Housing benefit reform could have a double impact on those in need

There are customers who come by the “Wäller Help” social department store in Montabaur every day, reports René Schneider. He works in the department store. Anyone who wants to shop here must provide proof of their need, as it is called in official German - for example, receive basic security or housing benefit.

For many people in the region, the store is an important meeting place, says Schneider. The visit there gives structure to the day; they can always find people in the house with whom they can talk.

The department store currently has 2,500 registered customers. However, the operators fear that they will no longer be able to serve many of their customers from next year. Because the federal government is planning a housing benefit reform. Today it is a topic in the responsible committee of the Bundestag.

The Federal Ministry of Construction estimates that a third of households that currently receive housing benefit will no longer receive the support after the reform. For households, this not only means that rent support is no longer available, but also that they are no longer allowed to shop at the social department store or at the food bank. Everyday life would suddenly become significantly more expensive for these people.

Many affected by the housing benefit reform

“Inflation affects a lot of people,” says René Schneider. "Single parents, for example, or pensioners who are somewhere in between. They have too much to increase their income, but too little to pay their rent. This hits them particularly hard."

Schneider knows what he's talking about. He received citizen's benefit himself. "You can no longer afford clothes if an appliance breaks - even if it's just a kettle, which many people take for granted, then it's absolutely unaffordable."

The federal government's plans for housing benefit reform provide for a combination of different points. On the one hand, the planned increase in housing benefit is to be suspended on January 1, 2027. There are also plans to halve the so-called heating cost component. It was introduced in 2023 in addition to the housing cost subsidy to cushion high energy prices.

Formula for calculation should be changed

In addition, the formula with which entitlement to housing benefit is calculated should be changed - so that fewer people will ultimately have this entitlement. According to the Federal Statistical Office, around 1.3 million households received housing benefit at the end of 2025, just over three percent of private households in Germany. On average, their claim is 291 euros per month.

The government hopes that the changes will save billions of euros: almost 1.2 billion euros less will be paid out in 2027, and almost 1.5 billion euros per year in the following years.

This also affects recipients of citizens’ benefit

But the reform will not only affect housing benefit recipients, fears René Schneider from the "Wäller Help" association: "A citizen's benefit recipient who would like to work but can only work part-time for health reasons must consider whether he really accepts a job. Because if he works part-time and does not receive housing benefit, he may no longer be able to pay his rent."

That would have the opposite effect of what the federal government actually wants. “This may even keep people on citizen’s benefit for longer, even though they actually want to work.”