Hubertz Scales Back Housing Benefit Cuts

Overview of the proposal and the recent change

Bundesbauministerin Verena Hubertz (SPD) initially signalled very large cuts to Germany’s housing benefit (Wohngeld), suggesting savings of roughly two billion euros per year split between the federal government and the states. That announcement raised alarm because reports suggested around 1.2 million households could be affected. Since then a draft law from her ministry has clarified the plan and shown that the immediate 2027 federal cut will be smaller than first communicated: the federal savings in 2027 are planned at 738 million euros, and the states would reduce their contribution by the same amount, producing total savings of roughly 1.5 billion euros in 2027 rather than the two billion initially discussed.

Key figures at a glance

1. Federal savings in 2027: 738 million euros.
2. Total savings in 2027 (federal + states): about 1.5 billion euros.
3. From 2028 onward the plan aims for roughly 1 billion euros in savings at federal level and 1 billion at state level, summing to about 2 billion euros annually.
4. An estimated one third of current entitlement holders could lose eligibility under the reform.
5. By 2029 the draft estimates 164,000 additional households will need basic security or social assistance, creating extra costs (about 680 million euros federal, roughly 74 million euros for municipalities).

How the draft law would achieve the savings

The ministry’s draft for “simplification and development of the Wohngeldgesetz” identifies three concrete levers to reach the planned savings. These changes affect the calculation of housing benefit, eligibility, and a special heating-cost allowance that is part of the housing benefit package.

1) Heating-cost allowance reduced

The draft proposes to halve the heating-cost allowance within the Wohngeld. This measure is designed to reduce immediate expenditure but would hit households with high energy bills particularly hard, since the allowance was intended to ease energy-related housing costs.

2) Cancellation of a planned 2027 increase

An increase to the housing benefit that had been planned for 1 January 2027 would be cancelled under the draft. This means households who expected a benefit rise next year will not receive that improvement, reducing the projected spending baseline.

3) Change to the calculation formula

The calculation formula for Wohngeld would be adjusted so that a larger share of household income is counted as available. As a result, many households will see lower entitlement amounts and a significant number will no longer qualify for housing benefit at all. The draft indicates this will primarily affect people who are currently just above the eligibility threshold.

• More income counted in means test
• Smaller benefit amounts for many recipients
• Loss of eligibility for households near the margin

Social and fiscal impacts

The reform’s combined effects are both social and fiscal. Short term, the cuts in 2027 are smaller than initially signalled; long term, from 2028 the plan restores the larger annual savings target. That trade-off reduces immediate pain but preserves a strong consolidation goal for the ministry’s budget.

Who would be affected

According to the ministry’s calculations cited in reporting, roughly one third of current Wohngeld recipients could lose entitlement under the new rules. The impact would be felt by low-income families, pensioners, and renters who currently live just above the threshold for social assistance. Existing benefit decisions would remain in force, but new and renewal applications would be judged by the new rules.

Costs shifted to other programmes

The ministry itself notes an important side effect: reducing Wohngeld will push some households onto other safety-net programmes. The draft estimates 164,000 additional households could need basic security or social assistance by 2029, with associated additional costs of about 680 million euros for the federal government and about 74 million euros for municipalities. This dynamic complicates the net fiscal benefit of the Wohngeld cuts.

Risks for housing stability

Social organisations such as the Deutsche Mieterbund and the Bundesarbeitsgemeinschaft Wohnungslosenhilfe warn that reducing housing benefit risks increasing rent burden, evictions and even homelessness. Critics say that cutting Wohngeld while rents remain high could undermine housing stability for people with low incomes.

Political response and public debate

Hubertz explains the measures with the pressure of tight budgets, limited growth and a wider need for austerity across ministries. She frames the reform as an unpleasant but necessary step to regain future fiscal room for manoeuvre. That rationale, however, meets strong opposition from social groups and parts of the political spectrum.

Arguments in favour

1. Budget discipline: supporters argue the federal and state budgets need consolidation.
2. Targeting: some say Wohngeld expansion in recent years should be refocused to be more efficient and better targeted.
3. Phased approach: the smaller 2027 cut is presented as a pragmatic step that staggers the burden.

Arguments against

1. Social risk: critics warn the reform will increase poverty and housing insecurity.
2. Unclear net savings: shifting people to social assistance could reduce the fiscal benefit and increase municipal costs.
3. Political pushback: parties like the Greens and social organisations call on the Bundestag budget committee to reject the cuts.

What happens next and short conclusion

The draft law will now enter the political process: scrutiny in the Bundestag, debates in committees including the Haushaltsausschuss, and discussions with the states that co-finance Wohngeld. The outline in the draft means Hubertz delivers a smaller cut in 2027 than initially communicated, but the plan preserves the larger consolidated savings from 2028 onward. The core tension remains: balancing the fiscal squeeze and the debt brake against the social goal of protecting low-income households from rising housing costs.