A man at home in Helsinki. LEHTIKUVA
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Significant changes to Finland’s general housing allowance will come into effect on 1 January 2025, reducing or eliminating benefits for many recipients. These reforms, approved by Parliament, are aimed at reducing state expenditure and will introduce new asset limits, remove support for homeowners, and revise maximum housing costs for certain municipalities.
One key change reintroduces a means test for assets when calculating the housing allowance. For a single-person household, assets exceeding €10,000 will affect the benefit amount.
For households with two or more adults, the limit is €20,000. Any amount over these thresholds will reduce the housing allowance by 20%. If a household’s combined assets reach €50,000 or more, they will no longer be eligible for the allowance.
For example, an individual with €15,000 in stocks would see €1,000 of that amount considered as annual income, impacting their benefit. The calculation deducts debts, though short-term consumer loans are excluded. A personal deduction of €2,000 is also applied to savings in bank accounts.
The changes will affect various types of assets, including property, shares, deposits, and investment funds. However, deposits in ASP (housing savings) accounts and personal-use holiday homes are excluded. The assets of minors are considered only if the child is the primary applicant or spouse of an applicant.
In addition to the asset test, six cities will see reductions in their maximum allowable housing costs for benefit calculations. Kajaani, Kouvola, Lappeenranta, Mikkeli, Pori, and Vaasa will move from cost group II to group III. This shift will decrease the housing allowance for nearly all beneficiaries in these cities or eliminate it entirely.
Support for homeowners will also be discontinued. From January 2025, general housing allowance will no longer cover costs like maintenance fees, loan interest, or upkeep expenses for owner-occupied homes. December 2024 is the final month for such support. Pensioners’ housing allowances are unaffected by this change.
Furthermore, the housing allowance will not receive an index adjustment in 2025, maintaining the same criteria as in 2024.
These cuts aim to save approximately €30 million annually by ending support for homeowners. The asset-based reductions are expected to impact around 3,700 households, with support ceasing entirely for about 2,200 of them, saving the state an estimated €8 million per year. The changes to municipal cost groups are projected to reduce housing allowance expenditures by an additional €5.3 million annually.
The government’s goal is to control public spending while addressing housing benefit costs. These reforms are likely to have a considerable impact on low-income households and those with assets, as well as residents in the affected municipalities.
HT
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Source: www.helsinkitimes.fi
