For a long time Finland had no restrictions on foreigners buying real estate. In the meantime, however, such transactions are subject to authorization for citizens from outside the EU and the EEA. There is reason to believe that not all buyers come with honest intentions.
The remote landscape of Finnish South Karelia interests Russians because it borders Greater St. Petersburg.
Kankaanpää is located in southwestern Finland. The small town is about as exciting as is typical of remote rural communities of around ten thousand people. But when a former old people’s home came up for sale about two kilometers from the center this autumn, interested parties soon found themselves. It was three people from Russia who wanted to purchase the building complex. First they wanted to create a leisure facility out of it, then a medical rehabilitation center, then a hostel.
However, it will not come to that, because the Finnish Ministry of Defense has put an end to the approval process. Only a few kilometers away from Kankaanpää is namely the weapons place Niinisalo, an important location of the Finnish artillery. It was feared that the repeatedly changed future use for the former old people’s home was only an excuse and that the interest of those willing to buy arose above all from the proximity to the military area.
The mysterious island of Säkkiluoto
The transaction would probably have happened a few years ago. For a long time official Finland was hardly interested in where foreigners wanted to buy real estate. However, a sensational affair on the Finnish south coast in autumn 2018 suddenly led to a rethink.
It was about an extensive raid in the archipelago off Turku. Hundreds of security forces were deployed in cars, boats and helicopters and searched numerous properties. The focus was on the privately owned islet of Säkkiluoto with its bungalows and outbuildings, a disproportionately large number of docks and an apparently illegally created helipad, all monitored by many cameras and sensors.
To date, the case has not been resolved. The court process is just getting started and is expected to last a long time; It is unclear whether it is “merely” a matter of suspected criminal activity or whether security policy aspects are involved. Coincidence or not, the properties affected by the raid were all located near major shipping routes, deep-sea data cables, or other maritime infrastructure. From the Finnish-registered company that signed as the owner of Säkkiluoto and the other properties, traces led to a Russian citizen who is said to have a number of other passports.
The Säkkiluoto case drew attention to the issue of Russian property ownership in Finland. Three years ago, a law came into force that stipulates that people from outside the EU or the European Economic Area can buy real estate in Finland must apply for a permit from the Ministry of Defence. Because in the meantime it had become clear that Russians were often interested in properties near military or critical civilian infrastructure.
According to Defense Minister Antti Kaikkonen, Helsinki is now even considering the option of refusing Russian citizens the purchase of real estate out of security considerations. Kaikkonen said so in late October the newspaper «Helsingin Sanomat». It would be a spectacular reversal after the practice, which has been very lax for a long time. However, Kaikkonen noted that there may be constitutional obstacles to doing so.
So far, only isolated cases have become known in which permits for the purchase of a property were not granted. In addition to the former old people’s home in Kankaanpää, there is also an industrial plot near the town of Rovaniemi in Finnish Lapland, which a Russian citizen had his eye on. The property is in close proximity to the airport.
At Rovaniemi Airport, the Finnish Defense Ministry banned the sale of a nearby industrial plot to a Russian citizen.
The summer house as a “visa accelerator”
While intelligence ulterior motives may well play a role in some Russian buyouts, there is another motivation. According to statistics, most Russian-owned Finnish objects are located in the South Karelia region. This is attractive because it borders on the greater St. Petersburg area and is therefore relatively easy to reach. Or was – because in the meantime Finland has largely closed the borders because of the Russian war in Ukraine.
However, this did not detract from the attractiveness of Finnish real estate for prospective Russian buyers. In the first seven months of 2022 were completed with more than 200 about the same number of such purchase contracts sealed as in the whole of 2021. Because a summer house not only means a relatively safe investment, it could also pave the way for the owner to a Finnish Schengen visa.
However, Finland also wants to tighten the screw here. President Sauli Niinistö said in September, until now, property ownership in Finland has been taken into account as a supporting factor in a visa application. But in his opinion, this should no longer be the case. In this context, Foreign Minister Pekka Haavisto pointed out that there was a tendency among Russian property owners to divide their property among several people – although the idea behind this was rather transparent.