Monday May 20, 2024

Reimbursement to lower 10%

No housing benefit for owner-occupied homes from Sep 2024

Published : 13 Oct 2023, 02:19

Updated : 13 Oct 2023, 02:24

  DF Report
DF File Photo.

Housing benefits will be cancelled for the for owner-occupied homes while reimbursement rate of the allowance will be reduced by 10 percent from September and April 2024 respectively as the government started to move to stiffen housing benefit supports.

The government on Tuesday submitted to Parliament a proposal for amending the Act on the General Housing Allowance, said an official press release.

The government proposed that, in future, housing allowance would no longer be available for owner-occupied homes, said the Ministry of Social Affairs and Health on Thursday.

In addition, the reimbursement rate of the housing allowance would be lowered from the current 80 per cent to 70 per cent.

By abolishing the housing allowance for owner-occupied homes, support would be targeted at households with the lowest income and the most limited means.

The City of Helsinki would be merged into the same municipal category with the rest of the Greater Helsinki area.

The legislative amendment would reduce the maximum amount of housing costs that is taken into account in the housing allowance in Helsinki.

The basic deductible is determined when calculating the amount of housing allowance. There is no basic deductible for those on the lowest income. When determining the basic deductible, 50 per cent of the income exceeding the lower limit would in future be taken into account instead of the current 42 per cent.

In addition, the coefficients for adults and children affecting the basic deductible would be changed so that the basic deductible would be slightly lower for families with children and they would receive a slightly higher allowance. The proposal would mitigate the effects of other proposed amendments on families with children.

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

The measures were taken as per the programme of the four-party alliance right-wing government.

The proposal would balance general government finances by EUR 308 annually and curb the strong growth in housing allowance expenditure.

Over the past ten years, the number of households receiving housing allowance has increased by about 200,000 and the annual housing allowance expenditure has increased by EUR 0.96 billion.

The number of people receiving allowance increased the most when students came under the scope of the general housing allowance in 2017.

The proposed act is scheduled to enter into force on 1 April 2024. The amendments will enter into force as the allowance in question is adjusted.

Abolishment of the allowances for owner-occupied homes is intended to enter into force on 1 September 2024.