution for 
home ownership in apartment blocks is either non-existent or lacking in efficacy. 
In most 
cases the legislative solution applied has been the “condominium model”, which involves a 
specifically designated “home owners association” or the administration is organised based on a housing 
condominium-only solution. 
The problem with the housing condominium-only solution is that the home owners comanage the 
maintenance and repair of communal structures and facilities without any specifically designated decision-
making body. It is clear that this kind of solution produces a number of administrative problems. 
A much more effective solution is to combine the condominium model with “home owners associations”. 
However, this model is also clearly lacking in several areas. These are especially difficulties in decision-making 
and obtaining loans for major repairs concerning common structures and facilities. 
These problems were solved in Finland with a special ownership model for apartment buildings and terraced 
houses. In this model the buildings are owned by the housing company, and the shares are divided in such a 
way that they correspond to an ownership of a certain flat. Separate legislation was developed for this model. 

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The highest authority is exercised by the shareholders’ meeting, which is usually held twice a year. Each 
shareholder can vote according to the number of shares he or she owns. The number of shares is generally 
based on the size of the flat. 
The shareholders’ meeting approves, among others, a budget, which is used to verify the monthly payments 
by shareholders. The shareholders’ meeting also makes decisions concerning major property repairs. The 
shareholders’ meeting also elects the board of directors, which exercises decision-making power. The board 
consists in general of at least three members. 
The board appoints a superintendent (manager), who is responsible for, among other things, collecting 
monthly payments and keeping company accounts. The superintendent also prepares various repair-bid 
documents for the company board, even though the board makes all decisions concerning the selection of 
contractors for instance for major repairs. 
Superintendents are usually employed by a property management agency. Such agencies are usually in 
charge of at least ten housing companies. 
The share certificate of each apartment can be used as flexible collateral when taking out loans for 
purchasing property or making repairs to the apartment. Alternatively, the company can take out loans against 
mortgage collateral for making repairs to communal structures and facilities. This makes it possible to take out 
loans at the most favourable market rates. 
Company-specific loan interest rates and instalments are paid in connection with the monthly payments. 
These monthly payments are sufficient enough to cover the costs for company administration, repairs and also 
heating. If the apartment owner fails to pay the monthly payments, the company can take possession of the 
apartment in question and pay the unpaid amount using revenue earned from rent. In cases such as this, 
however, the owner does not lose his/her ownership. 
These are some of the benefits offered by a liability housing company: 
1.
Decision-making responsibilities are clearly defined and the 
property’s communal structures and facilities have 
one specified owner; 
2.
Loans can be granted, on one hand, for repairs of communal structures and facilities and, on the other, 
apartment-specific needs (the purchase of the flat and apartment-specific repairs); 
3.
To sell housing company shares referring to a certain flat is easy for the owner to do (e.g. easier than selling a 
car); 
4.
The sanctioning system for those who have not paid their maintenance charge is functioning well, which means 
that these sanctions are rarely used; 
5.
The result of this clearly-defined decisionmaking process is that the buildings and their communal structures and 
facilities are in good condition and adequate repair measures can be taken. This is crucial to ensuring that 
property value is maintained and the living standard is kept high; 
6.
Shareholders can be either individual people or companies, municipalities or non-profit organisations. Individual 
people can either live in their own dwelling or rent it out. As a result, the housing company model enables the 
integration of owner-occupied dwellings and rental dwellings in the same buildings and thus decreases 
segregation. 
The Housing Company system has been functioning in Finland without any greater problems already from 1920. 
As a consequence of this the share of Housing Company dwellings in the housing stock is as high as 45%. 
In conclusion, the Finnish Housing Company model provides a clear and transparent ownership structure 
which is easy to understand by every one. 
Martti Lujanen 
– Emeritus Deputy Director general at
the Ministry of the Environment 

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