The Government proposes changes to the general housing allowance

The Government is proposing a number of changes that would cut the amount of the general housing allowance. Parliament is expected to approve the changes before the end of 2023, and the changes would come into effect during 2024. This press release contains information about all the changes to the general housing allowance that are currently being prepared.

The Government proposes several changes to the general housing allowance paid by Kela that would reduce the housing allowance paid to customers. Most of the changes are intended to take effect on 1 April 2024.

The Government also proposes that general housing allowance would no longer be available for owner-occupied housing as of 1 September 2024.

Parliament is expected to approve the legislative changes during 2023. Kela will inform the customers about the effects of the changes after this.

Proposed increase in basic deductible, more lenient criteria for families with children

The Government proposes that the basic deductible in connection with the general housing allowance be increased from 42 per cent to 50 per cent. 

When Kela calculates how much housing allowance a household can get, a basic deductible is determined for the household. The amount of the basic deductible is affected by the household income as well as the number of adults and children in the household. The bigger the income is, the larger the deductible. No basic deductible is determined for those with the lowest incomes.

According to the Government proposal, 50 per cent of the incomes that exceed the lower limit of the income limits for general housing allowance would henceforth be taken into account when calculating the basic deductible. Currently 42 per cent of the incomes that exceed the lower limit are taken into account.

The Government also proposes that the calculation formula for the basic deductible in connection with the general housing allowance be changed so that the effects of the other changes that are intended to take effect in 2024 and that would reduce the general housing allowance would be less severe for families with children.

The changes to the basic deductible would concern all households that receive general housing allowance.

The changes are intended to take effect on 1 April 2024. The changes would affect the housing allowance of the household when the household’s allowance next time is adjusted or when housing allowance is granted to a household that does not yet receive housing allowance.

Proposed reduction in the compensation percentage of the allowance

The Government proposes that the compensation percentage of the general housing allowance be reduced from the current 80 per cent to 70 per cent of the difference between the maximum acceptable housing costs and the basic deductible.

If the change is adopted, the general housing allowance would compensate for a smaller percentage of the household’s housing costs and the households would themselves have to pay for a larger percentage of the housing costs.

As a result of the change, the housing allowances of all households that receive housing allowance would be smaller.

The change is intended to take effect on 1 April 2024. The change would affect the housing allowance of the household when the household’s allowance next time is adjusted or when housing allowance is granted to a household that does not yet receive housing allowance.

Proposed abolishment of the earned-income tax deduction

According to the Government proposal, the earned-income tax deduction of 300 euros in the general housing allowance would be abolished. 

The earned-income tax deduction means that a sum of 300 euros per month is deducted from the total earned income of each household member. Currently Kela thus does not take into account some of the incomes when calculating the amount of the incomes that affect the housing allowance. The deduction can be made from wage and salary income, self-employment income and farm income.

As a result of the change, the housing allowance of the household would be reduced if the household members have wage and salary income, self-employment income or farm income.

The change is intended to take effect on 1 April 2024. The change would affect the housing allowance of the household when the household’s allowance next time is adjusted or when housing allowance is granted to a household that does not yet receive housing allowance.

Proposed reduction in the maximum housing costs taken into account in Helsinki

The Government proposes that municipality categories 1 and 2 for determining the maximum housing costs taken into account for the general housing allowance be merged and the maximum housing costs be determined according to the current municipality category 2.

In the general housing allowance, the maximum amount of housing costs based on which you can get housing allowance is specified by law. That amount is referred to as maximum housing costs. 

The maximum amount of the housing costs is affected by such factors as the municipality in which the home is located. Finnish municipalities are divided into four groups according to the cost of living there.

According to the Government proposal, the plan is to include Helsinki with the other municipalities of the Greater Helsinki area in the same municipality category. In such a case, the maximum housing costs that are taken into account for households in Helsinki would decrease slightly.

As a result of the change, the housing allowances of almost all households in Helsinki that receive housing allowance would be smaller.

The change is intended to take effect on 1 April 2024. The change would affect the housing allowance of the household when the household’s allowance next time is adjusted or when housing allowance is granted to a household that does not yet receive housing allowance.

General housing allowance no longer to be granted for owner-occupied housing

According to the Government proposal, the entitlement to general housing allowance would be abolished for owner-occupied housing.

The change is intended to take effect on 1 September 2024. August 2024 would be the last month for which general housing allowance is still available for owner-occupied housing.

When are the proposed changes intended to take effect?

If approved by Parliament, the changes will come into effect as of 1 April 2024. The changes would affect the housing allowance of the household when the household’s allowance next time is adjusted or when housing allowance is granted to a household that does not yet receive housing allowance.

Read more about when Kela customers should apply for adjustment of their general housing allowance.

If Parliament approves the change regarding the abolishment of the entitlement to housing allowance for owner-occupied housing, the change will take effect on 1 September 2024. August 2024 would be the last month for which general housing allowance is available for owner-occupied housing.

The proposed amendments would not apply to the housing allowance for pensioners.

Additional information for customers:

• Ministry of Social Affairs and Health press release on 10 September 2023: Changes proposed to general housing allowance
• HE 74/2023: Government proposal to Parliament for the amendment of the Act on General Housing Allowances
• Usein kysyttyä yleisestä asumistuesta annetun lain muuttamisesta
• The National Pensions Index means an increase of 5.9 per cent to only some Kela benefits – the Government proposes a freeze to the other benefits
• All press releases about the changes to the social security benefits are available at kela.fi/changes.