Paradise of Russian tycoons. They are buying homes. The government is blocking transactions
2:05 PM EDT, October 20, 2023
The Finnish Ministry of Defense announced on Thursday that it had blocked three transactions for the sale of attractive properties in vacation resorts in Finnish Karelia. Two of them were wanted by a well-known businessman from Petersburg in the east of the country.
The denial decisions were signed by Defense Minister Antti Hakkanen. The objections were justified by the fact that the transactions could pose a "threat to the maintenance and organization of national defense, as well as a complication for supervision over territorial integrity." According to the minister, the suspicious transactions were "linked to officers of the Russian security apparatus".
This refers to properties located in the region of the largest Finnish lake, Saimaa, in the belt along the border with Russia. In one case, a businessman from St. Petersburg was interested in purchasing a villa on the grounds of a historic palace, who had previously invested in prestigious local properties in Finland. His counterparts included, amongst others, other Russian businessmen and officials associated with Russian state-owned companies.
A man with dual Russian and Israeli citizenship wanted to purchase the third property: a cafe building and a vacation home in Kitee, but the sale was blocked by the defense department.
After Russia launched a military attack on Ukraine, the number of property purchases by Russians in Finland dropped, but then a significant increase in transactions was observed. This was related, among other things, to the fact that owning property in Finland made it easier to enter the country. A phenomenon of dividing one property among several people was also observed.
Between 2015-2020, Russians were purchasing about 150-200 properties annually. There were even more transactions before then (during 2011-2014 about 300-600 per year). In 2021 there were about 220, and in 2022 there were nearly 320 more. So far this year, up until May there have only been fewer than 50 transactions. The reasons include mainly EU sanctions, difficulties in bank payments, and a more restrictive policy by the Finnish authorities concerning the entry of Russians into the country and their activity in the real estate market.
The Finnish government is considering introducing a ban
At the beginning of 2023, regulations were introduced that give the Ministry of Defense the right to interfere more in the transactions of land or houses acquisition by foreigners from outside the EU, so as to effectively counter potential hybrid operations, especially in the case of properties located near Armed Forces or Border Guard facilities.
As Minister Antti Hakkanen announced on Thursday, commenting on the negative decisions issued, the department is currently also considering the options of introducing a total ban on the sale of properties to entities outside the EU and EEA.
