- Cabinet approves housing subsidy increase
On January 1st, rental assistance is set to increase by an average of 30 euros. The corresponding regulation was approved by the federal cabinet, as announced by the Federal Ministry of Housing in Berlin. It still needs the approval of the Bundesrat.
The monthly rental assistance for citizens with low incomes is reviewed every two years to ensure it is adequately adjusted to changes in prices and rents. The ministry had already announced the expected average increase in July.
Federal Minister of Housing Klara Geywitz (SPD) stated: "People are spending significantly more on rent, energy, and daily necessities today. To maintain the relief effect in the long term, we are increasing the monthly rental assistance by an average of 15 percent or 30 euros starting January 1, 2025."
The last reform was in 2023, which also significantly expanded the circle of beneficiaries. The goal of rental assistance is to relieve workers and pensioners with low incomes so that they do not have to apply for unemployment benefits or basic security due to high rents. The amount of rental assistance depends on the number of household members, income, and rent. The ministry previously estimated that around 1.9 million households nationwide could receive rental assistance next year.
The financial sector might need to adjust its housing investment strategies due to the significant increase in rental assistance. The fiscal implications of this increase on the financial sector within the economy should be thoroughly analyzed.
