Renewal of lease agreements for residential plots

The city renews leases with all tenants according to the same principles. The agreements are updated with the standard terms and conditions currently in use, as well as plot-specific terms and conditions.  

In recent years, many lease agreements have been renewed in Helsinki. For example, in 2023–2024, the lease expired on approximately 60 plots and on approximately 750 plots in 2020–2021. The lease on approximately 250 residential plots will expire in 2025. Most of these agreements entered into force in the 1960s. Since then, the value of the plots has risen sharply, and the lease for most plots has remained very low compared to the current price level. 

The lease of a residential plot is affected by:

• The gross floor area (kerrosala, k-m²) built on the plot
• The price per one square metre of building rights in the city district (EUR/k-m²)
• The cost-of-living index

An example of calculating the lease for a plot for a detached house                     

The detached house has a building with a gross floor area of 139 k-m².  The price per square metre for the district is EUR 930. 

• The lease is linked to the cost-of-living index. If a new lease for the plot is concluded in September 2019, the point figure for the cost of living is 19.73. The price per one square metre of building rights: EUR 930/k-m²: 19.73 = EUR 47.14.
• Estimated value of the plot: 139 k-m² x EUR 47.14 x 19.73 = EUR 129,280.03.
• The lease for residential plots of the City of Helsinki is 4% of the estimated value of the plot per year. Annual lease of the plot: EUR 120,280.03 x 0.04 = EUR 5,171.20.

The tenant will not pay the full lease until after ten years

If the new lease for the plot is EUR 5,171.20, the tenant will have to pay 50% of this in the first year, i.e. EUR 2,585.60. In the second year, the tenant will pay 55%, or EUR 2,844.16.

The lease will increase every year so that the tenant will not pay the full amount of the new lease until ten years later.

The lease is determined based on the gross floor area built on the plot. The gross floor area includes all buildings corresponding to the principal intended purpose of the plot.   

For example, in the case of a plot for a detached house, all premises used for residential purposes are included in the gross floor area. In addition to actual residential storeys, premises in the basement, attic or a storage building are calculated if these premises are used for residential purposes. The gross floor area does not include premises such as storage spaces, garages, technical facilities, balconies or outdoor patios. 

See an image of the calculation principles of the gross floor area of a detached house (pdf)

The gross floor area of a plot, on which the lease is based, is determined by an expert independent of the city based on the building permit drawings. The tenant must review the building type and the gross floor area. The tenant must send the information to the city if it differs from that specified. If necessary, an inspection of the plot will be arranged. 

The lease of a plot is affected by the price per one square metre of building rights in the city district in question (EUR/k-m²).     

In Helsinki, the price per one square metre of building rights for each city district is assessed by two experts independent of the city. The lower of the prices estimated by them will be selected, and a further 40% or so will be deducted from this price. 

Therefore, in Helsinki, the price per square metre that influences land leases is approximately 60% of the price per one square metre of building rights in the district. Most other large cities use the fair value as the basis for the land lease. 

Ultimately, the City Council decides on the price per one square metre of building rights in the city districts.  

The city wants to promote the construction of complementary buildings for plots leased by the city for residential apartment blocks. In connection with the renewal of lease agreements, the city investigates whether additional construction on the plot is possible.

If additional construction is possible on a plot with a lease that is to expire in 2025, the tenant must apply for an amendment of the local detailed plan together with the city before the end of the lease term. In addition, the tenant must sign an implementation agreement with the city within five years. If the tenant does not promote additional construction in this manner, the city may reduce the leased area without the tenant’s consent.

The tenant may receive financial benefits from additional construction. The housing company can sell the new building rights to a party or city of its choice, or construct the new building itself. 

Read more on the additional construction page (in Finnish)

Read more about additional construction on residential plots leased by the city

Contact us by email:  taydennysrakentaminen@hel.fi(Link opens default mail program)

At the time of the renewal of the lease, the plot must comply with the local detailed plan. If this is not the case, the city will apply for plot division, parcelling and registration on behalf of the tenant. These are services subject to a charge. The city will charge the costs from the tenant.

The plot division and parcelling can affect the size of the leased area.

Read more about plot divisions and cadastral surveys 

The City of Helsinki will send tenants an invitation to sign the land lease agreement. If necessary, private individuals may grant each other the right of representation by means of a power of attorney.

In most cases, the right to represent a corporate tenant is verified from a Trade Register extract, so the tenants should check that their information in the Trade Register is up to date.

In the case of a corporate tenant, the renewal of a land lease agreement usually requires that the matter is submitted to the company’s annual general meeting for a decision. This should be done well in advance of the signing of the new land lease agreement.