Rent Increases in Finland: Indexation and Rules

The Finnish rental market (in privately financed apartments) does not have a legislative rent ceiling or regulation that would prevent the free determination of rent. The initial rent is determined purely according to the laws of supply and demand, but the grounds for increasing the rent during the tenancy must be agreed upon in advance in the lease agreement.

1. How is a Rent Increase Agreed Upon? (AHVL § 27)

For the landlord to be able to notify that the rent will increase, for example, in January next year, there must be a clear, written condition for this in the original lease agreement. The most common and legal indices and grounds are:

Cost-of-Living Index (EKI)

By far the most common method in privately financed apartments is to tie the rent to the cost-of-living index (October 1951 = 100) published by Statistics Finland.

• How does it work? The agreement defines the base index figure (mostly the figure known at the time of making the contract) and the review month. Every year at the same time, the new index figure is compared to the base figure, and the rent increases at least by the amount of the rise in living costs.
• Note: Contracts often have a condition that the rent "is reviewed annually according to the index, but it nevertheless never decreases" or includes a certain minimum increase percentage (e.g., "the rent increases according to the cost-of-living index, but at least 1.5% per year"). Combination conditions are allowed.

Flat Increase

It can be agreed in the lease agreement that the rent increases every year by a certain fixed euro amount (e.g., 20 €/month always on January 1st). This is a clear and surprise-free model for both parties.

Percentage Increase A fixed annual percentage increase can be defined in the contract (e.g., 3% every year). Like the flat increase, this is a legal and predictable mechanism.

2. Notification Procedure and Time Limits

Even if the lease agreement says that the rent is increased annually according to the index, in practice, the increase must always be "activated" by the landlord's action.

• Written Notice: The landlord must notify the tenant of the rent increase in writing.
• 1-Month Rule: The notice of the new rent must be delivered to the tenant no later than one (1) month before the new, increased rent takes effect. If the new rent is to be collected on January 1st, the notice must be with the tenant by the end of November at the latest.

With the advent of payment methods and automatic billing, landlords typically send a new calculation document equipped with updated payment details (or amount) in good time to the home or email.

3. What if there is No Increase Condition or it is Unreasonable? (AHVL § 29)

No condition in the contract

If the lease agreement was made five years ago and not a word was mentioned about increases, the landlord cannot just send an increase notice. In this case, the landlord must initiate negotiations with the tenant. If the tenant does not agree to an increase corresponding to the market rent, the landlord's only resort is to terminate the apartment with a long 6-month notice period (if a permissible reason is met) and put it out for rent again. This legislation forces professionals to include conditional clauses right from the start.

Restricting an Unreasonable Increase

No matter how free the increase mechanism in the contract is, Finnish law prohibits the collection of an "unreasonable" rent.

• The rent must not substantially exceed the fair rent charged for comparable apartments in the same area.
• The increase itself must also not be so drastic at once that it would be considered unreasonable (according to the Supreme Court's guidelines, a single increase should generally not exceed the 15% rule compared to the previous one, although there are exceptions when the market changes after apartment renovations). Disputes can be taken to the Consumer Disputes Board for evaluation free of charge.

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