Parliament has decided on cuts to the general housing allowance, most of which will come into force
on 1 April 2024. The information below explains how these cuts will affect you.
What’s happening?
After the 2023 parliamentary elections, the new government led by Petteri Orpo was formed, which
decided in its government programme to implement cuts of €363 million in the general housing
allowance. The aim is to balance the government’s finances. The government prepared the
necessary legal amendments in autumn 2023, and these were approved by the Parliament.
Of the recipients of the general housing allowance, 43 per cent are student households. The cuts to
the housing allowance will affect the benefits received by each of them. On average, the general
housing allowance received by student households will decrease by €76 per month. The level of
variation is high, however, and the amount of benefit lost by any given student can range from a few
euros to hundreds of euros per month.
How will the general housing allowance change?
Several changes to the general housing allowance are coming into effect, and consequently everyone
will lose part of their allowance and some will no longer receive it at all. The changes are as follows:
Reduction in the reimbursement rate
Until now, the general housing allowance has covered up to 80 per cent of a household’s housing
costs. The changes will reduce the reimbursement rate to 70 per cent. This means that the housing
allowance will replace a smaller share of a household’s housing costs, and an increasing share will be
paid by the household. This change will reduce support for all households receiving the housing
allowance by at least 12.5 per cent.
Basic copayment coefficient increases from 42% to 50%
The coefficient used in the calculation of the basic copayment for the housing allowance is increasing
from 0.42 to 0.50. This change is technical, as it compensates for the alteration in the reimbursement
percentage affecting the basic copayment formula. This will ensure that the rate of the cut in the
housing allowance from benefits and earned income remains the same, at around 34 cents per euro
earned.
Abolition of the €300 earned income allowance for the housing allowance
The deduction of the earned income allowance from the housing allowance means that the first €300
earned as salary does not count towards the amount of housing allowance – this sum is disregarded.
The abolition of the €300 earned income allowance will therefore mean that earned income will start
to cut the amount of housing allowance more than before, and at lower income levels. This is why the
housing allowance will be sharply reduced for a large proportion of households whose members have
a reasonable level of earned income. The cut in the housing allowance due to the abolition of the
earned income allowance can be up to €100 for a single person, and even more for households with
more than one adult. Much of the reduction depends on the income level and size of the household,
so there is a lot of variation.
Abolition of the increased housing allowance level for Helsinki
The maximum amount of the general housing allowance depends on the municipality of residence.
Until now, a higher level of housing allowance has been available for households in Helsinki than for
those in the rest of Finland. With the coming reforms, the level of housing allowance in Helsinki will be
lowered to the same level as the rest of the Helsinki metropolitan area, which means that the housing
allowance for households in Helsinki will decrease more than in the rest of the country.
No housing allowance for owner-occupied housing
The general housing allowance for owner-occupied housing will end on 31 December 2024. From the
beginning of 2025, residents of owner-occupied housing will not be eligible under any circumstances
for a housing allowance to cover their housing costs.
When do the housing allowance cuts come into force?
Most of the cuts to the housing allowance will come into force on 1 April 2024. However, the change in
the housing allowance received by an individual household will take effect only when the level of
housing allowance is reviewed for the first time after the date of entry into force. This may happen
when the housing allowance must be checked, for example because of a change in income or a move,
or in the course of the regular annual review of the allowance. In practice, the cut will come into force
for some households this spring, whereas for others it will come into force only at the end of the year.
You can check the date of the annual review of your housing allowance with the Social Insurance
Institution of Finland (Kela).
Unlike other changes to the housing allowance, the general housing allowance for owner-occupied
housing costs will end on 1 January 2025. This means that the housing allowance for owner-occupied
housing will no longer be available next January.
A wealth limit for the housing allowance is being prepared
In addition to these cuts in the housing allowance, the Orpo government has decided to impose a
wealth limit on the general housing allowance. It aims to cut the amount of housing allowance
received by households with assets of more than €10,000. This change is still in preparation, and no
decisions have yet been taken on its entry into force.