ARA rental housing is highly targeted at low-income earners without income limits

The regulation aims to ensure that state-subsidised housing is channelled to those in financial need. This is a good objective, but Y-Säätiö sees no need for income limits, as almost all applicants already fall within the proposed income limits. Similarly, the social means test works effectively for those above the proposed income limits. Y-Säätiö therefore does not support the introduction of maximum income limits for the selection of tenants in rental housing with arava and long-term subsidies.

The introduction of income limits will slow down the tenant selection process, which will affect the speed with which new applicants can obtain accommodation. In addition, income limits may affect the interest in applying for ARA rental housing, as income limits may undermine the image of state-subsidised rental housing.

Y-Säätiö is clear that income limits create a new incentive trap. The introduction of income limits does not encourage the tenant to develop on the labour market, since even a small increase in income can lead to a tenant moving to a new home and losing many times the benefits of the increase in income by moving to a market-rate rental property and remaining outside the income limits for ARA rental housing.

“Unfortunately, raising income thresholds will not solve the issue of targeting and adequate supply of affordable housing. Housing already targets very low-income earners, and previous experiments showed that income limits have a very marginal impact on the issues sought.

It is now important to look for other ways to improve the ability of all Finns to find affordable housing solutions that meet their needs. The decline in ARA construction and the planned changes to social security will increase the importance of this issue. It is expected that more and more people will be affected by housing insecurity in the coming years,” says Teija Ojankoski, CEO of Y-Säätiö.

Reform would increase regulation and costs

The introduction of income limits would have significant administrative implications for the rental housing community and the municipality.

The tenant selection process for ARA housing is already more complex than for non-subsidised operators, and possible income limits would lengthen the selection period. The work is complicated by the fact that the landlord is not entitled to use the income register. In practice, the process of requesting, receiving and processing the annexes requested for the income declaration is manual. The change also requires software development. The resulting resource requirements will increase costs, which will increase the pressure to increase rents. As the rent for ARA properties is determined on an owner-occupied basis, the increased costs will be borne by the tenants in the rents.

The reform is also in conflict with the objectives of Prime Minister Orpheus’ government programme to deregulate and reduce administrative burdens. Increased regulation of affordable housing operators is not in the interests of residents. A survey conducted by KOVA ry in 2019 and 2021 among its member communities shows that 15% of those living in affordable, state-subsidised ARA rental housing receive income support, while half of renters receive housing benefit. Rental housing already targets low-income earners without bureaucratic income threshold clarification.

It is important to prevent segregation and housing segregation, which the current tenant selection regulations allow. Professionally conducted tenant selection prevents segregation of neighbourhoods and houses. Overly restrictive selection criteria prevent a balanced choice of tenants and only the most disadvantaged have to be selected, which has a strong segregating effect.