Housing agency proposes benefit cuts to fund up to 200 homes

Húsnæðis-, mannvirkja- og skipulagsstofnun, Iceland’s housing, construction and planning agency, is proposing cuts of up to 3 billion Icelandic krónur in housing benefits to fund homes for lower-income households, mbl.is reports.

The proposal is included in a new roadmap for more targeted housing support for tenants, which the agency presented on Tuesday.

Housing benefits are paid to tenants below specified income and asset thresholds. In August, the agency paid benefits to about 17,558 households.

According to the agency’s analysis, around one fifth of benefit recipients would not face burdensome rental costs without the payments. Rent is considered burdensome when it exceeds 25% of total household income.

If benefits were limited to tenants who would otherwise face burdensome rental costs, the government could save about 3 billion krónur a year. The agency estimates that the money could finance up to 200 homes in the public housing system.

Tenants in that system could have the option of buying their homes with the help of shared-equity loans.

The agency also proposes creating a clearer path to home ownership for tenants in the public housing system. They could finance purchases either through a loan or with a shared-equity loan from the agency alongside a housing loan.

The roadmap also contains two proposals on better integration of housing benefits and increased monitoring of their effectiveness.