Derogation permits for vacant office buildings as a tool to finance tram infrastructure and street or park renovations?
The Finnish Ministry of the Environment has published a draft of a new Urban Development Act, which would reintroduce the possibility of land use agreements and development compensation in connection with derogation permits. This would mark a significant shift from the current legal state established by KHO 2016:89, where such compensation has only been permitted in zoning processes.
Under the draft, compensation would no longer be based on the increase in land value, but on actual costs of urban infrastructure, such as streets, parks, and public transport. Notably, these costs could include major investments like tramline construction or large-scale street renovations, and could be allocated across a broader area and time span (up to 15 years forward or backward).
In practice, this could make it more attractive for municipalities to grant derogation permits — particularly for converting vacant office buildings into residential use—while requiring landowners to contribute to wider infrastructure costs. This creates a new mechanism to both enable urban redevelopment and finance public infrastructure.
Read the entire article in Finnish here.
