HOUSING-RELATED ALLOWANCES IN EUROMOD - ASSESSING AND EXTENDING COVERAGE USING HYPOTHETICAL HOUSEHOLDS IN HHOT - ZENODO

HOUSING-RELATED
ALLOWANCES IN
EUROMOD

Assessing and extending coverage
using hypothetical households in HHoT

Linus Siöland

23 September 2019

 This project has received funding from the European Union’s
 Horizon 2020 research and innovation programme under
 Grant Agreement No 730998

Abstract

 This paper surveys the coverage in EUROMOD of benefits and allowancecs compensating households for
 housing-related costs such as rent, heating and water. While most European countries’ schemes are
 programmed in EUROMOD, some are currently not included in the default package due to lacking
 microdata which prevents microsimulation. However, through the Hypothetical Household Tool (HHoT),
 missing data on the characteristics of household members or their residences can be imputed by
 researchers, allowing for these schemes to be simulated. After discussing the current coverage of housing-
 related allowances, this paper then discusses in detail housing allowance schemes in Austria, Croatia,
 Finland and Ireland, and housing cost subsidies in Lithuania and Denmark, and go on to describe how these
 have been included in EUROMOD. The paper then discusses design choices, constraints, implications for
 model households’ incomes and recommended venues for further research.

September 2019

© 2019, Antwerp – InGRID-2, Integrating Research Infrastructure for European expertise on Inclusive Growth
from data to policy – project number 730998

General contact: inclusive.growth@kuleuven.be
p.a. InGRID
 HIVA - Research Institute for Work and Society
 Parkstraat 47 box 5300, 3000 LEUVEN, Belgium

For more information: linus.sioland@uantwerpen.be.

Please refer to this publication as follows:
Siöland, Linus. (2019) ‘Housing-related allowances in EUROMOD: Assessing and extending coverage using
hypothetical households in HHoT’. Leuven, InGRID-2 project 730998 – H2020.

Information may be quoted provided the source is stated accurately and clearly.
This publication is also available via http://www.inclusivegrowth.eu

This publication is part of the InGRID-2 project, this project has received funding from the European Union’s
Horizon 2020 research and innovation programme under Grant Agreement No 730998.
The information and 'views set out in this paper are those of the author(s) and do not necessarily reflect the
official opinion of the European Union. Neither the European Union institutions and bodies nor any person
acting on their behalf may be held responsible for the use which may be made of the information contained
therein.

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Contents

1. Introduction 4

2. Housing-related benefits in EUROMOD 6
2.1 Present coverage 6
2.2 Extending EUROMOD housing benefit coverage 6

3. Details of extension 13
3.1 Austria 13
 3.1.1 Housing Allowance (bho_s) 14
3.2 Croatia 17
 3.2.1 Compensation for Housing Costs (bho_s) 17
3.3 Denmark 20
 3.3.1 Heating Subsidy (poaot_s) 20
3.4 Finland 23
 3.4.1 General Housing Allowance (bho00_s) 23
3.5 Ireland 27
 3.5.2 Rent Supplement (bho00_s) 27
 3.5.3 Housing Assistance Payment (bho01_s) 29
 3.5.4 Fuel Allowance (bhoht_s) 31
3.6 Lithuania 31
 3.6.1 Compensation for Housing Costs (bho_s) 32

4. Analysing the output 35
4.1 Comparison with default EUROMOD simulation 36
4.2 Housing allowances for the lower half of the income distribution 39
4.3 Other determinants of the level of housing and heating allowances 43

5. DISCUSSION 45

6. BIBLIOGRAPHY 48

appendix 1 Policy-specific information 51

appendix 2 Influence of factors other than household income on housing allowance receipt
 55

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1. Introduction1

Benefits compensating households for housing-related costs are an important tool of social policy. Housing
costs are one of the largest elements of household expenditure, and an inability to meet them can have grave
consequences for household members’ wellbeing: non-payment of water or heating charges can render
dwellings inhospitable or even uninhabitable during cold seasons, and non-payment of rent can ultimately result
in eviction and homelessness. The manner in and degree to which states compensate needy households for
these costs is therefore an important matter for policy researchers and practitioners. Comparative analysis of
policies’ coverage and target groups can further assist in our understanding of how these policies are designed
to fulfil their policy goals and effectively target those in need.

While some researchers have previously added to this collective knowledge through comparative studies of
housing allowances and their characteristics (see e.g. Kemp, 2007; Griggs and Kemp, 2012; André and Chalaux,
2018), different insights can be gained through considering housing allowances and related benefits within the
context of microsimulation models. These map out countries’ tax-benefit systems and policy interactions within
them, allowing for study of how different policy design decisions can affect eventual levels of household
income, and likewise to model how new, hypothetical policies could affect incomes and socioeconomic
indicators. The present paper will be concerned with the European microsimulation model EUROMOD. The
inclusion of housing-related benefits within the scope of wider tax-benefit systems in EUROMOD enables
researchers to investigate the proportion of households’ income which derives from these benefits, as well as
who is eligible and to what extent housing costs influence the benefit levels.

However, not all countries’ policies are simulated in EUROMOD by default: as it most commonly uses
microdata from the European Union Statistics on Income and Living Conditions survey (EU-SILC), some
benefits have been omitted where the microdata does not provide sufficient detail to impute benefit entitlement.
In the case of housing benefits this can be in the form of housing location, costs relating to heating or other
charges, or the need for a discretionary housing need assessment of social workers, without which the

1 Acknowledgement: The research for this paper has been supported by funding from the European Union's Horizon
2020 research and innovation programme under grant agreement No. 730998 (InGRID-2). The results presented are
based on EUROMOD version I1.0+. EUROMOD is maintained, developed and managed by the Institute for Social
and Economic Research (ISER) at the University of Essex, in collaboration with national teams from the EU
member states. A number of people have kindly assisted in the research of the paper. I am indebted to Tim Goedemé
and Sarah Marchal for guidance and feedback throughout the research and writing process; Jack Kneeshaw, Katrin
Gasior, Kostas Manios, Andrea Papini and Daria Popova at ISER for comments and advice at the joint ISER-
UAntwerp InGRID-2 meeting; Martin Hell, Stefan Angel, Pasi Moisio, Jussi Tervola and Aušra Čižauskaitė for
clarification of rules in Austria, Finland and Lithuania; Alice Pittini at Housing Europe for early feedback on the
research project; participants at the 2019 InGRID-2 Assembly at KU Leuven for helpful comments; and finally to
the many people who have contributed to the development of EUROMOD. Any errors are my own. The process of
extending and updating EUROMOD is financially supported by the European Union Programme for Employment
and Social Innovation ’Easi’ (2014-2020).

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household is not eligible. However, with the recent introduction of the Hypothetical Household Tool (HHoT)2
into EUROMOD, such characteristics can be defined by researchers within the scope of model household
simulations. This paper forms part of a wider effort within the framework of the InGRID-2 research
infrastructure to extend the functionality of HHoT.

As model households by necessity only covers specific household situations, research based on them cannot
be generalised to the full population (Van Mechelen et al., 2011; Goedemé, 2012). Nevertheless, model
household simulations allow for in-depth investigation of how typical households may be affected by a
country’s tax-benefit system (Marchal and Van Mechelen, 2017; Marchal, Siöland and Goedemé, 2018). The
paper will first survey the existing housing cost-related benefits in Europe and then consider (1) the extent to
which they are currently simulated in default EUROMOD and (2) which of those presently not simulated are
to be included in the extension. Based on their coverage among the low-income population it identifies
allowances in Austria, Croatia, Denmark, Finland, Ireland and Lithuania as suitable for inclusion. The relevant
allowances in these countries are then thoroughly discussed, and the details of their extension in EUROMOD
demonstrated and explained. The paper then evaluates these new allowances by considering their effect on the
net disposable incomes of a four model households previously defined by Marchal, Siöland and Goedemé
(2019), simulating net incomes for households with both varying levels of wage income and varying levels of
housing cost. It then concludes by discussing the limits of the extension and future possibilities for extending
EUROMOD and evaluating housing allowances as a constituent part of European minimum income
protection.

2The Hypothetical Household Tool (HHoT) has been jointly developed by the University of Essex and the
University of Antwerp as an add-on of the EUROMOD software (Hufkens et al., 2019).

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2. Housing-related benefits in EUROMOD

2.1 Present coverage

Housing benefits are detailed along with other details of countries’ tax-benefit systems in the EUROMOD
country reports. These elaborate on the characteristics of policies in terms of rates, means-tests, interaction
with other benefits and technical details of their simulation, and are therefore a logical starting point for
mapping the current coverage of housing allowances in EUROMOD. To further ensure that all policies are
covered, the OECD Benefits & Wages (B&W) database is also consulted. Based on information from the
EUROMOD country reports, the OECD B&W and – where necessary – national sources, Table 1 summarises
housing and housing-related allowances in the European Union and note whether these are presently simulated
in EUROMOD.

Some limits to the present survey should be noted. First, coverage is explicitly limited to benefits and
allowances, and so exclude subsidies, tax credits and in-kind support measures. Importantly, and in part as a
consequence of this restriction, it also excludes supply-side measures of housing poverty alleviation such as
social housing. While such measures play an important role in the housing mix of many European countries
(Scanlon, Whitehead and Fernández Arrigoitia, 2014; André and Chalaux, 2018), they are sufficiently different
in nature from monetary and cost-related allowances to be excluded here: for instance, eligibility may depend
on discretionary assessment by a social worker, waiting times, or the willingness to move from one location to
another where supply is larger. Without denying their importance, such measures are beyond the scope of this
paper.

2.2 Extending EUROMOD housing benefit coverage
Based on the information in Table 1, housing cost-related allowances are simulated in EUROMOD for most
European countries. However, in a number of cases one or more benefits are missing for various reasons. In
Austria and Finland (pre-2015) the reason for non-inclusion is a lack of information in EU-SILC microdata on
the exact circumstances of the tenure or characteristics of the dwelling, e.g. in terms of square metre size,
number of rooms, or year of construction. Allowances for heating, electricity and water in Denmark, Hungary,
Ireland and Lithuania are not simulated due to a lack of data on consumption and costs. In Ireland the housing
allowances are also not simulated as receipt requires the household to be ‘in social housing need’, which is a
discretionary judgment made by local caseworkers. In Belgium and Bulgaria the benefits are largely residual and
subject to very specific household circumstances, while Croatia, Greece, Italy and Spain see extensive regional
or local variation which complicates simulation.

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Table 1. Overview of housing and heating allowances and their status in EUROMOD (version I1.0+).

 Country Policies Programmed in EUROMOD? Variable
 Austria Housing allowance (Wohnbeihilfe) No – lack information on dwelling
 characteristics.
 Minimum income benefit (Bedarfsorienterte Mindestsicherung Wien): Social Yes, partly – although levels are in part bsa_s
 assistance contains element of rent compensation (Mietbeihilfe). determined by levels of housing allowance.
 Belgium Housing benefit: Characteristics vary depending on location. No – regional and highly conditional.
 Bulgaria Targeted assistance for rent of municipal housing: Allowance only for tenants No – lack information on municipal tenancy
 of municipal housing. status.
 Monthly allowance for social integration: Covers municipal rent for disabled No – lack information on municipal tenancy
 tenants. status.
 Targeted assistance for heating for individuals and families through the heating Yes. bsaht_s
 season: Means-tested heating benefit during heating season.
 Croatia Assistance in settling of housing costs (Naknada za troškove stanovanja): Benefit to No – lack of information on local variation
 cover cost of rent and other housing costs, locally administered. and household’ location.
 Firewood grant (Naknada za ogriev): Claimable by housing benefit recipients, No – often delivered in-kind, and further lack
 either in-kind or as equivalent cost. of information on local variation.
 Benefit for energy buyers (Naknada za troškove stanovanja): Compensates Yes. bhout_s
 electricity costs since Autumn 2015.
 Czech Housing allowance (Přispěvek na dítě) Yes. bho_s
 Republic Supplement for housing: Part of State Social Support Yes. bsaho_s
 Cyprus Housing allowance: Available as part of Guaranteed Minimum income if Yes, but eligibility test not included due to bsamm_s
 recipients pay rent or own a house and cannot afford mortgage loan lack of information on “highly complicated”
 repayments. asset test.
 Denmark Housing benefit (Boligsikring): Aimed chiefly at active-age households with Yes. bho01_s
 children.
 Housing grant (Boligydelse): Solely for recipients of old-age pension. Yes. bho02_s
 Green cheque (Grøn check): Benefit to low-income households to compensate Yes. bhtuc_s
 for increased energy and environmental taxes.
 Heating subsidy (Varmetillæg): Means-tested heating subsidy for pensioners, No – lack information on energy usage and
 scaled to energy usage and income. required own contribution to costs.

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Country Policies Programmed in EUROMOD? Variable
Estonia Subsistence benefit (Toimetulekutoetus): Social assistance guarantees a certain level Yes. bsa00_s
 of income after payment of housing expenses.
Greece Housing benefit for non-insured elderly: Local government benefit paid to No – lack information on local benefits and
 landlord on behalf of uninsured, low-income people over the age of 65. eligibility.
 OEK housing benefits: Social insurance-funded, abolished in 2012 austerity No – lack information on contribution
 measures. history.
 Lump-sum heating benefit: One-off lump-sum benefit in 2009. Yes. bhoxp_s
 Student housing benefit: Means-tested benefit paid for students in tertiary No – severely under-reported in microdata.
 education residing in town other than family residence.
 Rent allowance: Benefit for low-income households renting their Yes. bho_s
 accommodation, in effect from April 2015 to 2016.
Finland General housing allowance (Yleinen asumistuki): Means-tested benefit to reduce Simulated from 2015 onwards – before that, bho00_s
 housing costs. Includes compensation for heating and water charges. missing microdata on relevant eligibility
 criteria.
 Housing allowance for pensioners (Eläkkeensaajan asumistuki): Targeted Yes. bhope_s
 allowance available to those aged 65 or older, or younger and receiving a
 disability pension.
France Housing benefit (Allocation logement, APL and AL): Granted in various forms to Yes. bhotn_s
 people owing certain loans repayments, those qualifying for certain family
 benefits, and for tenants according to household resources and size.
Germany Housing benefits (Wohngeld): Means-tested housing benefit covering some Yes. bho_s
 accommodation costs. Mutually exclusive to Unemployment Benefits II.
Hungary Home maintenance allowance (Lakàsfenntársi támogatás): Provided locally as part Yes – size of flat imputed, as no information bsaho_s
 of social assistance where dwellings do not exceed a certain size. Supports on size of dwelling.
 maximum 30 percent of housing costs.
 Gas consumption allowance: Lump-sum allowance of 1,315 HUF, abolished in No – lack information on gas consumption.
 2011.
Ireland Rent Supplement: Part of social assistance for households in social housing No – lack information on housing tenure
 need, or where unforeseen circumstances have temporarily rendered their rent history and discretionary assessments of
 unaffordable. social housing need.
 Housing Assistance Payment: New housing benefit since 2015, aiming to allow No – lack information on assessment of
 for the combination of housing benefit receipt and work up to a certain social housing need.
 income.

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Country Policies Programmed in EUROMOD? Variable
 Fuel allowance: Available to social assistance recipients. No – lack information on energy
 consumption.
Italy Rent supplement: Regional means-tested benefits. Poorly funded by central No – lack information on local ranking
 government and receipt based on local ranking of neediest applicants. assessment.
 Basic needs debit card (Carta aquisti): Pre-paid debit card for e.g. groceries, No – lack information on eligibility.
 medicines and utilities bills, for citizens aged above 65.
 Rental tax credit: Tax credit available to tenants under controlled rent contracts No – no information on tenants’ specific
 (“contratti convenzionali”). contracts, and complex to derive due rent
 levels.
Lithuania Compensations for heating of a dwelling, cold and hot water expenses, and No — no information in microdata on
 sewage (Būsto šildymo, geriamojo ir karšto vandens išlaidų kompensacijos): Granted utilities expenditure, which is required to
 where household assets does not exceed a specified ratio of property value and simulate eligibility.
 all in household meet eligibility criteria. Compensations only paid for specified
 levels of expenses based on pre-defined, eligible household sizes and
 consumption. Since 2012 available also for renters, prior to that only owners of
 apartments.
 Compensation for part of lease payment: An allowance designed to allow No – no information on specificities around
 tenants who have a social housing need, but rent privately in the market, afford individuals’ tenancy agreements and
 their rent payments. circumstances.
Luxembourg Cost of living allowance (Allocation de vie chère): Replaced heating allowance in Yes. bsaht_s
 2009. Supports cost of living for low-income families.
 Rent allowance (Subvention de loyer): Implemented in 2016. Prior to this, social Yes. bho_s
 assistance recipients could receive the difference between rent paid and 10
 percent of guaranteed minimum income where rent was due.
Latvia Housing benefit (Dzīvokļa pabalsts): Provided by local governments to low- Yes, partly – rules vary locally, and bho_s
 income households. Rules differ between municipalities. programming is modelled on rules for Riga
 municipality.
Netherlands Rent allowance (Huurtoeslag): Paid to low/income tenants whose rent exceeds a Yes. bho_s
 normal amount, but not a maximum ‘social rent’ threshold.
Poland Housing benefit (Dodatek mieszkaniowy): Means-tested benefit for low-income Yes. bho_s
 households based on size of home and number of people in household. Some
 local government discretion in classifying housing costs for purposes of
 determining eligibility levels.
Portugal No housing or heating benefit in place.

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Country Policies Programmed in EUROMOD? Variable
Romania Means-tested heating benefit (Ajutorul pentru încălzirea locuinței): Given as support Yes, but not asset test bhoen_s
 to poor families who cannot afford expenses of home heating during cold
 season. Conditions and amounts differ according to type of heating.
Spain Regional housing benefits: In force in some regions to assist low-income No – lack information on specific
 households with associated housing costs. requirements across regions.
 Complementary benefit to non-contributory pensions due to housing rent Yes, partly – eligibility taken from dat. poacm_s
 (Complemento por alquiler): Given to pensioners in rented housing who do not
 own other housing and are not related to house-owner.
Sweden Housing allowance (Bostadsbidrag): Given to families with children, and to single Yes. bho_s
 and married/cohabiting families where all family members are aged 18-29.
 Housing allowance for pensioners (Bostadstillägg): Paid to low-income Yes. bhope_s
 pensioners.
Slovenia Housing benefit (Subvencija najemnine): Means-tested benefit. Covers part of rent Yes. bho_s
 for a person whose family income does not exceed a certain threshold.
Slovakia Material needs benefits (Dávka v hmotnej núdzi a príspevky k dávke): Main social Yes. temp_bsaho_s
 assistance program includes several components, one of which is the housing (part of bsa00_s)
 allowance.
United Housing benefit and local housing allowance: Assists low-income households Yes. bho_s
Kingdom with housing costs. In current implementation, local specifications for housing
 benefits for social tenants are not calculated.
 Winter fuel allowance: Universal heating benefit paid to pensioners. Yes. boaht_s
Source: EUROMOD Country Reports, OECD Benefits & Wages documentation, national legislation.

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Table 2. Share of households receiving housing allowances, OECD, 2014.

 Country Bottom quintile 3rd quintile
 Austria 16.4% 1.2%
 Belgium 0.8% 0.1%
 Bulgaria 0.0% 0.0%
 Croatia 5.4% 0.2%
 Cyprus 3.9% 3.3%
 Czech Republic 13.8% 1.2%
 Denmark 35.4% 9.3%
 Estonia 5.6% 1.4%
 Finland 53.2% 8.7%
 France 49.4% 17.8%
 Greece 0.0% 0.1%
 Hungary 28.1% 5.5%
 Ireland 49.5% 25.0%
 Italy 2.9% 1.1%
 Latvia 23.0% 4.6%
 Lithuania 6.8% 1.5%
 Luxembourg 9.7% 12.4%
 Malta 34.9% 11.5%
 Netherlands 44.6% 1.8%
 Poland 7.1% 0.8%
 Portugal 3.6% 10.3%
 Romania 0.0% 0.0%
 Slovak Republic 0.7% 0.0%
 Slovenia 3.9% 0.3%
 Spain 1.8% 0.9%
 Sweden 32.8% 1.5%
 United Kingdom 29.1% 13.2%
 Source: OECD Affordable Housing Database (cf. André and Chalaux, 2018).
 Note: Countries with one or more housing-related benefits not included in EUROMOD
 are marked in italics. Note that for Finland housing allowances are in place in EUROMOD
 from 2015 onward as default.

In most of these cases researchers can utilise HHoT to specify or impute characteristics and
parameters which are not included in microdata, and so enable a more complete simulation of
benefits in Europe.3 While ideally all programmes would be included, the correct programming of a
policy requires extensive time investment and study on behalf of the researcher. As a result, an
attempt has been made to identify which policies may bring most utility for researchers through their
inclusion. A first point of inquiry is how many recipients the schemes have in the first place – the
larger a scheme is, the stronger the case for its inclusion. Secondly, in marginal cases, it is asked
whether or to what extent the benefit is rights-based and, ideally, not subject to extensive geographic

3 Aswill be further discussed below, this has required the introduction of some new variables into HHoT.
These are discussed in the individual country chapters, and outlined fully in Table A1 in Appendix.

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variation in its application. Smaller, more discretionary or limited schemes require a longer
consideration of how to simulate eligibility or restrict receipt to certain geographic areas, for which
reason more unitary and rights-based shcemes are generally prioritised. Table 2 gives an initial
indication of receipt levels, displaying the share of households in the bottom and third quintiles of
the income distribution receiving housing allowances as defined by the OECD Affordable Housing
database.

Of the countries identified in Table 1 as missing benefits, three stand out here as having particularly
high receipt among the bottom income quintile of the population: Austria, Ireland and Finland. We
may further add that Croatia, Denmark and Lithuania both see a receipt of above 5 percent for the
same group. However, in all three cases more than one housing-related benefit is included and their
inclusion in the extension should be further supported. First, in Croatia, benefit receipt is largely due
to high spending on utility cost compensations (André and Chalaux, 2018: 29n14). Nevertheless, as
the benefit is rights-based and available to all recipients of social assistance from 2014 onwards, it
merits inclusion in the extension.

In some cases the missing policy cannot be distinguished from those already simulated. Denmark has
an extensive system of housing allowances, with benefits for both working-age and old-age
populations programmed. The elderly compensation for heating costs (varmetillæg) is excluded due to
missing data on energy costs and heating systems. Receipt is limited to recipients of public pension
which make up a substantial minority of the Danish population, their proportion increasing from 16
percent of the population in 2009 to 19 percent of the total in 2017 (Danmarks Statistik, 2018).
Receipt of the heating subsidy within this subpopulation is high although slowly decreasing,
benefitting 20 percent of public pensioners in 2013 and 16.8 percent in 2016 (Ældre Sagen, 2014;
2018). While this means that the total receipt among the population may not exceed 5 percent, its
status as a commonly received cost subsidy within this large, clearly defined subgroup merits its
inclusion in the present extension.

Finally, in Lithuania’s case the two included benefits are a compensation for housing and heating
costs, subject to consumption being below a specified threshold, and a municipally delivered
compensation for rental payments. The 2016-2017 Social Report from the Ministry of Social Security
and Labour indicates that only some 557 people, received compensation for rental payment in 2017
– a number that was even smaller in the years 2014 and 2015 (SocMin, 2016: 94; 2017: 97). Meanwhile,
the compensation for heating costs benefits a significantly larger part of the population, with 129,800
recipients in 2016 and 144,600 recipients in 2015 (SocMin, 2017: 72). Exact figures on the receipt
among low-income households in Lithuania is not available, but Lithuania’s targeted and relatively
limited system of social assistance – along with the policy’s explicit targeting of poorer households –
give cause for inclusion of the housing cost compensation. Thus, the compensation for rent payment
will not be included, but the compensation for housing costs will. For remaining countries, receipt is
too small to merit inclusion, especially given the highly situational character of the benefits (as in
Belgium and Bulgaria) and extensive local variation (as in Greece, Italy, Spain).

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3. Details of extension

3.1 Austria
The Austrian housing benefits are administered by federal regions in various forms, either to low-
income households for the alleviation of housing cost burden or as support for households which
benefitted from renovation work or construction subsidies. The levels of granted benefits vary on a
number of variables including year of construction, standard of living in the dwelling4 and location.
While variation in policies’ operation and scope exists between states, EUROMOD currently models
the Austrian microsimulation model on Vienna only. As such, the Viennese variant of housing
policies which is considered herein. Austria also has a large social housing sector, operated variously
by municipalities, non-profit organisations, cooperatives and civil society actors.

Figure 1. Housing stock composition in Vienna and the rest of Austria, 2017.

Source: Statistik Austria (2019).

This sector has been a historically important part of the housing stock, but regionalisation of housing
policy, a decrease in the corporatist Austrian welfare state and the introduction in the 21st century of
policies such as right-to-buy, along with decreased funding for housing construction, has increased
the importance of cost-compensation policies over traditional bricks-and-mortar measures

4 Chiefly applying to older buildings, the standard of the dwelling in terms of size, number of rooms, the
presence of in-door toilets and other factors determine their categorisation into Categories A, B, C and D,
in decreasing order of quality. Rents are limited in line with the quality of the dwelling, a fact which is
taken into consideration in housing allowances’ calculation of allowed standard rent. The amount of
regulated, low-standard dwellings has markedly decreased since the 1970s (Reinprecht, 2014: 68).

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(Reinprecht, 2014). However, it remains an important part of the housing stock, not least in Vienna
where the social and rented housing sectors are more common than home ownership, as illustrated
in Figure 1.

The calculation of housing allowances for various forms of subsidised flats differs from those for the
privately rented sector – e.g. for publicly funded housing, only the part of housing costs which serve
to repay loans incurred for the construction of the house can be taken into account, subject to usual
restrictions on household size and area in square metres (more on which below). As only privately
rented rules are simulated for the other countries included in this extension, the extension only
includes the rules for private, non-subsidised flats. A further extension of socially-rented and
subsidised dwellings, in Austria and elsewhere, constitutes a relevant future research agenda.

3.1.1 Housing Allowance (bho_s)

3.1.1.1 Definitions
The housing stock of Vienna is divided into four housing categories based on the size and standard
of the dwelling. Category A apartments must be in ‘usable condition’, larger than 30 m2, consist of
an entrance hall, extra room, kitchen and bathroom, and have heating and hot water. Category B
apartments must be in ‘usable condition’, consist of a room, kitchen or kitchenette, anteroom, toiler
and a modern standard of bathing opportunity. Category C apartments, when in usable condition,
must have at least a water tap and toiler inside. Finally, Category D apartments are those which do
not have a toiler or water supply point inside, or has this but in an unusable condition. Rents vary
depending on category, with better equipped flats more expensive, and the more basic or outmoded
flats having lower, capped rents.

Anrechenbarer Wohnungsaufwand (AWA) is the ‘countable housing expenditure’ of the
household, signifying the level of housing cost which can be used to claim housing allowance. It is
based on housing category (see above), household composition and the size (m2) of the dwelling.
Zumutbarer Wohnungsaufwand (ZWA), or ‘reasonable housing expenditure’, entails the
monetary amount the household is expected to contribute toward their housing costs based on
household composition, housing category and income text.

To determine the minimum required income levels, the minimum standard is used. This estimates
the required level of income for a household given its composition and characteristics and is used in
the minimum income benefit to calculate social assistance. In the case of housing allowances,
household incomes must be equal to or more than the household’s applicable minimum standard.

Separate to the housing allowance and programmed in the EUROMOD policy spine as part of the
minimum income guarantee, Mietbeihilfe – or ‘rent allowance’ – is a top-up available for households
where, even after social assistance and housing allowances, post-rent incomes are below the
household’s minimum standard. While already programmed, the introduction of housing allowance
into the policy spine requires that this income component is simulated separately, after the calculation
of housing allowance. Adjustments have been made to take this into account.

3.1.1.2 Eligibility conditions
Eligible are Austrian citizens and other legal residents of Austria whose monthly net income exceeds
a certain level (more specifically, that of the standard rates of the minimum income benefit). If they

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fulfil this condition the household can apply for the housing allowance, at which point the benefit is
scaled depending on the characteristics of the dwelling and additional household income.

3.1.1.3 Income test
For the income test, earnings after taxes and social insurance are taken into consideration along with
most other benefit payments. Exceptions to this rule are family allowances (including child benefit),
care allowances and disability allowances. The means-tested minimum income benefit is not taken
into consideration when establishing the income for means-test. In order to qualify for the housing
allowance, households must have a minimum monthly income equal to the social assistance base rate
of the household, based on its composition. These rates are illustrated in Table 3. Above this level,
the household income affects the ‘reasonable housing expenditure’, or ZWA, which households are
expected to contribute toward their housing costs: as incomes rise so does ZWA, with the housing
allowance size decreasing accordingly. Households earning above the minimum threshold can still
profit from a discount, though: for households where (i) all members are below 40, (ii) at least three
children are present, (iii) at least one child is below the age of six, (iv) a family member is disabled or
(v) a parent is raising children on their own, a 20 percent reduction in the assessed income applies.

Table 3. Indicative rates for persons receiving compensatory allowance, EUR, 2009-2018.

 Monthly net income
 Year Per further
 1 adult 2 adults Per child
 adult
 2018 863.04 1293.98 430.94 133.16
 2017 844.46 1266.13 421.67 130.30
 2016 837.76 1256.08 418.32 129.26
 2015 827.82 1241.19 413.37 127.73
 2014 813.99 1220.44 406.45 125.59
 2013 794.91 1191.84 396.93 122.65
 2012 773.26 1159.37 386.11 119.31
 2011 752.94 1128.89 375.95 78.91
 2010 744.01 1115.50 371.49 77.97
 2009 733.01 1099.02 366.01 76.82
Source: Stadt Wien (2019).

The increase of ZWA as household incomes rise is not linear. The larger the households, the higher
the allowed income before ZWA starts accruing – likewise, the maximum possible ZWA and allowed
rents are higher for larger households. As the increase is non-linear, the formula requires some
simplification prior to being programmed in EUROMOD.5 The income brackets are presented in
increments of 7.3 EUR in all cases, providing a good starting basis for calculation. However, as
income rises, ZWA rises at different pace and increments for different sizes of household. ZWA also
starts accruing later for larger households. To achieve a workable solution, this EUROMOD
extension estimates ZWA as

 = [(( − )/7.3)/ ]
5For illustration, full tables of ZWA calculation can be found on the website of the Vienna city council:
https://www.wien.gv.at/wohnen/wohnbaufoerderung/ahs-info/wohnbeihilfe/tabellen.html.

 15

where β represents the relevant household income, γ the income at which ZWA starts accruing (for
all years and household sizes, this occurs at an income of 734 EUR per month) and α the average
ZWA increase per increment of 7.3 EUR based on household size n.

3.1.1.4 Benefit amount
As noted in Section 3.1.1.1, benefit rates and housing costs in Vienna depend on the characteristics
of the dwelling and the composition of the household, with Category A flats having the highest
standard and thus the highest allowed rents – and, consequently, higher possible benefit rate – and
Category D flats having the most basic standard and the lowest-capped housing costs. Housing
benefits are also bounded by flat size: if the actual size is above that permitted by the household
composition the granted benefit is scaled so as to only be based on the allowable space. This amounts
to 50 m2 for one person-households, 70 m2 for two persons, and 15 m2 per person after two. All
these factors come together when establishing the ‘countable housing expenditure’, or AWA. When
the maximum allowed size is established, whichever is lower of allowed and actual size is multiplied
by the allowable cost per square metre, as displayed in Table 4.

Table 4. Allowable cost per square metre for Category A, B, C and D apartments in Vienna, 2009-2018.

 Category 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
 Cat. A 4.73 4.91 4.91 5.16 5.16 5.39 5.39 5.39 5.39 5.58
 Cat. B 3.55 3.68 3.68 3.87 3.87 4.04 4.04 4.04 4.04 4.18
 Cat C+D 2.37 2.46 2.46 2.46 2.58 2.58 2.70 2.70 2.70 2.79
Source: Stadt Wien (2019).

This gives the value of AWA, which is then used in conjunction with the ZWA value from the income
test to calculate final benefit receipt. according to the following formula:

 = ( ℎ ) − ( ℎ )

As noted above, the housing allowance also affects the level of rent allowance included in the
minimum income benefit. The social assistance includes a basic housing cost subsidy comprising 25
percent of the minimum standard and if housing costs are high also include the additional rent
allowance, which is calculated as the difference between the maximum rent allowance per household
– cf. Table 5 – and the actual rent paid, minus any awarded housing allowance.

The rent allowance is already programmed in EUROMOD to work with microdata, but in this
extension is simulated separately after the calculation of the housing allowance so that all relevant
components are taken into consideration. Keeping most of the elements of the original programming,
the rent allowance is awarded if post-rent income, including minimum income guarantee payment
and housing allowance, is below the minimum standard for the household.

 16

Table 5. Monthly maximum amount of Mietbeihilfe for people receiving means-tested minimum income or
 pensions, Vienna 2009-2018.

 Household
 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
 size
 1 or 2 272 279 282 289 297.09 304.22 309.39 313.10 315.60 322.54
 3 or 4 288 292 295 303 311.48 318.96 324.38 328.27 330.90 338.18
 5 or 6 305 310 313 321 329.99 337.91 343.65 347.77 350.55 358.26
 7 and more 322 327 330 338 347.46 355.80 361.85 366.19 369.12 377.24
Source: Fuchs and Hollan (2018).

Programming notes: A few assumptions have been made regarding the characteristics of recipient
households. By default, households are assumed to reside in a Category A dwelling, indicated by
{amrtp00 = 1}. Researchers can change this to Category B, C or D ({amrtp00 = 2, 3 and 4},
respectively) in the HHoT Advanced Country Variables. Further, if the household area size {amrar}
is left unchanged at 0 in HHoT, the maximum allowed size given household composition is assumed.
If {amrar > 0} is indicated in HHoT, this user-entered value is used instead.

3.2 Croatia
Croatia is the most recent accession state to the EU, having joined the Union in 2013. It is the only
country for which EUROMOD simulations are not available for the full 2009-2018 period, covering
instead 2011-2018. Since its inclusion in 2016, the study of the Croatian tax-benefit system has also
been furthered through miCROmod, a microsimulation tool developed by researchers at the Croatian
Institute of Public Finance which uses the EUROMOD template to construct a Croatia-specific
model, allowing for deeper study of regional effects and benefits not included in the standard
EUROMOD model (Urban, Bezeredi and Pezer, 2018).6 This includes the compensation for housing
costs included in this extension, whose local character and wide variation – being delivered by local
self-governing units rather than central government – prevents accurate programming in standard
EUROMOD. Such variation presents a challenge also in this case. As it is beyond the scope of this
extension to model the full variation of regions, the policy is modelled based on the rules in place for
Zagreb, being the largest city in Croatia.

3.2.1 Compensation for Housing Costs (bho_s)

3.2.1.1 Definitions
LSG refers to the local self-governing units in municipal government which deliver compensation
for housing costs, among other social programmes. Similarly, RSG refers to regional self-
government units and deliver other social programmes, e.g. the Firewood Grant.

Means of Subsistence is the measure by which household need is calculated, and the benchmark
against which eligibility to certain benefits is assessed. It depends on household size and the

6 The miCROmod model and documentation provides valuable insights into the workings of the Croatian
tax-benefit system, highlighting e.g. the variation in benefit levels between regions (Pezer, Bezeredi and
Leventi, 2018), the effect of in-work benefits (Bezeredi et al., 2018) and comparing the impact of child
benefits in Croatia and neighbouring countries (Urban and Pezer, 2019). The present extension has
benefitted greatly from these insights.

 17

characteristics of individuals within it. The household income must be below its assessed means of
subsistence to qualify for the housing benefit.

3.2.1.2 Eligibility conditions
From January 1 2014, recipients of the housing cost compensation must be recipients of Subsistence
Benefit (Zajamčena minimalna naknada), the main Croatian social assistance programme. Additional
eligibility criteria are the same as for subsistence benefit, with eligible individuals being between 15
and 65, except when they are unable to work, engaged in care duties, engaged in higher education
and aged between 15 and 29, within five years of statutory retirement age, or pregnant. The 2014
reforms entailed a simplification of the previous rules. Before this, the means-test was indirectly tied
to social assistance as the income of the household was required to not exceed the dependency
allowance. Additionally eligibility was limited by the size of the dwelling, with residences over a certain
limit not eligible for benefit. The allowed housing size was 35 m2 for the first person, 42 m2 for a
disabled person (20 percent higher than standard) and 10 m2 for any additional residents. This is
currently programmed for the year 2013 only.

Programming notes: If the size of the residence ({amrar}) is entered by the researcher when
constructing households in HHoT, this size is used when determining eligibility for the benefit. If no
such size is entered, it is assumed that it is the largest allowed size given the household composition.

3.2.1.3 Income test
The policy rules for Zagreb require that households must be in receipt of Subsistence Benefit to
qualify. The income test is therefore implied, as a household which does not pass it is not in receipt
of Subsistence Benefit to begin with (Urban, Bezeredi and Pezer, 2018: 14). Prior to 2014, the
requirement was that the household income must not be over the subsistence benefit in the three
months prior to granting of the benefit. Within the scope of Subsistence Benefit, incomes of all
individuals in the household are considered, and must be below the household’s ‘means of
subsistence’ to qualify. Means of subsistence depends on individual household members’ individual
characteristics, as demonstrated in Table 6. From the means of subsistence is subtracted the post-
tax and -social insurance income of the household, giving the applicable subsistence benefit (capped
at the gross minimum wage).

 18

Table 6. Means of subsistence for various household members, 2015-2018, in monthly HRK.

 2013 2014-2015 2016-2018
 Adult in a one-member household
 Able to work 600 800 800
 Unable to work 850 800 920
 Adult in a multiple-member household
 Able to work 400 480 480
 Unable to work 550 480 480
 Lone parent7
 Able to work 400 480 800
 Unable to work 550 480 800
 Child of a non-single parent
 Aged 0-6 years 400 320 320
 Aged 7-14 years 450 320 320
 Aged 15-17 years 500 320 320
 Aged 18-25 years, in regular 500 480 480
 education
 Child of a single parent
 Aged 0-6 years 525 320 440
 Aged 7-14 years 575 320 440
 Aged 15-17 years 625 320 440
 Aged 18-25 years, in regular 625 480 480
 education
Source: Ivica, Bezeredi and Pezer (2018: 22-23), EUROMOD policy spine.

3.2.1.4 Benefit amount
The generosity of benefits in Croatia can vary significantly depending on locality, with the capital area
of Zagreb having a significantly higher amount of paid benefits than other RSG (Urban, Bezeredi
and Pezer, 2018: 5; cf. also Pezer, Bezeredi and Leventi, 2018). If qualifying by virtue of being a
recipient of subsistence benefit, the benefit covers rent as well as bills for heating, electricity, gas,
water and other utilities.8 In Zagreb – and also in the cities of Split and Osijek– the maximum value
of the benefit is 50 percent of the maximum amount of guaranteed minimum benefit granted to the
household. The benefit is therefore given as = 0.5 ∗ , where denotes the maximum
guaranteed minimum benefit.

Programming notes: Rules and rates here are modelled on Zagreb, which generally has higher
benefit levels than the rest of the country by virtue of having higher estimated living costs.

7 As noted in Ivica, Bezeredi and Pezer (2018: 32), ‘lone parent’ specifically refers to cases where a
single parent’s (ex-)spouse is either deceased or unknown. Individuals in this category qualify for a
higher means of subsistence than single parents whose spouse is known, but their children receive the
same means of subsistence regardless. The distinction between lone and single parents is not programmed
in this extension, and all single-parent cases refer to the one with the lower replacement rate.
8 This is exclusive of the HRK 200 ‘compensation for electricity costs’ provided by central government

since 2016 for households with disabled family members.

 19

3.3 Denmark
The Danish compensation for elderly households’ energy costs is intended to alleviate public pension
recipients’ costs for heating. It is not included in the EUROMOD policy spine as information is
missing in microdata on housing costs and specificities of public pension receipt, which cannot always
be identified separate to other pensions in EU-SILC. It is commonly received by old-age households,
benefitting between 15 and 20 percent of public pensioners.

3.3.1 Heating Subsidy (poaot_s)

3.3.1.1 Definitions
The receipt of heating subsidy is scaled based on the households supplement rate (personlige
tillægsprocent), also known as supplementary percentage in some translations. This is an integer
between 0 and 100 which indicate the financial resources at the disposal of a pensioner household,
with 100 signifying the least available resources and 0 signifying the most available resources. Based
on the household’s energy usage, the final receipt of heating subsidy – as well as other supplementary
pension benefits – is scaled according to the supplement rate, with 100 leading to full receipt and 0
leading to no receipt.

The husholdningsfradrag (‘household deduction’) is a deduction made to the subsidy since 2016
if the heating source – gas or electricity – is used for more than only heating.

3.3.1.2 Eligibility conditions
Eligible for receipt of the subsidy are households where at least one individual receives the public
pension, the folkepension, and individuals who became early retirees prior to 2003 reforms to the early
retirement system. Only one individual per household receives the subsidy regardless of how many
that are eligible, although levels vary for single and couple households, and where additional family
members are present.

3.3.1.3 Income test
The key metric used for calculating the amount of Heating Subsidy is the supplement rate, which is
derived from the level of received public pension. The supplement rate – also denoted ‘supplementary
percentage’ in some contexts – ranges from 0 to 100 depending on the level of income other than
the qualifying pension benefits, with 0 indicating a high additional income and 100 low or no
additional income. The heating subsidy is scaled accordingly: 100 results in the full subsidy, 0 in no
received subsidy, and intermittent percentages scale accordingly. Table 7 illustrates the maximum and
minimum additional income levels involves in the calculation of the supplementary percentage for
the year 2018,9 and the rate at which it is scaled between these two values. No subsidy is received
where the supplementary percentage is not above 0, and no further means-test is done to account for
households’ wealth.

9The calculation of supplementary percentage for the full 2009-2018 period is available in Table in
Appendix.

 20

Table 7. Supplementary percentage (personlige tillægsprocent) calculation for 2018, based on annual
incomes in addition to qualifying pension payments.

 Single household Couple household
 Supplementary percentage is 100 if… 20,500 DKK p.a. 40,600 DKK p.a.
 For incomes above this, supplementary 507 DKK p.a. 1,022 DKK p.a.
 percentage is reduced by 1 for every
 additional…
 Supplementary percentage is 0 if… 71,200 DKK p.a. 142,800 DKK p.a.
Source: Greve and Hussain (2018), EUROMOD policy spine.

This does not require programming anew in EUROMOD, as it is already in place for the calculation
of Supplementary Pension (Ældrecheck og supplerende pensionsydelse, {poa02_s}) allowances, stored as
variable {i_poa02b}. This variable is thus reused in the subsequent calculation of the heating subsidy.

3.3.1.4 Benefit amount
The heating costs used to calculate the heating subsidy are usually determined by the household’s
average heating cost over the previous three years, or failing that an estimation of the expected costs
in the following year. Unless the maximum basis is changed based on fluctuations compared to the
previous year – usually in excess of 10 percent – this remains constant, even if actual heating costs
may slightly exceed or fall short of it. The basis is also subject to adjustments based on household
composition, discussed further below. This dynamic cannot be included in the extension, not least
due to its discretionary element. Heating costs entered for calculation are therefore used as is, and
are assumed to represent an appropriate average.

For the benefit to be calculated, heating costs must be entered in variable {xhcscht} in HHoT. If
heating costs are not entered, it is assumed that the benefit is 0. Once the supplementary percentage
is determined, a range of additional factors enter into the calculation of the benefit. As noted above,
a first consideration is the composition of the household, with couples or cohabiting households
receiving a higher subsidy than singles. Additionally, since 2016 the benefit only covers costs relating
to the use of gas or electricity for heating specifically, and does not cover other or maintenance-
related costs. This is reflected in the ‘household deduction’ (husholdningsfradrag) which decreases the
subsidy if the heating sources are also used for other household functions. For 2018, if electricity is
used both for heating and other purposes, the subsidy is decreased by DKK 3,500 p.a. for singles
and DKK 4,500 p.a. for cohabiting couple households. If gas is used for both heating and other
purposes, the subsidy is decreased by DKK 700 p.a. for singles, and DKK 800 p.a. for cohabiting
couple households. Where district heating is used –most commonly, and used as default in the HHoT
extension; this is further discussed below – a 10 percent reduction in the maximum basis applies.10

When all these components are taken into consideration the final benefit depends on the household’s
maximum basis for calculation, as discussed above. Prior to that, the maximum basis is adjusted if
there are additional eligible pensioners beyond two, or other ineligible adults – i.e. adult non-
pensioners – present in the household. Every additional adult raises the maximum basis by a certain
sum (6,600 DKK p.a. in 2018), but only public pension recipients are used as the basis of benefit
award. Thus, after the maximum basis has been increased accordingly, the final figure is scaled based

10Recipients of housing grant (boligydelse) receive a small subsidy towards the upkeep of heating
systems. If this subsidy is larger than the 10 percent reduction for district heating households in the
heating subsidy, the difference is subtracted from the heating subsidy. However, this mechanic is not
present in EUROMOD’s default configuration and hence not included in this extension either.

 21

on the ratio of pensioners to total adults in the household: i.e. if a pensioner couple live with an adult
daughter above the age of 18, the final maximum basis is scaled by 2/3. For the purposes of
calculation, the household is comprised of family members only, and not lodgers.

Table 8. Reimbursement levels based on household heating costs, annual rates for 2017.

 Heating subsidy rates Single Cohabiting couple
 Full self-payment of heating costs at DKK 5,100 p.a. or below DKK 7,650 or below
 Allowance for ¾ of costs between DKK 5,101-13,100 p.a. DKK 7,651-13,100 p.a.
 Allowance for ½ of costs between DKK 13,101-17,400 p.a. DKK 13,101-17,400 p.a.
 Allowance for ¼ of costs between DKK 17,401-21,600 p.a. DKK 17,401-21,600 p.a.
Source: Ældre Sagen (2018).

Once these adjustments are made, Table 8 illustrates how different levels of heating cost are
reimbursed for different households. In 2017 households pay their heating bill themselves if these
are below 5,100 DKK p.a. for singles and below 7,650 DKK p.a. for couples. After this, costs
between this sum and 13,100 DKK p.a. are reimbursed three-quarters of the cost, from there to
17,400 DKK p.a. at half of the cost, and from there to a maximum of 21,600 DKK p.a. at one-quarter
of the cost. The subsidy is then scaled according to the supplementary percentage discussed above –
i.e. for a person whose supplementary rate is 100 the full resulting sum is paid, while a person with a
supplementary rate of 80 would receive 80 percent, and so on. The household’s supplementary rate
must be above 0 for payment. This gives

 = ( − ∗ ( /100))

where is the reimbursable heating costs, x is the factor by which it is scaled if ineligible adults are
present in the household, γ any applicable decrease based on the household’s heating system, and α
is the supplementary percentage.

Programming notes: Full calculation of the heating subsidy requires information on the heating
system used by the household: variable {armht} identifying whether district heating (1), electricity (2)
or gas (3). District heating is used as the default value by virtue of being Denmark’s most common
form of heating, with 64.8 percent of households supplied in this manner in 2018.11 This influences
the final calculation of the benefit. If district heating is used, 10 percent of the heating bill is estimated
to go towards maintenance, and so only 90 percent of costs are considered in the calculation of the
heating subsidy. If the household has gas or electricity both for hearing and for other purposes, a
deduction applies as the subsidy only covers heating costs. The default assumption is that they are
not used for heating only {xivhchm12 = 0}. If overwritten in the construction of the households as
{xivhchm > 0}, the programmed policy assumes that the energy source is used for heating only and
hence does not apply the benefit adjustment.

11 For an overview of Danish heating systems in 2010-2018, see Table 3 in Appendix. The proportion has
remained substantively the same in the period at hand.
12 Named in according with EUROMOD labelling convention, denoting ‘expenditure : imputed value :

housing cost : house maintenance’. It is added into HHoT as a country-specific categorical variable.

 22

3.4 Finland
Finnish housing allowances are programmed in EUROMOD from 2015 onwards, following legal
changes in 2014 which greatly simplified a previously convoluted set of rules and regulations.13
Similarly to Austria, these rules considered aspects such as the size and building year of the dwelling
in defining the relevant maxima of the benefit and its constituent parts. Additionally, the 2014 reforms
simplified the calculation of the income-based deductible which previously was non-formulaic –
being instead based on extensive reference tables with non-linear deductible increases as household
income increased in turn – and subject to revisions in about half of the years in the 2009-2018 time
period. The extension makes a few assumptions so as to keep the programming from becoming too
unwieldy (most prominently in only including renters, not home-owners) but overall attempts to
capture the added complexity.

3.4.1 General Housing Allowance (bho00_s)

3.4.1.1 Definitions
Finland is divided into three heating regions, covering Helsinki and South Finland (I), East Finland
(II) and the rest of Finland (III). These are used for some determinations of benefit rates, with more
northern areas deemed in need of higher compensation for heating cost by virtue of colder
temperatures. These do not entirely overlap with the four municipality groups which are spread
more irregularly across the country, but also play a part in determining housing allowances (with e.g.
municipality group I being Helsinki, and thus deemed the most expensive). The full range of
municipality group variation cannot be programmed, but EUROMOD’s programming of housing
allowances from 2015 onward use the NUTS-2 regions {drgn2} as an estimate. Note that these two
terms cannot be used interchangeably.

The first relevant component in calculating housing allowances is the acceptable cost. This takes
into consideration acceptable costs for rent, water, electricity and maintenance, given the size of the
household, the area size of the residence and the region in which it resides. From this acceptable cost
is then withdrawn the personal deductible which is based on the household size, its income, and
any factors which merit additional allowances in the income base (e.g. discounts for lone parents and
large households of more than eight people).

3.4.1.2 Eligibility conditions
The Finnish housing allowance covers not only rented dwellings, but also right-of-occupancy
dwellings14 and owner-occupied dwellings in both single- and multi-family residences. For the time
period considered here, those who are in receipt of housing benefits intended for either pensioners
or students15 are ineligible for housing benefit. The type of dwelling has consequences for the
structure of the housing allowance and what costs are considered. To avoid the programming
becoming too unwieldy, it currently only includes rules for rented and right-of-occupancy dwellings,
omitting owner-occupied dwellings.
13 Reform codified in the ‘Laki vleisestä asumistuesta’, Law 14.11.2014/938,
.
14 Right-of-occupancy housing was introduced in Finland in the early 1990s as a part-ownership

programme intended to secure low-cost housing, with construction subsidised by the state (Elsinga,
2005).
15 Note that outside of the 2009-2014 period for which Finnish housing allowance is being extended in

this paper, 2017 reforms to student aid have cut student housing supplements, with the intention of
integrating eligible previous recipients into the regular housing allowance regime. The benefits remain
mutually exclusive, however.

 23