According to the government, around 1.2 million households in Germany currently receive the benefit, and more than half of them are pensioner families.
Who Will Lose the Right to the Benefit
The hardest hit will be recipients whose payments range from 50 to 60 euros per month, as well as those who barely meet the criteria to qualify for the benefit. From 2027, this category will be left without rent subsidies. Households at the lower threshold of benefit eligibility risk falling into the category of basic social security recipients after the payments are abolished. According to government sources, the cuts will affect all currently recipient households without exception.
The changes will prove particularly sensitive for elderly people: according to estimates by the relevant ministry, pensioners account for about 52% of all benefit-recipient households, with a total of around 638,000 pensioners currently receiving it. If the assumption that one-third of recipients will drop out is confirmed, this could involve several hundred thousand pensioner households for whom losing the benefit means having to cover the difference between their income and rent costs independently.
Why Spending Is Being Cut
The reform is being implemented as part of the program for the “simplification and development of the housing benefit law” and is linked to the strict budget austerity to which the federal government has transitioned. To stabilize the state budget, housing benefit expenditures in 2027 will be reduced by 738 million euros. The federal states (Länder) are required to proportionally reduce their share of the funding.
Savings are being achieved not only by abolishing payments for a portion of recipients, but also by changing the actual mechanism for calculating the benefit. The government plans to suspend the scheduled indexation of Wohngeld, which usually occurs every two years and was due to take place precisely on January 1, 2027; without it, payments will not account for the rental rates and consumer prices that have risen since 2025. Simultaneously, the heating allowance, previously introduced to compensate for costlier energy resources, is being halved: for a single person, it will decrease from 96 to 48 euros per month, for two people—from 124 to 62 euros, and for three—from 148 to 74 euros. Furthermore, a recipient’s income will be factored more heavily into the benefit calculation—the corresponding coefficient in the formula will increase by approximately 58%, causing the final payment amount for many households to decrease or drop to zero.
Key figures of the reform:
- 2027 — savings will amount to 738 million euros (less than the initially planned 1 billion);
- 2028–2030 — annual savings are fixed at 1 billion euros;
- responsibility for a portion of the payments shifts from the Ministry of Housing to the Ministry of Labour and the municipalities;
- up to 163,000 households may transition to basic social security (Grundsicherung), which will partially offset the budget savings with additional expenditures—over 300 million euros for the federal budget and around 33 million euros for municipalities.
Government representatives characterize this step as painful but inevitable given the tense state budget situation. According to them, efforts were made to make the reform as gentle as possible for socially vulnerable segments of the population. Government circles note that for the head of the relevant department, Minister for Housing Verena Hubertz (SPD), this decision was also not easy, as opportunities for savings in other programs of the ministry, including social housing construction, are limited.
What Will Happen to Already Approved Payments
For those who have already received approval for the housing benefit, a grace period is provided—the so-called protection of existing rights. The upcoming changes will not affect them immediately: payments will continue in full until the expiration of the established term, which usually lasts twelve months, and in individual cases—up to 24 months. Since applications for Wohngeld must, in most cases, be resubmitted every twelve months, the effect of the reform for specific families will become apparent over the course of 2027, as the terms of current decisions expire.
Reaction to the Reform
The government’s plans have already drawn criticism from a number of political forces and social organizations. Representatives of the Green Party warn that many households will lose support and will be forced to apply for other types of social benefits. Specialized associations in the social sector, particularly the Paritätische Wohlfahrtsverband, point out that the cuts are occurring against a backdrop of rising poverty and homelessness and could increase the risk of rent arrears and the loss of housing. The government, for its part, insists that the savings are distributed across all departments and are a necessary condition for restoring budget reserves over the medium term.
Thus, the reform will not affect recipients immediately, but it will set the stage for a significant portion of needy households to transition into the basic social security system starting as early as 2027. The final impact on municipalities and the social support market will only become evident after the changes enter into force, and will depend on the final form in which the law is approved by the Bundestag and the Bundesrat.
Sources: AFP, t-online, RND
