Germany to Cut Housing Subsidy by €2 Billion, Hitting 400,000 Households
Published on 07/30/2026 at 09:31 | Redaktion boerse-global.de
A planned overhaul of Germany’s housing benefit system will see nearly two billion euros slashed from the programme starting in 2027, with experts warning that up to 400,000 households could lose their eligibility. The cuts, approved by the federal cabinet on 6 July 2026, mark a sharp reversal from the Wohngeld-Plus reform of 2023, which had expanded the subsidy to around 1.2 million households.
Under the current rules, even workers earning the statutory minimum wage of €13.90 per hour can qualify for housing support. Eligibility depends on three factors: household size, rent level, and total income. People already receiving other social benefits that cover housing costs—such as Bürgergeld, basic income support, or BAföG—are excluded. Homeowners can apply for a separate “mortgage relief” allowance, which accounts for loan costs, a flat maintenance rate of €36 per square metre per year, and property taxes.
When calculating entitlement, authorities scrutinise income closely. Certain payments are not counted: child benefit, the child supplement, and care allowance. Volunteer and coaching allowances of up to €3,000 annually are also exempt. Pensioners with at least 33 years of pension contributions receive a special deduction. Self-employed applicants must submit a 12-month income forecast, with a flat 10 percent of profits deducted for taxes and social contributions.
Asset limits for 2026 stand at €60,000 for the first person in a household and €30,000 for each additional member. Exceeding those thresholds typically disqualifies a household from receiving Wohngeld.
The planned cuts will hit hardest from 2027. Monthly payments under €15 will no longer be disbursed. Analysts estimate that between 381,000 and 400,000 households will lose their entitlement entirely. Pensioners, who account for more than half of all Wohngeld recipients, are expected to be disproportionately affected. Social associations and the German Tenants’ Association have sharply criticised the move. Roughly 143,000 households may end up falling back on Bürgergeld or basic income support, while families risk losing the child supplement as well.
Alongside the benefit cuts, new rent tiers will take effect in January 2027. These tiers determine the maximum rent that the subsidy calculation will recognise. Some 411 municipalities will move into higher tiers, while 126 will drop into lower ones.
Existing benefit decisions remain valid until the end of their approval period. However, if a household gains new members or sees its rent rise by more than 10 percent, authorities can recalculate eligibility immediately.
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