Housing allowance

Housing Allowance - Housing allowance is a government subsidy for housing costs that provides financial relief to low-income households. It is granted as a rental subsidy (for renters) or as a mortgage subsidy (for homeowners). The legal basis is the Housing Allowance Act (WoGG). Since the 2023 housing allowance reform (“Wohngeld Plus”), the number of eligible households has expanded to approximately 2 million households nationwide - significantly more than the roughly 600,000 households that received housing allowance before the reform.

Eligibility Requirements and Calculation

Housing allowance is provided to households that have a minimum income (no entitlement to citizen’s income or social assistance) but whose income is insufficient to fully cover housing costs. The calculation is based on three factors:

1. Household size: Number of household members to be considered
2. Total income: Gross income minus allowances and standard deductions (30% for taxes and social security contributions for employees)
3. Rent or housing costs: Considered up to the local maximum limit

For Nuremberg, Rent Level IV (out of six levels) applies. The maximum eligible rent amounts are:

• 1-person household: approx. 563 euros/month
• 2-person household: approx. 681 euros/month
• 4-person household: approx. 857 euros/month

Since the 2023 reform, the average housing allowance has been approximately 370 euros per month - compared to approximately 180 euros before the reform. The exact amount is calculated using a formula that takes household size, income, and rent into account. Online housing allowance calculators (e.g., on the website of the Federal Ministry of Housing) provide an initial estimate.

Housing Allowance Plus: The 2023 Reform

The 2023 housing allowance reform brought the following key improvements:

• Increase in benefit amounts by an average of around 190 euros/month
• Heating cost component: For the first time, a flat-rate surcharge for energy costs is included
• Climate component: Deduction for particularly energy-efficient buildings (EPC A/B) - an incentive for energy-efficient renovations, including in social housing
• Expansion of the eligible group by raising income limits

Starting in 2025, there will also be automatic indexation: Benefit amounts will be regularly adjusted to reflect changes in income and rent, ensuring that housing assistance is not eroded by inflation.

Housing Allowance for Landlords - Indirect Effects

For landlords, the housing allowance serves an important function: It ensures the ability to pay of low-income tenants and reduces the risk of rent default. Tenants with a housing allowance approval are considered reliable payers by many landlords, as the subsidy is transferred regularly.

When it comes to utility bill settlements, note the following: The heating cost component of housing assistance covers a portion of the heating expenses-making it easier for tenants to make up any shortfalls. Owners of rental properties are not personally eligible for housing assistance for the rented unit-the mortgage subsidy applies exclusively to owner-occupied properties.

Practical Tip for Owners in Nuremberg

We recommend that owner-occupiers in Nuremberg check their eligibility for the mortgage subsidy if the monthly burden of interest, principal payments, and maintenance costs is placing a heavy strain on their household budget. The application is submitted to the Nuremberg Housing Allowance Office (Social Welfare Office, Dietzstraße 4)-in person, by mail, or online via the BayernPortal.

Especially for owners of older properties in neighborhoods such as Langwasser, Eibach, or Kornburg with moderate property values, the housing cost subsidy can provide significant relief of 100-400 euros per month. Eligible expenses for the housing cost subsidy include interest and principal payments, operating and maintenance costs, as well as public taxes and fees-up to the same maximum amounts as for the rental subsidy.

Approval is granted for 12 months-submit the renewal application in a timely manner before expiration (at least 2 months in advance). With the 2023 reform, many who were previously denied became eligible again-we recommend checking again even if you were previously denied.

Frequently Asked Questions

How do I apply for housing allowance in Nuremberg?

The application is submitted to the Housing Allowance Office of the City of Nuremberg-in person (Dietzstraße 4, by appointment), by mail, or online via the BayernPortal. Required documents include: proof of income for the last 12 months (pay stubs, tax assessments for self-employed individuals), rental agreement or loan and repayment schedule, ID cards for all household members, and current bank statements. The processing time in Nuremberg is currently approximately 6-10 weeks. If approved, housing allowance is paid retroactively starting from the month of application.

Can I receive housing allowance and citizen’s income at the same time?

No, housing allowance and citizen’s income (formerly ALG II) are mutually exclusive, as housing costs are already included in citizen’s income. Recipients of social assistance, BAföG with a full grant, or asylum seeker benefits are also excluded from housing allowance. However, if you slightly exceed the basic income limit, housing allowance may be the more financially advantageous option-it’s worth calculating on a case-by-case basis.

Is housing allowance deducted from the rent?

No, housing allowance is a purpose-specific subsidy paid to the tenant or homeowner-it is not paid directly to the landlord and is not deducted from the rent. The landlord generally does not find out whether a tenant receives housing allowance. Housing allowance is tax-free and is not reported as income on your income tax return. However, you are not required to disclose it to the landlord.

What documents do I need as an owner-occupier to apply for the housing subsidy?

In addition to the general documents (proof of income, ID card), owners need the following for the housing subsidy: the current loan agreement with a repayment schedule, proof of interest and principal payments for the last 12 months (bank statements), the land registry extract, the current property tax bill, and proof of operating and maintenance costs (e.g., utility bills). If there are multiple outstanding loans on the property, all must be listed.

How does housing assistance affect property value?

Housing allowance has no direct impact on property value-it is a subsidy for the resident, not for the property. Indirectly, however, demand in neighborhoods where many households receive housing allowance (e.g., Nuremberg-Langwasser, Eibach, or Kornburg) can be influenced by a stabilization of tenants’ purchasing power. For landlords in these neighborhoods, housing assistance reduces the risk of rent default, as low-income tenants receiving housing assistance have part of their rent subsidized by the government. When valuing rental properties with a tenant base of low-income residents, appraisers factor the risk of rent default into the property yield-stable rent payments thanks to housing assistance can therefore have a positive impact on the income value. When valuing investment properties in the metropolitan region, we analyze the tenant structure and the risk of rent default as part of a comprehensive market assessment.

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