Changes proposed to general housing allowance
The Government has submitted to Parliament a proposal for amending the Act on the General Housing Allowance. The proposed amendments concern lowering the reimbursement rate of the allowance, tightening the effect of the income that affects the allowance, and abolishing the earned income allowance and the support for owner-occupied housing.
The Government proposes that, in future, housing allowance would no longer be available for owner-occupied homes. In addition, the reimbursement rate of the housing allowance would be lowered from the current 80 per cent to 70 per cent. The Government also proposes abolishing the earned income allowance of EUR 300 (known as the exempt amount) that concerns earned and entrepreneurial income and is deducted from that monthly income of a member of the household that affects the allowance. Thus, in future, earned income would be taken into account in full when determining the housing allowance.
By abolishing the earned income allowance and the housing allowance for owner-occupied homes, support would be targeted at households with the lowest income and the most limited means. The purpose of abolishing the earned income allowance is to better encourage jobseekers to work full-time. This change is also part of the preparations for launching universal credit in accordance with the Government Programme.
The City of Helsinki would be merged into the same municipal category with the rest of the Greater Helsinki area. The legislative amendment would reduce the maximum amount of housing costs that is taken into account in the housing allowance in Helsinki.
The basic deductible is determined when calculating the amount of housing allowance. There is no basic deductible for those on the lowest income. When determining the basic deductible, 50 per cent of the income exceeding the lower limit would in future be taken into account instead of the current 42 per cent. In addition, the coefficients for adults and children affecting the basic deductible would be changed so that the basic deductible would be slightly lower for families with children and they would receive a slightly higher allowance. The proposal would mitigate the effects of other proposed amendments on families with children.
The proposed amendments would not apply to the housing allowance for pensioners.
Proposed amendments would strengthen general government finances
The purpose of the measures put forward in the proposal is to strengthen general government finances in line with the policies outlined in the Government Programme. The proposal would balance general government finances by EUR 308 annually and curb the strong growth in housing allowance expenditure. Over the past ten years, the number of households receiving housing allowance has increased by approximately 200,000 and the annual housing allowance expenditure has increased by EUR 0.96 billion. The number of people receiving allowance increased the most when students came under the scope of the general housing allowance in 2017.
The proposed act is scheduled to enter into force on 1 April 2024. The amendments will enter into force as the allowance in question is adjusted. Abolishment of the allowances for owner-occupied homes is intended to enter into force on 1 September 2024.
Liisa Siika-aho, Director General, tel. +358 295 163 085, [email protected]
Mikko Horko, Ministerial Adviser, tel. +358 295 163 344, [email protected]
Sakari Rokkanen, Special Adviser to the Minister of Social Security, tel. +358 295 163 109, [email protected]