Skip to content
Media
Valtioneuvoston kanslia frontpage

Infill construction is a possible alternative to major renovations

Government Communications Department
Publication date 15.11.2016 10.02
Press release 494/2016

VTT Technical Research Centre of Finland Ltd has studied the effects of easing decisions taken on infill construction by limited liability housing companies. In some cases, the demolition of run-down buildings owned by such companies proved to be a viable alternative. The findings of the study will be used when evaluating the need to amend the Limited Liability Housing Companies Act.

Infill construction means the development of growth areas by demolishing the old building stock and building more housing in its place. To increase the density of the urban structure, old buildings could be demolished more efficiently to make way for ones that meet the growing need for housing. On the other hand, limited liability housing companies with buildings in poor condition face difficulties when needing to make renovation investments that are out-sized in relation to the apartments’ value.

The current Limited Liability Housing Companies Act requires a unanimous decision by all shareholders on the demolition of buildings. The result is that demolition is now very rare and is only undertaken where renovation would be non-viable due to the poor condition of a building. But infill construction could be used more often, if such projects could be begun on the basis of a majority decision.

May be profitable in growth areas

There is a desire to curb urban sprawl by focusing the construction of new housing in the existing built environment. One means of achieving this is infill construction, which involves extending the building rights on plots. In general, demolition and new construction are being analysed as alternatives to major renovations, such as renewing a building’s plumbing.

Shareholders can finance a substantial portion of the infill construction of new housing from the income generated by exploiting any additional building rights obtained by the housing company. The requirements for such projects include external expertise and funding, and a change to the building plan.

The study finds that infill construction can be financially viable in growing but non-densely built city areas where housing is in demand. The technique did not prove sufficiently viable in areas that are in decline.

Needs to change the Limited Limited liability Housing Companies Act will be evaluated

The Ministry of Justice will consider amending the Limited Liability Housing Companies Act on the basis of the study’s findings.  The project is based on the Government Programme’s objective to ease decision-making on infill construction.

“We now need to review the requirement for unanimity on limited liability housing company activities, with a view to meeting future needs. On the other hand, the study also shows that the creation of effective implementation and co-operative models would have a major practical impact, alongside the easing of decision-making on infill construction,” says Markus Tervonen, Senior Adviser at the Ministry of Justice.

The report on infill construction by limited liability housing companies was completed as part of the implementation of the Government's analysis and research plan for 2016. The report was drawn up by Terttu Vainio, Pertti Lahdenperä and Markku Kiviniemi of VTT.

Report on infill construction by limited liability housing companies (in Finnish)

Further information: Terttu Vainio, Senior Scientist, VTT Ltd, tel. +358 40 508 0983, e-mail: [email protected] and Markus Tervonen, Senior Adviser, Ministry of Justice, tel. +358 295 150 558, e-mail: [email protected]

For further information on the Government's analysis and research activities, see tietokayttoon.fi