The Social Insurance Institution-Kela will make changes to the housing allowance as of 1 January 2025, reducing the amount of housing allowance for some people and stopping it altogether for some, said Kela in a press release on Thursday.
The four-party alliance government led by Kansallinen Kokoomus (National Coalition Party-NCP) decided to cut the housing benefit for the low income people and pensioners with the view to save a total of 68.7 million euros annually.
The changes mean that assets will be taken into account when calculating the amount of housing allowance, and the benefit will no longer be available for owner-occupied homes.
The assets of all members of the household will affect the amount of the housing allowance.
Meanwhile, residents of six cities will get lower amount of housing allowance from the beginning of next year.
The amount will be reduced in Kajaani, Kouvola, Lappeenranta, Mikkeli, Pori and Vaasa as the six cities will be transferred from municipal category II to municipal category III.
The amount of general housing allowance will be reduced for almost all recipients in these cities.
As per the new law, assets will be taken into account in granting general housing allowance. This means that part of the household’s assets will affect the amount of the housing allowance as of 1 January 2025.
The limit for the assets taken into account is assets exceeding EUR 10,000 for single-person households and assets exceeding EUR 20,000 for households of two or more adults. Twenty percent of the amount that exceeds the limit will be taken into account in the calculation of housing allowance.
If the household has assets of a total of EUR 50,000 or more, the household will not be able to receive housing allowance.
“First, any debts are deducted from the household's assets, except for consumer loans or other short-term debts, which are not deducted,” said Mirja Peltonen, Senior Coordinator of Kela.
The Government estimated that savings of more than EUR 30 million a year can be achieved by ceasing to pay general housing allowance for owner-occupied dwellings.
In October 2024, general housing allowance for an owner-occupied home was paid to 16,136 households.
Taking assets into account in the calculation of general housing allowance will reduce the housing allowance payments to an estimated 3,700 households, out of which 2,200 households will no longer be entitled to housing allowance at all. This will reduce government expenditure on housing allowance by an estimated EUR 8 million a year.
The change to the way the municipalities are divided into categories will reduce government expenditure on housing allowance by a further EUR 5.3 million a year, according to estimates.
Meanwhile, Kela will introduce tighter eligibility criteria for the housing allowance for pensioners from January 2025.
Under the new criteria, income will reduce the amount of the housing allowance for pensioners more than it does at present. A basic deductible and an additional deductible are deducted from the housing costs recognised under the housing allowance scheme.
The tighter rules will specifically impact customers who have assets or a higher income. The reduction in the housing allowance will be compensated for customers who receive social assistance. The changes will save the state EUR 38.4 million but will increase spending on social assistance by EUR 0.4 million. Further, they will reduce payments to wellbeing services counties for assisted living services by EUR 12.6 million. The total savings in public spending are estimated to be EUR 25.4 million.
The changes will also enter into force on 1 January 2025, but they will not have an impact on the amount of the general housing allowance until the next time the housing allowance is reviewed.
People who apply for general housing allowance starting 1 January 2025 or later will be immediately affected by the changes.
- Housing
- Benifit
- Cuts
Source: www.dailyfinland.fi
