The draft law introduces three main cutback mechanisms: suspending the indexation of housing benefit, halving the heating cost component, and changing the calculation formula. Households with very low payments of 50 to 60 euros per month are to be removed from housing benefit entirely, according to government circles. Instead, they will switch to basic income support, which will incur higher costs for the federal and local governments.
The changes take effect on January 1, 2027, but existing benefit notices remain valid initially. Since housing benefit must usually be reapplied for annually, the cuts will take effect gradually. Overall, the government expects net savings of around 1.16 billion euros in 2027 and around 1.5 billion euros annually from 2028.
In 2024, the federal and state governments paid a total of around 4.7 billion euros in housing benefit to over 1.2 million households. According to the Housing Ministry, 44 percent of recipients are families, and 52 percent of households are pensioners. The draft law now goes to the Bundestag for deliberation.
Source: Stadt München
