Renewal of leases for apartment plots

Overview 

The starting point of long-term land lease agreements is that the city gives the tenant the opportunity to enter into a new long-term land lease agreement for his plot at the end of the previous land lease agreement. However, the condition is that no changes have occurred or are occurring in the land use (mainly in the site plan) that would prevent the land use according to the previous agreement.

According to the Land Policy Program approved by the City Council, the starting point when renewing contracts is equal treatment. The terms of the contracts to be renewed must therefore be determined according to the same principles as in the new contracts. When determining the rent, the starting point is a reasonable fair price corresponding to the market price. The capital value of the plot and thus further the rent is affected by the right to build on the plot defined in the site plan. However, the rent is not affected by how much of the plot's building right has been used.

Plot rent development and plot prices

By following completed deals, it can be stated that the prices of unbuilt detached house plots in Imatra are around 3 – 000 euros. At the price level mentioned above, the annual rent of 40% is practically 000 – 5 euros.

The city currently distributes around 90 small house lots. The most expensive plots are located in the central area of ​​Imatrankoski or the plots have water views. The city has handed over (sold or rented) plots for small houses annually during the past few years, on average less than 10 per year. The average price of the plots of land to be handed over in the city is around 15 euros, and the median is around 800 euros. The amount of annual rent on an average lot is around 12 euros.

Land lease agreement decisions

The city surveyor decides on the amount of rent and the rental period for new land leases based on the administrative rule (Kov 15.10.2018 § 92) and the delegation decision (Urban Development Board 30.10.2018 § 103), when the prices of the individual plots subject to the decision are no more than 100 euros. City planning is responsible for preparing the renewal of land leases.

Rental

The annual rent for rental residential plots is 5% of the capital value of the plot. The rent is tied to the cost of living index. Based on the decision of the Urban Development Board (§ 16.4.2020 of April 35, 1.1.2021), the average index of the previous year will be used as the reference point figure for the cost of living index from January XNUMX, XNUMX, and the index check will only be done once a year, so these conditions will be introduced for renewable contracts.

The rent of the plot is for the owner of the plot, i.e. the city of Imatra, interest on the capital value of the plot.

The rental income is not earmarked for the development of the district in question, but is a significant income for financing the city's various functions and services. 

Regarding the reasonableness of the rent, the rent is not compared to the old rent, but to the reasonable fair market value at the time of renewal.

Rental period

The lease agreements for the apartment plots will be extended with a new agreement for 50 years with updated lease terms.

Residential plots

The pricing of plots takes into account the pricing of new plots in the area and the rents of previously extended plots.

Plot areas and building rights vary in different neighborhoods and blocks. The definition of building right varies, the most common definitions are the efficiency number, for example e= 0,30, in which case 30% of the plot area can be built, or the building right number, for example 250, in which case 250 square meters can be built on the plot.

Company-style apartment building, terraced house and service building plots

According to the Municipal Act, the city must enter into long-term land lease agreements at market prices. In order to check whether the condition of market price is met, the city will in the future commission a zone price report or a real estate appraisal of the market prices for each rental property by an independent real estate appraiser.

Procedures at the end of the tenancy

The measures related to the termination of the tenancy are recorded in different ways in the tenancy agreements made at different times. If you notice that your contract is about to expire, and the city has not notified you of the termination, contact the city to agree on further measures for the rental agreement for you. The city intends to clarify the contracts that expire in the following years every few years and inform the tenants in question about this in good time.

Letters are sent to the tenants, explaining the measures to extend the tenancy, the future rent of the plot and information about the possibility of buying the plot, if the city decides that it is possible in the area in question. Attached to the letter is the application and lease agreement template. When the tenant has returned the completed application, the city prepares a decision to re-rent the plot. An extract of the decision and information on when the lease agreement can be signed will be sent to the tenant. 

If the signing of the leases to be renewed is delayed

Any mortgages confirmed on the land lease right and buildings will expire if the registration of the lease right is not initiated at the Land Survey I drove before the end of the old contract. Since confirmed mortgages serve as collateral for loans granted by banks and other financial institutions, it is possible that banks will call the loans due for payment when the mortgages expire.
Failure to sign the contract leaves the tenant in a state without a contract. Land rent invoicing will change in any case in accordance with the new rental decision and land rents will be collected in accordance with the decisions. The tenant therefore has an obligation to pay, because the tenant keeps the building he owns on the city's land, but the terms of the contract securing housing and keeping the building are missing.

If the tenant is planning to sell the building and the leasehold, the tenant has the obligation to inform the buyer, if the tenant has not signed the land lease, that there is no signed land lease. The tenant is responsible for the damages and costs caused by his actions.

Land tenants should note that the city is not responsible for any damages, inconveniences or costs resulting from the tenant's failure to sign the contract.

Transfer of tenancy

It is not possible for the city to transfer the lease agreement to new tenants with a new lease agreement, but in that case the tenant must sell the land lease right to new persons with a written deed of sale. The deed of sale must be delivered to the city so that the city can receive information about tenant changes and can send land rent invoices to the correct land tenants.

Registration of tenancy

According to the terms of the rental agreement, the tenant must record (register) his rental rights. It is done by applying for registration of the lease right from the Land Survey. In old lease agreements, it is possible to extend the registration of the lease right during the lease term with a new lease agreement, by applying for it from the Land Survey, which charges a fee for it. If the rental period is about to end, the tenant must apply again for the registration of the right to rent (registration of a special right), which is more expensive than changing the registration.

Also in connection with the sale of the land lease right, the new tenant must apply to change the registration of the lease right to their own name from the Land Survey.  

Recording the land lease right is mandatory when renting city plots, when the lease right can still be transferred without consulting the land owner, there are buildings belonging to the tenant in the area, and buildings belonging to the tenant may be built in the area. Instructions for registering a special right can be found on the website of the Land Surveying Institute. From this link to the National Land Survey page.