There will be cuts to the general housing allowance
Changes will be made to the general housing allowance as of 1 January 2025, reducing the amount of housing allowance for some customers and stopping it altogether for some. 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 aim of these cuts is to attain savings in public finances.
Summary
The following changes will be made to the general housing allowance:
General housing allowance 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.
Kajaani, Kouvola, Lappeenranta, Mikkeli, Pori and Vaasa 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.
The change concerning owner-occupied homes will enter into force on 1 January 2025. December 2024 will be the last month for which general housing allowance is still available for owner-occupied homes.
The other 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. Customers who apply for general housing allowance starting 1 January 2025 or later will be immediately affected by the changes.
Kela will stop paying housing allowance for owner-occupied homes automatically and you do not have to take any action.
You do not have to apply for a review of the general housing allowance because of the changes in the legislation. However, if your own situation changes, you must apply for a review of the general housing allowance.
See when you must apply for a review of the general housing allowance.
Legislative amendments concerning the general housing allowance have been approved by Parliament. Firstly, 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. 20% 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.
Example
Pekka lives alone in a rental apartment. Pekka owns shares with a total value of EUR 15,000. Because his household consists of just one person, 20% of the value of assets exceeding EUR 10,000 is taken into account when calculating the housing allowance.
The amount of income on assets for Pekka is (EUR 15,000 - EUR 10,000) x 20% = EUR 1,000.
In other words, the part of Pekka’s assets that affects the amount of the housing allowance is EUR 1,000 per year, or EUR 83.33 per month. In addition to that, Pekka’s earnings and capital income also affect his housing allowance.
The following types of assets will be taken into account in calculating the general housing allowance:
- real estate, not including a summer cottage in own use
- shares in a housing company
- deposits
- business and farming assets as well as shares in corporate assets
- forests
- bonds or equivalent
- publicly listed shares and shares in investment funds
- insurance savings
“First, any debts are deducted from the household's assets, except for consumer loans or other short-term debts, which are not deducted,” says Mirja Peltonen, Senior Coordinator at Kela.
“Then a deduction of EUR 2,000 for disposable income is made from deposits in accounts. This amount of the customer’s total deposits does not affect the general housing allowance. The deduction for disposable income is personal, which means that it is made separately from each family member's deposits.”
The general housing allowance will not be affected by deposits in an ASP (home saver's bonus) account, so on this point there will be no change. Other assets that will not be taken into account include a summer cottage in the household’s own use, a share of an undivided estate, or assets that are not at the disposal of members of the household. The income of a person under the age of 18 will be taken into account only if the person is the applicant or the spouse of the applicant.
Housing allowance will decrease in six cities
Another change applies to the way municipalities are divided into categories for maximum housing costs.
“There are limits for the housing costs taken into account in general housing allowance, in other words, there is a maximum amount of housing costs for which you can get housing allowance. That amount is referred to as the maximum housing costs,” Peltonen explains.
The maximum housing costs depend on factors such as the municipality where the home is. All the municipalities in Finland are divided into three categories according to the cost of living.
As of the beginning of 2025, Kajaani, Kouvola, Lappeenranta, Mikkeli, Pori and Vaasa will be transferred from municipal category II to municipal category III. In practice, this means that the maximum housing costs taken into account for housing allowance will be reduced as of 1 January 2025 for applicants living in these cities.
As a consequence, the general housing allowance for almost all recipient households in these cities will decrease or stop altogether.
End to housing allowance for owner-occupied homes to bring savings of over 30 million euros
According to an earlier decision by Parliament, general housing allowance will no longer be available for housing costs for owner-occupied homes as of 1 January 2025. These costs include maintenance charges, maintenance costs for single-family homes and interest payments on housing loans. December 2024 is the last month for which general housing allowance is still available for owner-occupied homes. The change does not apply to the housing allowance for pensioners.
In addition, Parliament has decided that there will be no index adjustments to the general housing allowance in 2025. This means that the rules for determining the housing allowance will remain the same in 2025 as this year.
The aim of the cuts to the general housing allowance is to achieve savings in public finances. The Government estimates 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.
More information
General housing allowance (kela.fi)
Housing costs for which you can get general housing allowance(kela.fi)