Housing benefit reform
The sharp increase in energy costs is hitting lower income earners particularly hard, as a high proportion of their outgoings are for housing and heating. The Federal Government's housing benefit reform will increase housing benefits and ensure that more households receive them. To achieve this, the Federal Government passed a law for the so-called Wohngeld-Plus-Gesetz (Housing Benefit Plus Act).
The housing benefit reform is part of the Federal Government's third relief package and will provide targeted support for low-income households: the reform means that some 1.4 million households will receive housing benefits either for the first time or will continue to receive them, bringing the total number of households eligible for housing benefits to around two million from 2023 onwards, rather than the current total of around 600,000.
The Federal Cabinet passed a draft law for the Housing Benefit Plus Act on Wednesday.
Average housing benefit twice as high as before
Following the reform, the housing benefit is expected to increase by an average of around 190 euros per month in 2023, doubling it from an average of about 180 euros per month (prior to the reform) to about 370 euros per month.
Subsidies for heating costs and climate component as a way of motivating people to save energy
A permanent heating cost component will also help to curb rising heating costs in addition to which there will also be a climate component as agreed in the coalition agreement, which will take the form of a surcharge on the maximum amount of the rent or charge. The decision to set flat rates for the heating and climate components was made deliberately to simplify administration and incentivise people to save energy. The reform also takes account of changing regional rent levels by reallocating municipalities and counties in line with the prevailing rent levels.
The costs of the 2023 housing benefit reform will be borne in equal parts by the Federal and State Governments. The act still has to be approved by the Bundesrat and is scheduled to come into force on 1 January 2023.