Amendment of the Act on Transfers of Real Estate Requiring Special Permission: What Are the Key Changes for Foreign Purchasers?

Authors: Matti Lajunen, Krister Koskela, Mikael Sandkulla, and Miro Matkavuori

Background and Objectives

In light of the changing security environment, the Finnish Parliament adopted an amendment to the Act on Transfers of Real Estate Requiring Special Permission (in Finnish: laki eräiden kiinteistönhankintojen luvanvaraisuudesta) in April 2025 (the “Amendment”). The Amendment is the result of a fundamental change in the security environment, the most significant single factor being Russia’s war of aggression against Ukraine, which has emphasised the need for effective measures to protect national interests. This blog post serves as a summary of what foreign purchasers should know about the new legislation in Finland.

Currently, the Finnish Ministry of Defence shall not grant a permission for non-EU and non-EEA private individuals and/or entities to acquire real estate in Finland if the acquisition can be assessed as a threat to national security or a hindrance to the organisation of national defence, the control and safeguarding or territorial integrity, or ensuring border control, border security, or security of supply. Such application for a permission may also be rejected if the acquisition may jeopardise said interests and i) it is obvious that the real estate to be acquired is not suitable for the purpose stated in the application or ii) if the real estate is acquired by a person who has been issued with a final deportation decision and who resides illegally in the country. Additionally, the permission may also be rejected if, despite a reminder from the Ministry of Defence, the applicant repeatedly fails to comply with the obligation to provide necessary clarifications or intentionally provides false material information on the matter.

The aim of the Amendment is to further safeguard Finland’s national security by restricting the acquisition of real estate in Finland by non-EU and non-EEA individuals whose state of nationality has been found by the European Union to have violated the territorial integrity, sovereignty, and independence of another state. The Amendment is part of a broader strategy to fortify Finland’s resilience against potential hostile influences. It aligns with the Finnish Government’s commitment to ensuring that critical infrastructure and strategic assets remain under secure and trustworthy ownership.

Key Changes

As a result of the Amendment, the legislation will become stricter with the following key changes.

1. Absolute Grounds for Not Granting Permission: The Amendment introduces a new Section 5 a, which provides for absolute grounds for not granting a real estate acquisition permission. Under the provision, permission shall not be granted to individuals whose nationality is from a state identified by the Council of the European Union as having violated another state’s territorial integrity, sovereignty, and independence. Additionally, the provision requires that this state of nationality can be considered to pose a threat to Finland’s national security and that the state of nationality may use its nationals in an inappropriate manner that endangers it. The prohibition also applies to an entity that is domiciled in the territory of such a state or that is owned or controlled by a national or entity of such a state.
2. Exceptions: Despite the strict criteria, the Amendment allows for exceptions. A permission may be granted to individuals who have a permanent residence permit in Finland or a so-called EU residence permit issued by Finland at the time of the acquisition of the real estate and when the application for a permission is pending. This provision ensures that individuals with established ties to Finland are not unduly penalised.
3. Government Decree: The Finnish Government will issue a decree listing the states that meet the criteria outlined in Section 5 a. This decree will be based on assessments by relevant authorities regarding the threat posed by these states. This approach ensures that the list of restricted states is dynamic and responsive to the evolving security environment. The draft decree is currently being circulated for comments.
4. Cost Reimbursement: The Amendment also contains a provision according to which the Finnish State shall not reimburse costs incurred as a result of the acquisition in a situation where the purchaser has taken a risk by acquiring the real estate before the Ministry of Defence has granted a permission, where there has been an absolute ground for not granting the permission within the meaning of Section 5 a. The purpose is to prevent a situation in which real estate is deliberately acquired in such a way that the state can be required to reimburse the costs, even though there is no actual right for the purchaser to acquire the real estate.

Rationale Behind the Changes

The legislative proposal is rooted in the Finnish Government’s programme, which emphasises the need to review and strengthen regulations concerning real estate acquisitions by non-EU and non-EEA entities. The Government is also exploring more effective post-acquisition controls and interventions to protect assets critical to national security and supply chain resilience. The security environment in Finland has undergone significant and lasting changes due to Russia’s invasion of Ukraine. This conflict has highlighted the importance of maintaining societal resilience, national defence capabilities, and internal security. The proposed Amendment is a proactive response to these challenges, aiming to prevent the misuse of real estate for hostile purposes.

Conclusion

In summary, the Amendment represents a crucial step in bolstering Finland’s national security. By imposing stricter controls on real estate acquisitions by individuals and entities from countries that pose a security threat, the Finnish Government seeks to protect its strategic assets and ensure Finland’s long-term stability. The changes reflect a comprehensive approach to addressing the evolving security environment and safeguarding national interests. The Amendment and the Government decree are set to enter into force by the end of June 2025.

In an earlier blog post, we discussed the previous amendments made to the Act on Transfers of Real Estate Requiring Special Permission. The key amendment was the addition of a provision allowing the rejection of an application for a permission in situations where the acquisition of real estate is considered to threaten national security.

You can find the earlier blog post here: Property Ownership Control Will Be Strengthened in Finland — What Will Change?