2017
Summary of the report, dated 20 April 2017, on improving comprehensive state security in transfers of immovable property
Introduction:
One of the goals in Prime Minister Sipilä’s Government Programme is to draft more detailed legislation on the acquisition of land areas and properties significant from the point of view of comprehensive security. A study was conducted to find concrete and feasible ways to improve comprehensive state security in transfers of ownership and right of possession concerning immovable property adjacent to vital functions of society as well as in significant investment projects. Strategic sites where the surrounding area may have security dimensions include, among others, military areas, strategic road, railway, bridge and dam structures, shipping routes and harbour structures as well as sites associated with telecommunications and electricity transmission.
Key contents:
The study sought ways to promote the State’s capabilities to produce real-time situation awareness of changes in the ownership and right of possession of immovable property and of operators associated with significant investment projects. It also examined how well current official registers are suited to the security authorities’ needs concerning situation awareness analyses.
The study examined the following official registers from the perspective of situation awareness: the Land Information System and the Official Purchase Price Register maintained by the National Land Survey of Finland, the Population Information System maintained by the Population Register Centre, the Business Information System maintained jointly by the Finnish Patent and Registration Office and the National Board of Taxes, as well as the Trade Register and the Register of Associations maintained by the Finnish Patent and Registration Office. It also reviewed the data content of the forthcoming register of limited liability housing companies, planned for introduction in 2019–2020. The final report of the study makes several suggestions on how to improve the official registers and how to support the developing of security authorities’ user interfaces in order to improve their capabilities to assess situation awareness. The report also includes proposals on how real-time situation awareness could be produced.
The study also reviewed potential ways to develop real estate legislation to better take into account the needs of comprehensive security. The purpose was to lay the groundwork for the drafting of legislation. The development targets identified included, among others, revising the redemption legislation, extending the right of pre-emption to the State, introducing a restricted obligation to hold a permit or provide notification associated with real estate ownership of non-EU/EEA citizens, facilitating greater utilisation of land use planning as well as the possible developing of a permit system for planning needs and construction.
The Act on Redemption of Immovable Property and Special Rights (603/1977) enables the redemption of immovable property to meet a public need. However, there is no definition of public need in the Act. In administrative and legal practice, public need has been interpreted to exist in connection with several types of projects by public authorities and private operators. The interpretation of ‘public’ has been fairly broad and the range of the ‘need’ has been extensive. The legislator has not considered it necessary or possible to introduce a more precise definition of ‘public need’ into the legislation, although there are no legal obstacles for it. The provision on public need is, however, extremely flexible, and the criteria can be met even in projects associated with comprehensive security where redemption of property is necessary.
The report shows that the Act on Redemption of Immovable Property and Special Rights could be revised so that needs associated with comprehensive security would be identified in the Act more widely than at present. This kind of regulation would significantly depart from the current legal tradition. The Act on Redemption of Property for Defence Purposes (1301/1996) could be revised regarding the scope of defence purposes by enacting that even areas adjacent to sites administered by the Defence Forces could meet the conditions for redemption of property. The Act on Redemption of Property for Defence Purposes enables the temporary prohibition of operations after the Ministry of Defence has initiated the preparations for redemption of property. The Act should more clearly prohibit such use of real estate that could have harmful effects on the operations of the Defence Forces. The provision on advance possession could be revised to ensure the efficiency of redemption procedures in cases where the security interests of the State could be jeopardised. These amendments would have extensive significance for comprehensive security. The Act on Redemption of Property for Defence Purposes would, naturally, apply only to the operations of the Defence Forces. The report says that further preparations should pay particular attention to specifying the legal means concerning areas outside the control of the Defence Forces that are significant for comprehensive security.
According to the report, the pre-emption legislation has not been used in Finland to safeguard comprehensive security in ways that would have enabled the public authorities to intervene in transfers of immovable property significant for comprehensive security. The current Pre-emption Act (608/1977) applies only to the municipalities’ right of pre-emption in land acquisitions for urban development, recreational and protective purposes. According to the Pre-emption Act, a municipality exercising its right of pre-emption replaces the purchaser on the agreed sales terms and is also obliged to reimburse any financing or other necessary expenses. State intervention in real-estate transactions could be implemented either by introducing to the current Pre-emption Act provisions on the State’s right of pre-emption or by enacting a new act on State pre-emption with provisions on pre-emption on the grounds of comprehensive security. Of the two alternatives, the second one would be somewhat clearer: the first option would entail that one and the same act would contain pre-emption conditions based on very different grounds. Harnessing the pre-emption legislation to serve the promotion of comprehensive security would be possible either by assigning the State extensive rights of pre-emption in real estate transactions or by restricting the State’s right of pre-emption to specific areas, such as areas adjacent to predetermined security-sensitive sites. Giving the State right of pre-emption without any territorial restrictions could lead to problems to real estate transfers that could be difficult to control. Pre-emption legislation with territorial restrictions would be one alternative for effective promotion of comprehensive security.
Currently there is no Finnish legislation on real estate ownership of foreigners. Until 1999 Finland did have an act on the surveillance of non-residents’ and foreign organisations’ acquisitions of real property in Finland. There are still restricted possibilities to introduce regulations for a permit or notification system for non-Finnish/EU/EEA citizens or operators. International agreements impose some restrictions on a permit system. However, advance control could be possible within the limits of national security exceptions in restricted application fields at the very least. Conditions for the exercise of such control would be, first of all, the necessity of control and a security-based need of compelling public interest. Secondly, the restrictions could not discriminate arbitrarily. A control system on real estate ownership of non-citizens could be based on an obligation to hold a permit or an obligation to provide notification. It could even include both types of advance control means. Provisions on the system should be laid down by an act, and its scope of application could have territorial and/or subject-related restrictions. For example, it could apply to a precisely defined area, such as a border region, and possibly include areas immediately next to specified ‘public sites’ (e.g. areas next to garrisons and backup landing sites). The provisions on the territorial scope of application should be as precise as possible.
The report states that land use planning and construction control could be developed so that planning and construction control systems would take better into account comprehensive security. The current national land use guidelines from 2008 discuss some targets that are significant for comprehensive security. It is stated under target 4.2 that “[in] land use planning, the need for national defence and the guarding of the borders should be taken into account, and sufficient areas should be allocated to garrisons, shooting and training areas, storage functions and other prerequisites for the functioning of the national defence and the guarding of the borders”. However, the land use targets do not seem to include the general promotion of comprehensive security. Neither do they contain any specific comprehensive security targets beyond the statement above.
The report states that the provisions in the Land Use and Building Act (132/1999) concerning the content requirements for the various plans do not unambiguously cover the comprehensive security perspective in land use planning. However, comprehensive security could be specifically mentioned in the content requirements, defined in the legislation, for building plans. The building permit system in the Land Use and Building Act does not at present contain any special conditions or obligations with regard to comprehensive security. Therefore, the system could be developed in this regard so that comprehensive security would be taken into account in the consideration of building permits even at the level of legislation.
According to the report, there are provisions on notifications for real estate transfers in the Act on Public Purchase Witnesses (573/2009) and the Government Decree on Public Purchase Witnesses (734/2009). Nationality is one of the details entered in the notification. The notification system could be further developed by including the obligation to specify whether the receiver of transfer is a non-EU/EEA citizen or operator. This information would speed up the processing of the notification.
The legislation on real estate agents consists of the Act on Working as Real Estate Agent and Housing Rental Agent (1074/2000) and the Act on Real Estate Agencies and Housing Rental Agencies (1075/2000). If there were provisions restricting real estate transactions of foreigners (non-EU/EEA) or establishing a system of advance control, real estate agents would be obliged to provide their clients with the relevant information: under section 8 of the Act on Working as Real Estate Agent and Housing Rental Agent, a general rule is that real estate agencies must provide their clients with all the information that the agency knows or should know will affect decisions concerning the sale or rental agreement or any other agreement concerning right of use.
Conclusions:
It is necessary to develop the legislation in order to improve comprehensive state security in matters pertaining to transfer of immovable property. The report identifies several possibilities to improve the authorities’ remit for taking action to safeguard national security. A more detailed estimate of the necessary measures will be specified once the next phases of the preparation are decided.
For further information, please contact staff officer Vesa Halinen, 0295 140 451 or legal counsellor Teija Pellikainen, 0295 140 606.