Rental Market in Helsinki: 5 Tips for Private Landlords

Helsinki and the entire metropolitan area have been a sought-after destination for both domestic and international migration for years. As a Nordic capital city, Helsinki is particularly attractive in the rental housing market. However, in recent years, significant changes have occurred in the rental housing market, such as doubling of marketing times, decrease in rents, and tougher competition among landlords for the best tenants. In this article, we will review the current state of the rental market in the metropolitan area, the reasons for these changes, and provide five tips for individual landlords to improve the competitiveness of their properties.

The current state of the rental market in Helsinki

For years, rising rents made Helsinki and the entire metropolitan area an attractive destination for both domestic and international migration. However, significant changes have taken place in the rental housing market in recent years, such as a doubling of marketing times, rent decreases, and increased competition among landlords for the best tenants. In this article, we will examine the current state of the rental market in the metropolitan area, the reasons for these changes, and provide five tips for individual landlords to improve the competitiveness of their properties.

The pandemic has caused mobility to decline and restrictions have increased demand, which has driven the housing market to record highs in 2021. The rental market lost a significant portion of its best applicants in various directions. At the same time, new rental properties, often aimed at investors, continued to be built in the metropolitan area and rapidly growing urban centers. With the pandemic increasing remote work, interest in smaller studio apartments has decreased and former investment studios are now being sold off, providing first-time homebuyers with a good opportunity.

Five tips for landlords - how to stay competitive

Maintaining competitiveness in a challenging rental market requires strategically considered decisions from landlords.

1. Price your rental request correctly - you probably won't get the same rent as, for example, three years ago. Unrealistic pricing can lead to unnecessary empty months and cost you more than a few tens of rent reduction. My boutique real estate firm Alvarist offers a free rentability analysis through the Alvar-asunnot.fi service, which you can use as a basis for creating a new apartment ad.

2. Consider offering discounts either on the first month's rent or the deposit. The major players in the industry have largely abandoned deposits, so requiring a deposit equivalent to 2-3 months' rent makes your property a less attractive option. There are several options on the market where an external company guarantees the landlord's receivables under conditions equivalent to the deposit for a monthly fee.

3. Specialize as a landlord: In recent years, many furnished apartments have been moved from the market to the so-called long-term rental portfolio. Familiarize yourself with the supply in your own market area and consider whether your property could be rented out at a better price furnished, for example, through Airbnb or Booking services.

4. Once the strategy and pricing have been decided, make sure that your property is available in more than one channel. There are tools that combine different channels for short-term rentals. For traditional rentals, the most important channels in Finland are Oikotie, Tori, and Vuokraovi.

5. Be flexible and service-minded. Being a landlord is a service profession and in the current situation, tenants have more power than perhaps ever before. Remember customer orientation in both communication and lease terms.

A glimpse into the crystal ball: What does the future look like?

Although there are currently challenges in the market, it is important to remember the golden rule of investing: a real estate investor's quarter is 25 years. Helsinki's population is expected to grow significantly, at least until 2040. Rapid population growth and the end of the real estate investment boom mean that demand will continue to grow, but hopefully we will see more diverse housing production in the future than just small, efficient studio apartments. Within the century-long quarter, the future of landlords in Helsinki looks bright. As long as, for example, the price development in Stockholm and Copenhagen is upward, Helsinki will follow suit.

In summary, it is currently difficult to leverage investment property loans for positive cash flow in the Helsinki metropolitan area, but if the landlord can finance part of the loan servicing costs themselves, there is still an opportunity to make big profits through property appreciation, at least in the "quarterly" review period. In a decades-long strategy, it is more important to minimize vacant months than to seek quick profits. Long-term cooperation with a broker partner enables on-demand marketing of the property whenever a tenant change is imminent, improving the property's circulation. The costs incurred by the broker are a negligible expense when the appreciation can eventually be realized, and in the meantime, protecting cash flow is more important than minimizing costs.