Finland faces rising demand for affordable housing as Kela tightens regulations

In Finland, there is a substantial supply of affordable housing, according to Eemeli Karlsson, an economist with the Finnish Landlords Association. However, strict regulations from Kela (the Finnish social insurance institution) may increase the demand for smaller and cheaper apartments, potentially driving up rents.

A recent investigation into the availability of affordable rental housing in five major cities revealed that over 25,000 households on welfare have been prompted by Kela to seek less expensive accommodations following a legislative change implemented in early April. Kela has tightened its rules regarding maximum local rent allowances, only deviating from these limits under special circumstances for basic welfare benefits related to housing costs.

In the capital region, Kela can provide a maximum of €715 per month for an individual’s housing expenses, which is valid in cities such as Helsinki, Espoo, Kauniainen, and Vantaa. Other cities have lower thresholds, with Tampere permitting nearly €590; Turku, €540; Jyväskylä, just under €530; and Oulu, around €520. Additionally, there is an acceptance of a water fee of €26.40 per person.

A comparison between Kela’s maximum limits and available housing indicates a notable variance: Helsinki offers 237 suitable apartments, while Tampere has only 87, with Jyväskylä at 83, Turku at 54, and Oulu at 40.

Karlsson notes that the demand for affordable housing is on the rise. While there has been an increase in the availability of affordable units in Helsinki, Tampere’s supply has notably decreased this year. Many young individuals have expressed challenges in finding suitable apartments within Kela’s limits, influenced by financial issues or insufficient market options. With rising demand, the rental prices may soon follow suit, presenting a potential challenge for tenants seeking affordable housing.