Helsinki City Housing (Heka) has announced plans for rent hikes for its rental apartments, citing rising interest rates and escalating expenses.
In an interview with Yle, Heka's CEO Jaana Närö said that some areas may experience rent increases of more than 15 percent. The rent hikes are expected to be confirmed in early August.
Earlier this year Heka, which is owned by the City of Helsinki, announced an average rent increase of over ten percent. This followed a four percent increase in 2022 and an average of 1.5 percent in previous years.
Substantial rent increases could bring Heka's rents closer to market rates than the city's set target of maintaining a minimum 40 percent difference from rents on Helsinki's open market.
Närö said the 40 percent target initially set by the city was an aspiration and not formally defined. She also noted that Heka's rents were currently based on costs.
"A 15 percent limit in line with good tenant practices means that it does not require any justification; you can increase by 15 percent just for fun. But when it is based on actual costs, there is no such 15 percent limit," Närö said.
Heka is carrying approximately three billion euros in debt, which has been a factor in justifying the rent hikes. The Helsinki City Group Committee previously suggested that Heka has not made adequate preparations for interest rate normalisation and demanded that the firm implement corrective measures to address the situation. Helsinki City cannot provide financial support to Heka.
"It [financial support] has not been requested, and the City cannot do that for its own company. Other rental housing companies are in the same situation. They also have similar pressures. In any case, state aid regulations prohibit giving such city support," Närö said.
Currently, 92,000 people live in Heka's rental apartments, making it Finland's largest rental provider.
In the newest Heka properties, rents can exceed 20 euros per square metre. However, the average rent has been around 12.60 euros per square metre, but after a 10 percent increase, that square-metre price would rise to about 14 euros.
Heka's rent levels vary quite a bit, depending on a rental's location and property type, but the potential rent increases could bring rent levels of the most expensive Heka studio flats to around 800 euros a month.
In the open residential rental market, square-metre prices in Helsinki average from about 22 euro to as much as 25 euros in the most expensive areas.