The German Federal Ministry for Housing, Urban Development and Building has introduced a draft bill aimed at reducing government spending on housing benefits, known as Wohngeld. Under the proposal, the federal government and the states seek to save approximately 1.5 billion euros in 2027, with annual savings projected to rise to over 2 billion euros starting in 2028. This move marks a significant shift from the expansionary policy introduced by the 2023 Housing Benefit Plus Act, which had substantially increased both the number of recipients and the amount of support provided to low-income households.
The proposed measures include three primary changes to the current system. First, the government plans to halve the heating cost component of the benefit. Second, a scheduled increase in housing benefits planned for January 1, 2027, would be canceled. Third, the ministry intends to modify the calculation formula for housing benefits, which would effectively count a larger portion of a household's income toward their housing costs, thereby reducing the total benefit amount for many recipients.
Approximately 1.2 million households currently receive housing assistance in Germany, with retirees, families, and single parents making up the majority of beneficiaries. According to the ministry's draft, these changes could result in about one-third of current recipients losing their eligibility entirely. Existing benefit decisions will remain valid until their expiration, meaning the impact will be felt gradually as households apply for renewals, which typically occur every twelve months.
Federal Minister Verena Hubertz has justified the cuts as a necessary step for fiscal consolidation in response to broader economic challenges and limited growth. However, the draft bill itself acknowledges that these reductions may lead to increased costs in other areas of the social safety net. Specifically, it anticipates that many individuals who lose their housing benefit may become eligible for basic income support, such as Bürgergeld or social assistance, potentially offsetting some of the intended savings.