Stakeholder newsletter October 2020 | Kojamo

Dear political influencer,

You will have an impact on the reform of the Land Use and Building Act. The new legislation will have extensive impacts on people’s daily lives and the growth of the national economy, which is why both dimensions should be considered at the same time.

The law stipulates how people can take part in the development of their residential area or how it is decided where new homes can be built. Smooth zoning facilitates sufficient housing production in growth centres, which is a guarantee of the mobility of labour.

We are hoping that the intensity of the overall reform of the Land Use and Building Act will continue until the last stretch. Sustainable urbanisation, the mitigation of climate change and the acceleration of economic growth are significant social goals that can partly be met by increasing urban density and promoting infill development. Therefore, the functionality of the legislation faces the biggest challenges in growing urban regions where housing is increasingly built in existing residential areas.

In the post-coronavirus society, it will be increasingly important to ensure the materialisation of viable investments and accelerate the progress of projects from investors’ plans, zoning and building permits to construction.

Kojamo is one of the biggest investors in Finland, operating with a long-term perspective: we develop projects for our long-term ownership. Therefore, we want to plan long-lived, comfortable and desirable residential areas.

We have condensed our objectives for the reform of the Land Use and Building Act, which I would also be happy to discuss with you.

Best regards,

Jani Nieminen
CEO

jani.nieminen@kojamo.fi
tel. +358 20 508 3201

Kojamo’s objectives for the reform of the Land Use and Building Act

Sustainable urbanisation, the mitigation of climate change and the acceleration of economic growth are the societal objectives of the reform.
Improving the smooth process of zoning should be a principle that transcends the entire reform.
Zoning should be guided more through goals than detailed regulations, leaving more room for improving the productivity of construction.
An adequate volume of housing production in relation to the population is a prerequisite for the mobility of labour and economic growth. The most effective way of keeping housing expenses under control is to build more housing. The law should aim to keep the increase in the costs of construction and housing under control.

How can zoning be reformed to be smoother?

In preparing the reform of the Land Use and Building Act, the role and responsibilities of the party with main responsibility for undertaking the construction project is being increased. A “flagging responsibility” in planning solutions would encourage reacting to shortcomings observed in construction plans, for example.
The right of land and estate owners to submit initiatives, making it possible to submit a zoning proposal to the municipality for a decision, should be enacted.
It is important to strengthen the possibilities of a private operator to prepare a partnership zoning plan together with the municipality. In a genuine partnership, the planner and party undertaking the project can find the most appropriate and cost-efficient solutions in zoning and permits.
The zoning system should be digitised in its entirety, facilitating electronic services for companies and citizens and exerting influence at all stages of zoning, as well as guaranteeing the availability of the most up-to-date information. Digitisation should also be extended increasingly to the use and maintenance of buildings, which would make it possible to reduce their lifecycle emissions and costs.
Deadlines must be imposed on the authorities for processing permit applications and complaints, and the authorities must be obligated to provide a zoning service guarantee.
Every resident of a municipality is entitled to file a complaint concerning the municipality’s master plan, but only the parties involved should be entitled to file a complaint at the more detailed plan level. Submitting a complaint must be free of charge, but it should be possible to charge a reasonable processing fee for completely unfounded complaints.
The accounts and impact assessments required in zoning should be made at one level of plan only.
The aim of making zoning more cost-conscious should be enacted. When preparing a plan, the impact of detailed zoning regulations on the price of construction should be estimated. When the impact of each standard on price is made visible, a political decision-maker can better assess the reasonableness of each standard separately.

8-year housing policy programme

Finland has urbanised at the fastest rate in Europe with the other Nordic countries in recent decades. However, Finland’s urbanisation rate is still low at the European level. Sustainable urbanisation requires sufficient housing production, which is a prerequisite for the mobility of labour and economic growth.

Private housing production determines the market price of housing, so the higher the market-based housing production, the more affordable housing is. Subsidised housing should be targeted at those who need it the most with income limits. Society would get the biggest impact by allocating its money to creating the preconditions for housing production, such as good public transport connections.

Of housing demand, 80 per cent concerns single and two-room apartments in the Helsinki Metropolitan Area, for example. The only sustainable way of responding to this is to build homes based on the level of demand, instead of the authorities estimating the needs of people. A shortfall in the supply of housing increases housing prices.

The Government of Finland has one of the most ambitious climate goals in the world: Finland should be carbon-neutral by 2035. In the future, cities must grow in a density-increasing way. In addition to climate-friendly buildings, homes should primarily be located in existing residential areas.

How can society support housing with the highest impact?

Investments in public transport, particularly investments in new tram lines, are the most effective way of increasing housing production. When society creates good locations for housing, the private sector will build housing there without public subsidies. Public resources are, in fact, the most effective way of steering housing policy towards improving the prerequisites for housing production.
Increasing the density of the urban structure and infill and conversion development lower the infrastructure and service expenses of cities, with less need for building schools, day care centres, streets and sewers. Locating new homes in existing residential areas is an underused method of improving the sustainability of cities’ finances.
Subsidised housing production should be targeted at those who need it the most in line with EU regulations, which can be ensured through residents’ income limits.
A needs-based housing allowance is a cost-efficient method of subsidising the housing of those with low incomes and a necessary method of equalising income distribution and encouraging moving for work.

Sufficient plot production is the prerequisite for housing production

Clearly more housing should be planned in central areas, close to stations and public transport zones. When more housing is built on plots in the most desired areas, it restrains housing prices everywhere. Kojamo allocates the majority of residential construction in priority residential areas specified in land use and building (MAL) agreements.
In MAL agreements, the state should require cities to keep a minimum of five years’ suitable plot reserves for apartment building construction needs.

Build homes that people want

Housing should be constructed on the basis of demand. Cities should not set formal apartment distribution or floor area requirements. The authorities’ advance regulations concerning the sizes of apartments that should be built rarely meet the need. In growth centres, there is demand for singles in particular, and their proportional share has not increased in Helsinki, for example.
Market-based parking should be made the main rule in growth centres.
Zoning-related standards, such as parking space regulations, should equally concern all parties and all types of occupation.
Changes in the purpose of use of inadequate buildings and commercial properties should be made smoother and more predictable, which is an important means of fostering infill development.

Kojamo is Finland’s largest private residential real estate company and a frontrunner in the housing business. Our mission is to create better urban housing. The Lumo brand provides environmental-friendly housing and services in Finland’s biggest growth centres. We actively develop the value of our investment properties by developing new properties and our existing property portfolio. We want to be the property market frontrunner and the number one choice for our customers. Kojamo’s shares are listed on the official list of Nasdaq Helsinki. For more information, please visit kojamo.fi/en/