Changes to housing and income support increase the risk of homelessness

Broad social costs of cuts

In the requests for opinions, the cuts in housing and income support are justified by the need to balance the state budget. The aim is to curb the growth of housing benefit expenditure and to improve incentives to take up full-time work. In addition to savings, the cuts in income support are intended to have a positive impact on incentives for employment. Y-Säätiö estimates that it will be difficult to achieve these objectives if the reforms increase the risk of exclusion and people move to the last resort, i.e. income support.

Cost savings for the lowest-income and already vulnerable people and households, such as single people, students and single-parent families, will inevitably have a knock-on effect on public finances elsewhere. Poverty and social segregation will be exacerbated if those on low incomes are forced to move further away from service networks and jobs. Students’ tight financial constraints will also be further reduced and their opportunities to complete their studies and qualifications may be reduced. The risk of exclusion increases and the situation of families with children is of particular concern. Overall, single-parent families in particular are at risk of increasing poverty, thus increasing the intergenerational transmission of exclusion.

“With the cost of housing on the rise, cuts to housing benefit are making people’s daily lives unnecessarily miserable. A large number of households are already on a knife-edge. If there is no financial room for manoeuvre, they will find themselves in situations where payment difficulties are followed by credit reports, rent arrears and eviction – and even homelessness.” Teija Ojankoski, CEO of Y-Säätiö, commented on the planned changes to housing support.

Increasing housing insecurity

Beneficiaries of income support are to be directed to find cheaper accommodation within three months if their housing costs exceed the acceptable limit. Y-Säätiö expresses serious concern about the consequences. For many people, finding rented accommodation that meets the rent norms is a challenge and it is not always possible to find suitable accommodation, especially within the time limit. Instead, the reforms are expected to increase the number of evictions and the risk of homelessness. In addition, the reform would create and deepen segregation by directing those on income support to the cheapest housing options.

“Y-Säätiö has carried out research whose results highlight the importance of housing permanence for human well-being. Forcing a person to move to a new neighbourhood in an unstable situation can have a range of negative effects, including increased substance abuse and mental health problems, loneliness and alienation.

Housing, especially the home, has a holistic meaning for the individual and societal decisions in this regard should not be taken without considering the wider implications. The savings sought may not be achieved if costs increase elsewhere. By creating stability and continuity in housing for all, the foundations of a prosperous society are maintained,” continues Ojankoski.

Housing should be provided for those who need it most

In addition to weakening housing subsidies, which are now being consulted on, the government is planning other housing-related reforms. The reduction in ARA production will reduce the supply of affordable housing for low-income earners. Government-subsidised housing production will provide rental housing at a rent level that is affordable for all.

“The multiplier effects of simultaneously cutting housing subsidies and ARA production can be surprisingly high. In ARA rental housing, housing is provided to those who need it most. In turn, private landlords tend to look for the best tenant. If housing poverty increases and competition for rental housing intensifies, the result will be homelessness at worst and segregation at worst.

Affordable housing and adequate social protection prevent homelessness at the societal level. Weakening these elements that ensure continuity of housing will in the longer term lead to an increase in homelessness”, says Ojankoski.