Amendments to Expropriation Compensation

The expropriation compensations are amended based on Prime Minister Petteri Orpo’s Government Programme. The amendments enter into force on 1 August.

The amendments include:

In this Legal Alert, we highlight key aspects of the amendments regarding expropriation compensation.

The compensation for expropriation is increased by 25 per cent. This increase is calculated based on the compensation amount before any additional increases. This amount refers to the market value of the property being expropriated (discussed in more detail later in this Alert). The addition of 25 per cent applies to compensation for the property itself and any inconvenience, but not to damages. The distinction between different types of compensation plays a more significant role in determining compensation. This is something to keep an eye on as the previous procedures have not always been clear or consistent in distinguishing between compensation categories. This is partly because the categorisation has not previously affected the amount of compensation.

For expropriations related to water management projects and for expropriations from a property owner at their request in mining projects, the existing one-and-a-half-times compensation remains in effect, and the additional 25 per cent does not apply. In other mining-related expropriations, the 25 per cent addition to compensation applies. Furthermore, in cases where expropriation is carried out on the basis of a building obligation, the 25 per cent increase does not apply.

In Sweden, a similar 25 per cent addition to expropriation compensation have driven up price levels in real estate transactions, though the rise in prices has remained below the level of the additional compensation. There is no indication that the additional payment, awarded on top of the market value in the purchase price, has raised the property’s overall market value.

Best and most productive use of the property as the compensation determinant. The compensation is determined based on the assessed property’s “best and most productive use”, meaning the most likely use of the property that is physically possible, legally permitted, economically viable, appropriate, and that maximises its value. Prior to this amendment, compensation was based on the property’s price at the time of expropriation. This new principle means the property’s market value may exceed its current-use value at the time of assessment. For instance, if there is a realistic expectation of changes affecting the property’s usability, the property may enter a new market where its value exceeds the current-use value. Such expectations often arise near towns or urban centres, where urban growth and land-use planning create prospects of future construction opportunities. When these expectations are sufficiently strong, purchase prices higher than those typical for agricultural and forestry use emerge. Consequently, the land shifts from the agricultural and forestry market to the “raw land market.” The expectation value generated in the raw land market influences the market value and must be taken into account when assessing compensation.

Only alternative uses and their feasibility that are apparent at the time of assessment can be considered. In many cases, an alternative use of an area requires a permit or decision by an authority. However, this should not be considered a prerequisite for compensation if the permissibility of the alternative use can otherwise be reliably anticipated. As a general rule, any use possibility that has not been denied by an authority’s decision may be considered unfeasible. The authority responsible for the expropriation procedure assesses the alternatives. The parties may also provide claims and supporting evidence concerning the method to be used. The authority must, at a minimum, take into account alternative uses permitted under current legislation. If an alternative use proposed by a party is deemed unlikely by the authority, the decision must be justified in the expropriation decision.

In some situations, the subject of the expropriation is of such a nature that there is no market for. For instance, in strip-like expropriation projects, expropriated units typically consist of small parcels belonging to various properties. There is no effective market for such areas, which means that compensation should, for example, be determined on a segmented property basis. If the expropriation area, such as a power line corridor, concerns a forest land, the value of the expropriated property may be established based on the forest information pertaining to that property using the summation approach (in Finnish: summa-arvomenetelmä), as previously. In this method, the value of the land, the value of the seedling stand, the expected value of the timber stand, and the felling value of the timber stand are added together. This is not the only possible method though, as noted by the Economic Affairs Committee of the Parliament. In its decision (KKO 2025:19) from February 2025, the Supreme Court found prior to the amendments to expropriation compensation that a forest parcel derived a special value from a previously erected telecom mast and the associated former lease agreement, exceeding mere forest-related values. The Court deemed that compensation could not be based on information about purchase prices for forestry land. Instead, the valuation was based on an income approach, in which the earlier lease agreement was taken into account.

Value reduction regarding an expropriation for a local detailed plan is repealed. Under the repealed regulation, if a municipality acquired land for community development after deciding to prepare or amend a local detailed plan, any increase in value occurring post-decision was disregarded. This exception to the main principle of full compensation has now been removed.

When property is expropriated that the owner mainly uses for living or for practicing their profession, the compensation must be set at a level that allows the owner to acquire a new home that meets the same housing needs or a new property that provides the same livelihood, regardless of the market value of the expropriated property. This regulation concerning residential and professional property is extended to cover all expropriation cases falling under the Expropriation Act (603/1977), rather than solely where the project causing expropriation affects the property’s price (positively or negatively). This amendment also applies to compensation in mining proceedings.

If you have questions about the impact of these amendments on your business or need compliance assistance, please contact us or your regular Borenius contact.