The government is cutting housing benefit payments – even though more and more people need it.
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More than one in four German renters could afford their home for only a few months after a major loss of income. At the same time, the government plans to reduce Wohngeld (housing benefit) from 2027.
Rising rents are putting increasing pressure on households across Germany. According to the 2026 Mietenreport (rent report) from the Deutscher Mieterbund (German Tenants’ Association), 29 percent of renters fear they may no longer be able to afford their rent in the future, while 58 percent say their housing costs have increased within the past year.
Many households are already cutting spending elsewhere to cope with higher housing costs. Around 52 percent say they are reducing savings or retirement contributions, while 49 percent are spending less on holidays, culture and leisure. A quarter report cutting back on healthy food, and 15 percent say they are spending less on their own health.
At the same time, the number of households receiving Wohngeld has risen sharply. The figure nearly doubled from around 600,000 in 2020 to approximately 1.2 million by the end of 2023. In 2024, the number increased by another 5.9 percent, while spending by the federal and state governments reached around €4.7 billion.
Wohngeld is not limited to unemployed people. In 2023, employees were the main source of income in 37 percent of Wohngeld households, while pensioners or retirees accounted for 53 percent. This means the benefit supports many working people and older residents whose incomes are no longer sufficient to cover rising housing costs.
Despite this growing demand, the Bundesregierung (German federal government) plans to cut spending on Wohngeld from January 2027. The proposed changes include suspending the scheduled annual increase, halving the heating-cost component and changing the formula used to calculate benefits.
The government expects the reforms to reduce the number of households receiving Wohngeld to around one million by 2029. Approximately 238,000 households could reportedly lose their entitlement entirely. The government aims to save around €1 billion, although critics warn that some of these costs could simply shift to other parts of the social welfare system.
The situation highlights a growing dilemma in Germany: housing costs are rising while government support is set to shrink. For many low-income workers, pensioners and families, the planned changes could mean having to absorb even more of the country’s escalating housing costs themselves.