Austerity is on Finland’s political agenda, and the coming cuts are likely to hurt those receiving social security benefits. Prime Minister designate Juha Sipilä has said that a freeze on index-linked benefits is likely, and that includes support for housing low-income people’s housing costs.
Rents rose by 3.3 percent in the first quarter of 2015, well above the level of consumer price inflation, and so any freeze in the level of housing benefit is likely to hurt low income households. According to Professor of Social Policy Juho Saari, something should be done to help cushion the impact.
"The only sensible way is to increase the supply of rental housing," said Saari.
That's difficult, according to Saari, because municipalities are reluctant to construct rental units, or zone land for their construction, because they might attract residents who pay less municipal income tax.
"No single municipality wants necessarily to zone land for rental housing, as it brings in people whose income levels are relatively low," said Saari.
Bank of Finland governor Erkki Liikanen agreed, saying that Finnish housing policy had failed in recent years.
"Rents in the private sector have risen quicker than anywhere else in the last ten years, 15 percent," said Liikanen. "There is more land in Finland than anywhere else. This is the result of failed policy, but it can be changed by better policy."
Housing policy rose to the fore last week when Helsingin Sanomat covered a Centre Party policy document that opposed housebuilding in the Helsinki region. According to the policy document, increasing the supply would encourage more people to move to Helsinki and thereby worsen the housing shortage.
Centre MP and former Prime Minister Matti Vanhanen is leading a working group handling housing policy as part of talks over the formation of a new coalition government. The group is pondering whether to limit the right of appeal over new building and a streamlined zoning process are two options the group is reportedly considering. It is also looking at a proposal to concentrate housing, transport and infrastructure policy in one ministry.
