Cuts on general housing allowance - see how they will affect the students living in Oulu
The Finnish Parliament has decided on cuts to general housing allowance and a majority of them will come into effect on the 1st of April. In this article we’ll go through how these cuts will affect the lives of students living in Oulu.
What is happening?
The Government decided to cut housing allowance for approx. 363 million euros in the government programme. The goal is to balance the state finances of Finland. The cuts were approved by the Parliament last autumn and are by that irreversible.
Students make up to 43 per cent of the receivers of general housing allowance. All students receiving the allowance will be affected by the cuts. The precise amounts depend on the size of the household and the incomes of household members. The cuts can be over 100 euros for a student living alone and even more, if there is more than one person in the household.
How will the general housing allowance change?
There will be several changes that will affect the allowance. Due to these changes the level of allowance will decrease for all households and some will be left even without the allowance. Here are the most remarkable changes cutting the allowance:
- Reduction in the compensation percentage of the allowance:
The compensation percentage of the general housing allowance is reduced from the current 80 per cent to 70 per cent of the difference between the acceptable housing costs and the basic deductible. This means that the allowance does not cover as much of the households housing costs as it did before. This will reduce the allowance of the households by at least 12,5 per cent. - The 300 euro deduction under the general housing allowance scheme for earned income will no longer be available:
The deduction meant that the receiver of the housing allowance was able to earn the first 300 euros without reducing the amount of the allowance. Now the income of the student will cut the housing allowance more and on a lower income level. By this the allowance will strongly decrease in households with moderate income. The effect of this can be over 100 euros per student living alone and even more, if the household includes multiple adults. The income rates and the size of the household will have an effect on the cut, so the amounts may differ a lot.
Where can I see my future allowance?
You can find more information about the changes on Kela’s website. You can check your future level of general housing allowance from a general housing allowance calculator found at Kela’s website or by calling Kela’s customer service.
When will the cuts come into effect?
The majority of the cuts come into effect from 1st of April 2024, but they do not show straight away. The changes start to affect allowance after allowance is reviewed. Usually this happens when the allowance needs to change due to other incomes, moving or yearly review. Some households will face this straight away, some at the end of the year. You can check your allowances yearly review date from Kela.
Future changes to general housing allowance:
- General housing allowance will no longer be available for owner-occupied homes in 2025. The allowance to owner-occupied homes will end 31.12.2024 and from that, the owners can not get the allowance in any circumstances.
- The Government is planning on a wealth limit to the general housing allowance. The initial limit is 10 000 euros, but there is no further information on the matter yet.
More information can be found on Kela’s website. You can also ask questions about the matter from OYY’s Specialist of Social Affairs Essi Leinonen.