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Housing allowance is a debt trap for households with low incomes – a review is necessary

The housing allowance recovery system leads to low-income families with children frequently getting into debt. The Swedish National Audit Office audit shows that the changes recently proposed are a step in the right direction, but that this form of benefit as a whole should be reviewed.

Bostadsområde med bro i bakgrunden.

Audit Background

Housing allowance is a means-tested benefit granted for one year at a time to households with children and young people aged 18 to 28 years. The size of the allowance depends on the household’s benefit-qualifying income, the number of children in the household, the housing cost and size of the dwelling in the calendar year in which the allowance is paid. The allowance is determined provisionally for one year at a time, and the final allowance is determined up to two years after the first payment, when the Swedish Social Insurance Agency reconciles the benefit-qualifying income against income data from several agencies, above all the Swedish Tax Agency. The recipients are obliged to report on a current basis if their income changes in the calendar year in which the allowance is paid.

Nevertheless, about one third of the recipients receive demands for repayment of the provisional housing allowance, which is considerably more than was assumed when the rules were introduced in 1997. To reduce the frequency of recovery the Government decided that an effective system for reporting income changes should be created. For example, interest started to be charged on overdue recovery demands.

Since the allowance has a clear family policy purpose, the actions of the Government and the Social Insurance Agency are assessed against this background as well. As housing allowance targets households with a low economic standard, there may also be negative consequences if recovery of housing allowance leads to indebtedness.

Press contact: Olle Castelius, phone: +46 8-5171 40 04.

Presskontakt: , telefon: 08-5171 42 06.

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Updated: 26 June 2018

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