Changes proposed to general housing allowance – Ministry of Social Affairs and Health requests comments

Ministry of Social Affairs and Health

8.9.2023 17.52 | Published in English on 11.9.2023 at 12.14

Press release 114/2023

The Ministry of Social Affairs and Health requests comments on a draft bill that proposes amendments to the Act on General Housing Allowance. The proposed amendments would 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 draft bill proposes that in future housing allowance would no longer be available for owner-occupied homes. In addition, the reimbursement rate of housing allowance would be lowered from the current 80 per cent to 70 per cent. The draft bill 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. 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 will 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. This 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 bill 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 measures are part of the Government Programme

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 bill would balance central government finances and curb the strong growth in housing allowance expenditure. The number of households receiving general housing allowance and the housing allowances paid have increased considerably in recent years. At the end of 2012, about 181,000 households received housing allowance and the annual housing allowance expenditure amounted to EUR 0.605 billion. At the end of 2022, about 382,000 households received housing allowance, with the annual housing expenditure amounting to EUR 1,565 billion.

The proposal concerns the 2024 budget proposal and is intended to be considered with it.

The bill 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.

Comments on the draft bill should be submitted by 20 September 2023 at 16.15.

Inquiries:

Liisa Siika-aho, Director General, tel. +358 295 163 085, firstname.lastname@gov.fi

Mikko Horko, Ministerial Adviser, tel. +358 295 163 344, firstname.lastname@gov.fi

Sakari Rokkanen, Special Adviser to the Minister of Social Security, tel. +358 295 163 109, firstname.lastname@gov.fi