Real estate investor Juha Parviainen has been trying to find a tenant for one of his flats in East Helsinki since March.
"I've already lowered the rent by 10 percent, but it's still hard to find a suitable tenant," he explained, saying the problem isn't the price anymore, but finding good tenants.
Parviainen, who has been a real estate investor for around two decades, owns a number of apartments in the capital area and in other parts of Finland. But he said that the situation in Helsinki is exceptional.
In an effort to fill vacant flats, he arranges showings every other week.
"There might be five scheduled showings, and one [prospective tenant] shows up," he said, adding that the rest of them don't even inform him they're not coming.
Statistics Finland recently reported that rents for privately financed rental properties in the capital area decreased for the first time since the agency started tracking the figure, in 2015. In the second quarter, the region saw a 0.3 percent year-on-year decrease in rents, while rents increased by nearly a percentage point in the rest of the country.
Rental fees for studio apartments in particular fell in all three of the capital area's three cities, Helsinki, Espoo and Vantaa.
Korhonen said he thinks the reason for the decline is clearly an oversupply, with more available flats than people who are interested in renting them.
Pointing to other parts of the country, Korhonen said there is a better balance between supply and demand, and that rental fees there reflect the general increase in costs.
Tenant's market
According to rental agent Henri Haaksiala, it is a tenant's market right now.
"Just a few years ago, rental apartments were almost filled up. Now,the competition for good tenants is fierce, and now flats are vacant for longer periods. Landlords don't want to risk months of vacancies, so prices are becoming more flexible," Haaksiala explained.
He said the current situation has been brewing for some time and that tenants' negotiating positions are strong because they can shop around. The current state of affairs is particularly good for students who are starting school this autumn, as well as others looking for a new place to live, as they are more able to find a suitable home at a lower price than before.
According to Haaksiala, there is more room for negotiation now, too.
He said that landlords need to adapt to the changed market conditions, recommending they lower rental deposit sums or make other accommodations that will make it easier for tenants to sign leases.
"When rents fall and competition for tenants becomes tougher, it's no longer necessarily sensible to require a two-month rental deposit. Many larger operators are even offering apartments without deposits. Investors should also consider making small improvements to an apartment, if it's empty," Haaksiala said.
Government reforms of housing benefit arrangements have also affected the rental market.
When the changes go into effect in August, students will no longer be eligible for general housing benefits, which in turn could lead them to more affordable living arrangements, according to Statistics Finland chief actuary, Martti Korhonen.
Now, the situation is like it was before 2017, when students received housing supplements as part of their student financial aid. After that year, the majority of higher ed students lost the housing supplement, prompting them to seek general housing benefits.
He said the coming changes will have various effects in different places, "especially where there are too many new, or too expensive, available rentals," Korhonen said.
