What is a right-of-occupancy dwelling?
In a right-of-occupancy dwelling, you buy the right-of-occupancy to a dwelling owned by the construction company. When you move into the dwelling, you make a right-of-occupancy payment of 15 per cent of the dwelling’s price and during tenancy you pay a monthly residence charge.
When you give up the dwelling, you will be refunded your right-of-occupancy payment within three months. This refund is adjusted by the construction cost index.
Pros and cons of a right-of-occupancy dwelling
A right-of-occupancy dwelling is ideal for you if you do not want or cannot commit to an owner-occupied home and do not want to take a large home loan. A right-of-occupancy dwelling has many other benefits too:
- An affordable form of living. The residence charge you pay is lower than the market rental rate.
- You can live in the dwelling as long as you like. You can live in the dwelling as long as you like because the house owner cannot terminate the right-of-occupancy contract.
- Choose a dwelling that suits you. Offered dwellings vary from studios to seven-room apartments, there are no size restrictions and you have the possibility to personalise the apartment into a home through adaptations.
- Building maintenance. The company providing the right-of-occupancy is responsible for the maintenance of the building.
- No resale risk. You do not yourself need to take care of reselling the dwelling, and you are also entitled to rent it for up to two years during your right of occupancy if you have a justified reason for doing so.
- Financially sound. Your right-of-occupancy payment is only 15 per cent of the price of the dwelling and you do not have to pay transfer tax, which means that you do not need a large loan.
- Housing cost subsidy. You can apply for housing allowance from KELA for your residence charge.
- Refund of right-of-occupancy payment. The refund of your right-of-occupancy payment is adjusted by the construction cost index when you give up your dwelling.
- Home loan interest is tax-deductible. The interest on loan for acquiring a right-of-occupancy dwelling is tax-deductible.
Costs for a right-of-occupancy dwelling
When you acquire a right-of occupancy dwelling, you make the right-of-occupancy payment and a deposit payment, which is usually one or two times the residence charge.
The right-of-occupancy payment is typically about 15 per cent of the price of the dwelling. In the Helsinki Metropolitan area, the right-of-occupancy payment is usually between 8,000 and 70,000 euros.
Your right-of-occupancy payment is refunded when you give up the dwelling. This payment is adjusted by the construction cost index. You can estimate the amount of your refund at the time you give up your dwelling using the following formula:
- refund = right-of-occupancy payment divided by the construction cost index on the acquisition date multiplied by the index on the refund date.
The residence charge is always reasonable and varies between about 9 and 17 euros per square metre per month depending on the area. The residence charge consists of a maintenance charge and a basic charge. The residence charge is used to cover capital and maintenance costs, among other things.
Acquiring a right-of-occupancy dwelling
All you need to acquire a right-of-occupancy dwelling is a queue number. You can receive this number from the housing office of the city or municipality in which you are applying.
After you have received your queue number, you can apply online for any right-of-occupancy dwelling that you are interested in. The owner companies’ customer service can assist you in filling in the application. You will be offered freed-up dwellings in accordance with your queue number.
Income limits and terms and conditions for right-of-occupancy dwellings
You can apply for a right-of-occupancy dwelling if you are over 18 years old. Your income has no bearing on you being granted a dwelling. However, a condition for receiving a right-of-occupancy dwelling is that you do not own a home of the size you need in the same area or do not have the means to purchase a reasonable one. Right-of-occupancy dwellings are intended for the permanent use of the holder of the right.
Asset limits and conditions for receiving a right-of-occupancy dwelling are not applied to applicants over 55 years old, or if you are exchanging your right-of-occupancy dwelling for someone else’s.
Apply for a right-of-occupancy dwelling loan
Affordable right-of-occupancy living translates into an affordable home loan. A right-of-occupancy loan is just like a regular home loan. The right-of-occupancy agreement is sufficient collateral for the loan.
You can apply for a loan decision in advance, which speeds up the process when you have found a suitable home. Simply fill in a loan application and we will let you know how large a loan we can grant and how much the monthly repayment is.
The loan application is not binding on you in any way, but it ensures that you have an opportunity to discuss the loan with our experts.
You can negotiate the loan in an online meeting without visiting a bank branch.