Study finds: General housing allowance important and transparent support form for consumers

26 October 2017

According to a study conducted by Pellervo Economic Research PTT, more than 60% of renters receiving housing allowance in Finland regard housing allowance as an important factor affecting their lives. The general housing allowance is also viewed as a transparent and easy-to-understand support form. Commissioned by SATO, the City of Espoo and Finnish Tenants, the study on housing benefits from the renter perspective was published today.

The significance of the housing allowance is high for low-income groups as housing benefits cover more than half of the housing costs in the majority of households among these groups. According to a survey conducted among renters in Finland and included in the study published today, more than 60% of the respondents regard the housing allowance as a significant or very significant factor affecting their everyday lives.

Only just over one in four respondents regard cuts in consumption costs as a possible alternative if the housing allowance was to be discontinued. In that event, more than 35% of the respondents believe they would seek support from other benefits and allowances. If the amount of housing allowance was to be cut, changing homes is not regarded as a viable option, either. According to PTT Economist Antti Kekäläinen, the reason for this may be that it is difficult to find an alternative home that meets the renter’s needs.

Housing allowances affect urbanisation development

Among the respondents, those most commonly claiming housing allowance are students (around 90% students) and the unemployed (around 80% unemployed), while more than half of those in part-time employment and of pensioners receive these benefits. There are also some employed persons whose pay clearly does not cover their living expenses as around 16% of respondents in full-time employment are recipients of housing allowance.

– Any changes in housing allowance will have an adverse effect on those with the lowest income levels as their capacities to help themselves are usually the poorest in case changes in the negative direction take place in benefits, points out Sirkka-Liisa Kähärä, Chair, Finnish Tenants. – Housing benefits play a major role in the financial situation of service-sector employees in the biggest growth centres and, consequently, affect the urbanisation development. In addition to housing allowance, production aid is also needed to maintain a sufficient rate of affordable housing production.

Housing allowance criteria clearer than the role of state-supported housing production

The housing allowance is often linked with living in subsidised rental housing as around half of the responding recipients of housing allowance live in a state-subsidised (ARA) home. According to the study, it is easier for renters to understand the housing allowance than the role of state-subsidised housing production. More than 65% of the respondents claiming housing allowance regard it as easy to apply for the allowance, while getting a subsidised home is regarded as a process that is very difficult and even too slow. More than 300 respondents had applied for a subsidised home but only just over half of their applications had been successful.

– On the basis of the literature review, the survey among renters and the interviews with experts conducted, demand-based support for housing, such as the general housing allowance, is regarded as the model that is the most transparent, best targeted at those who need support and clearer than supply-based types of support, says PTT’s Kekäläinen.

According to the survey, supported rental homes are highly sought after, and the most preferred type of housing among the respondents is a home in a municipal rental housing company (32%) because of the low rent level. This is also reflected in the fact that, according to the survey, the majority of housing allowance recipients live either in municipal rental housing, student housing or housing provided by some other non-profit organisation.

– There have been several studies into housing support and the effectiveness of the support system, but in these the resident perspective has not been covered. It is important for us to understand the everyday lives and needs of our customers. In addition, it has often been assumed that those living in non-subsidised homes are the biggest recipients of housing allowance. This study shows that housing allowance is claimed evenly across the types of housing from state-subsidised to non-subsidised and from municipality-owned to privately-owned homes, says SATO President and CEO Saku Sipola.

Unanimity among respondents: amount of rent must be the most important factor affecting allowance

Regardless of whether recipients of housing allowance or not, respondents were very unanimous as regards the types of factor that should affect the amount of housing allowance granted. Around 65% of respondents regard the amount of rent and around 70% the proportion of rent of income as the most significant factor. Low-income respondents in particular are in favour of the housing allowance being based on the amount of rent.

– Almost half of the general housing allowance is targeted at single-person households, with the second-largest recipient group being single-parent families. The significance of support is emphasised among single-parent families as the occurrence of low income in single-parent families is almost three times that seen in two-parent families. This affects issues including opportunities to spend money on children’s leisure activities. One in five of Espoo’s families with children are single-parent families, says City of Espoo Housing Manager Anne Savolainen.

About the study:
The resident perspective was included in the study on the basis of an online survey. The study as a whole is based on a literature and statistical review, interviews with experts and the survey among renters. The respondent target group for the survey consisted of renters participating in the online panel of the survey provider (Kantar TNS). The survey took place between 5 and 18 September 2017. A total of 1,020 renters responded to the survey.

Attachment: Policy brief (in Finnish)

For more information please contact:

Pellervo Economic Research PTT
Antti Kekäläinen, Economist
Phone: +358 40 164 8136,

Kirsi Noro, Business Economics Researcher
Phone: +358 40 164 8369,

SATO Corporation
Saku Sipola, President and CEO
Phone: +358 40 551 5953,

City of Espoo
Anne Savolainen, Housing Manager
Phone: +358 40 353 3582,

Finnish Tenants (VKL ry)
Anne Viita, Executive Director
Phone: +358 50 588 3483,