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14.02.2025 12:27

Changes to housing allowance in 2025 – Means testing and changes to municipal categories affect many recipients

There are significant cuts to general housing allowance from the beginning of 2025. The maximum housing cost will be reduced in several cities and at the same time means testing will be implemented. How will these changes impact you?

Mies suojaa nukkeperhettä käsillään kaatuvilta palikoilta

At the beginning of 2025, a legislative amendment came into force, requiring that household assets be taken into account when assessing eligibility for general housing allowance. This may result in some recipients receiving less support or losing it entirely.

— For many low-paid workers, a reduction in housing allowance would be a major hardship. Many are already living from paycheck to paycheck, and it does not feel fair that even relatively small savings could lead to cuts in housing allowance, says PAM’s Social Policy Specialist Egezona Kllokoqi-Bublaku.

Kllokoqi-Bublaku reminds everyone to check their personal situation as soon as possible in order to prepare for potential changes.

How does means testing work?

The following limits apply when calculating general housing allowance:

  • Household with one adult: assets up to €10,000 before they affect the allowance.
  • Household with two or more adults: assets up to €20,000 before they affect the allowance.
  • If household assets exceed €50,000, no housing allowance is granted.

Assets include, for example:re

  • Bank deposits: Only the portion of the household’s savings that exceeds €2,000 is considered. For example, if there are €5,000 in savings, €3,000 will be counted as assets when calculating the housing allowance.
  • Real estate and investment properties: If the household owns an investment property that is not used for personal housing, it is considered an asset.
  • Mutual funds and shares: Investments such as stocks or mutual funds are included as part of household assets.

The home you live in, a holiday home, and a car do not affect the housing allowance. This means that, for example, a summer cottage or a personal vehicle will not reduce the amount of the allowance.

— This is a reasonable limitation, as a car is essential for many PAM members’ work commutes. It is also fair that an inherited summer cottage does not impact housing allowance eligibility, says Kllokoqi-Bublaku.

PAMin sosiaalipoliittinen asiantuntija Egezona Kllokoqi-Bublaku
Social Policy Specialist Egezona Kllokoqi-Bublaku finds it troublesome, that even relatively small savings could lead to cuts in housing allowance.

Changes to municipality categories affect housing allowance

At the beginning of 2025, the cities of Kajaani, Kouvola, Lappeenranta, Mikkeli, Pori, and Vaasa were moved from municipality category II to category III.

This means that the maximum amount of housing costs covered by the allowance will decrease in these cities. As a result, some households will receive less support if their housing costs exceed the new limits. In some cases, this could mean that housing allowance stops entirely.

These changes will have a major impact on low-income workers, many of whom already struggle with high living costs.

— It is troublesome, that cuts to housing allowance may increase financial uncertainty, especially in municipalities where job opportunities are scarce and earning more is hard. In these areas, finding affordable housing is also often a challenge, says Kllokoqi-Bublaku.

What can you do?

The changes affect different applicants at different times, so it is important to follow your situation and prepare for possible changes ahead of time.

PAM urges members to check how these changes may affect their finances, and to seek counselling and support when needed.

Remember these key points!

  • Check Kela’s website to see how the change affects you.
  • Use the housing allowance calculator to see if you are still eligible for support.
  • If you have any questions, contact Kela.

More information: www.kela.fi/general-housing-allowance

Text: Minttu Sallinen
Images: Shutterstock and Eeva Anundi

More information: www.kela.fi/general-housing-allowance

Keywords:

income legislation

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