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General Information Housing Assistance

The Federal Government's Housing Assistance

Housing is a basic human need. To ensure a good quality of life for everyone, it is crucially important to have good housing standards as well as intact towns and cities. This also contributes substantially to a healthy social climate in our society.

Good overall housing supply is the result of the interplay of housing market and housing policies, i.e. of the investment activity of private investors and companies and of the housing policies adopted by the German government, the federal states (Länder) and the communities.

Besides the regulatory framework for housing markets, a range of financial housing policy instruments are needed to ensure suitable housing supply with the aim to

  • provide affordable housing for lower income groups
  • support the creation of home ownership and provision for old age,
  • improve the ecological footprint of housing.

Financial housing policy instruments

Housing benefit

Housing benefit is an indispensable and integral part of generally market-economy oriented housing and rent policies. For more than 50 years, this tool has supported lower-income tenants of rental units (rent subsidy) and owner-occupiers (mortgage subsidy) to pay for housing. The costs of housing benefit are divided equally between the Federation and the Länder.

Households receiving housing benefit are no longer limited to a very specific low-price and thus narrow market segment but have access to average-cost housing. This also helps maintain and create stable population structures in neighbourhoods.

Housing benefit constitutes a legal right. Everybody who meets the requirements should assert their valid claim. The Housing Benefit Act lays down the details of entitlement to housing benefit.

Since 1 January 2005, housing benefit is provided solely to non-recipients of social support payments. This is because the competent authorities already take accommodation costs into account for social support recipients (in particular, social support payments include Unemployment Benefit II, social assistance and basic income support in old age and in the event of reduction in earning capacity).

The housing benefit was last increased on 1 January 2016 (cf. act reforming the housing benefit law and amending the Housing Assistance Act of 2 October 2015 (Federal Law Gazette I p. 1610)).

Social housing assistance

Social housing assistance is an essential element of socially responsible housing policy. Even in the most favourable framework condition, that is an essentially balanced market for housing, there are always households which cannot afford adequate housing for themselves – either because their income is too low or for other reasons.

Within the context of social housing assistance, private investors and municipal housing companies make affordable rental properties available for households with difficulties in gaining access to homes on the housing market. Assistance is granted for rented flats, the modernisation of existing housing and the establishment of owner-occupied property, primarily for families with children. A number of Länder and municipalities are also using social housing assistance to create homes meeting the needs of people with disabilities.

In the first phase of Germany’s federalism reform, all responsibility for social housing assistance was transferred from the Federation to the Länder as of 1 September 2006. The right to adopt legislation in this area and the funding of social housing assistance now lies with the Länder. To make up for lost federal funding for social housing, the federal government is providing compensation payments to the Länder from 2007 until 2019. The payments first amounted to 518.2 million euros annually and in 2015 were increased by 500 million euros per year for 2016 – 2019. The act on federal contributions to integration costs and for further support of the Länder and municipalities laid down a further top-up of 500 million euros for the years 2017/2018 to 1,518.2 million euros respectively. After the transfer of social housing assistance responsibilities, the Länder now have funding security for performing these tasks themselves. Since then, the Länder Baden-Württemberg, Bavaria, Berlin, Bremen, Hamburg, Hessen, Lower Saxony, North-Rhine Westphalia, Rhineland Palatinate, Schleswig-Holstein and Thuringia have issued their own legislation on social housing assistance allocation. The Housing Assistance Act and the Social Housing (Restricted Allocation) Act at national level remain in force as long as they are not replaced by provisions at Länder level.

Home ownership pension

Residential property is highly significant for individual asset management and provisions for old age. It also strengthens local ties by demanding and rewarding the acceptance of personal responsibility. In 2008, the federal government adopted the Home Ownership Pensions Act to better integrate owner-occupied housing and cooperative housing into the old-age provisions and the related tax benefits. The act improved opportunities to withdraw funds from the respective pension plan and also introduced a repayment bonus for property loans. In 2013 support was introduced for adapting owner-occupied homes to the needs of senior citizens.

Support for home ownership savings plans, home ownership savings premium and savings bonuses for employees

It is not possible to purchase a house or flat without equity capital. This requires saving-up. The earlier this decision is made, the earlier the intention to buy can be turned into reality. Home ownership savings plans are a good example of how this can be achieved.

In contrast to other forms of saving, home ownership savings plans receive government support in form of home ownership savings premiums and savings bonuses for employees.

Housing support programmes from the KfW

The housing support programmes of the federal government and of the KfW provide a wide range of programmes for buying or renovating buildings and apartments as well as for the energy-related modernisation or the adaptation to the needs of senior citizens. Burglar-retardant measures have also been subsidised since November 2015. Support for modernising buildings or homes is available in form of individual measures, packages of measures or complex targeted assistance to achieve a specific energy-efficiency or age-appropriate level.

In addition, support is provided in the form of low-interest loans from the KfW for the new construction of energy-saving buildings and the creation of home ownership, including the purchase of shares in a housing cooperative. The CO2 Building Rehabilitation Programme and the Age-appropriate Conversion/Burglary Protection Programme also provide support by means of grants. For more information please refer to the link on the KfW website in the context menu on the right.

Last update: 03.03.2017

Further information

KfW Group