New Housing Companies Act

The new Housing Companies Act contains provisions that allow the modification and termination of the corporate structure of a housing corporation. Thus, it is possible to achieve a merger between two different corporations and a de-merger of a corporation into two different components. The new law applies to all corporations registered as housing corporations according to Finnish law. The law also applies to any such old housing corporations where more than half of the floor area has been reserved as residential flats under the management of the shareholders. The new law may also apply to the so-called mutual real estate corporations, subject to any exceptions provided in law or determined in the Articles of Association.

De-merger and merger of corporations

Housing corporation and mutual real estate corporation restructuring is a beneficial tool, for example if ownership or conditions have changed to such an extent that the operations are no longer possible or necessary in the previous corporate form. For an apartment block corporation with only one or two buildings, a merger with a similar corporation in the neighbourhood may be justified for financial or administrative reasons.
For detached and single-family housing, the founding of a housing corporation has almost been the norm in order to minimize transfer taxation. However, the housing conditions may not necessitate a joint administrative community. Real estate and corporate law allow the use of separate housing divisions with regard to housing-related decision-making on an individual basis.

In all real estate and corporate restructuring, it is essential to take into account the tax effects of the proposed project. Currently there is a loophole in legislation in that, according to tax legislation, tax reliefs concerning de-mergers do not apply to housing corporations. In the Business Tax Act, the applicable provision concerning corporate restructuring omits any mention of it applying to housing corporations.