Living allowance is a state subsidy designed to help low-income households to ensure adequate and family-friendly housing. The subsidy is specifically aimed at people who have sufficient income to cover their living costs but have difficulties covering their monthly housing costs. Both tenants and owners are entitled to living allowance, provided they fulfil the relevant requirements.
Requirements for living allowance
You are entitled to living allowance if
You have the minimum income to cover your daily needs independently, but are considered to be on a low income. Living allowance is expressly not a means of subsistence but a pure subsidy towards housing costs.
Your income does not exceed your individual income limit and thus reduces your entitlement to zero by offsetting.
You do not receive any other social benefits that already include accommodation costs, e.g. citizens allowance or social assistance.
You have your place of residence or habitual abode in Germany.
Note: The minimum income is based on the standard requirements and any additional requirements. If your income minus the warm rent and health insurance falls below this requirement, there is a so-called plausibility check, because as I said, the living allowance is supposed to be for maintenance, not for living costs. Citizens allowance would be the appropriate benefit for this.
Do you still need to apply for living allowance? With our housing allowance calculator from LeistungsLotse, you can quickly and easily check whether and how much living allowance you are entitled to. Check now!
Who is considered to be on a low income?
Low-income households are entitled to a living allowance, but what is considered "low" is relative. With the 2025 living allowance increase, the income limits have risen significantly, meaning that significantly more people can now benefit from the housing cost subsidy. The income limits are based on the rent level (I to VII), which reflects the regional housing costs, and the number of household members.
The income limits are higher than some people assume, especially after the living allowance reform. Nevertheless, many people refrain from submitting an application out of ignorance, even though they could actually receive living allowance.
Calculation factors for the amount of living allowance
The amount of living allowance is calculated individually and depends on several factors:
Number of household members: The more people living in a household, the higher the eligible housing costs. The living allowance is based on the average cost of living, which increases with the size of the household.
Amount of allowable rent or charge: The actual rent or the monthly charge of owners is taken into account up to a certain maximum amount. If the rent exceeds these maximum amounts, the excess amount is not included in the calculation.
Household income: The total income of the household determines whether and how much living allowance is granted. This includes all regular income, such as wages, pensions or maintenance payments. However, certain allowances and deductions reduce the income used for the calculation.
The role of allowances and deductions in the housing benefit calculation
A central aspect of the living allowance calculation are allowances and deductions that reduce the income to be taken into account and thus increase the chances of receiving living allowance. These include
Child allowances: A certain amount is deducted from income for each child living in the household in order to take into account the additional financial expenditure of families.
Allowances for people with disabilities: People with a recognised degree of disability can claim additional allowances.
Deductible expenses: Deductible expenses include, for example, maintenance payments or pension expenses. These amounts reduce the income that is taken into account when calculating housing benefit.
These allowances and deductions are particularly important as they ensure that households with incomes slightly above the income thresholds can also be entitled to living allowance.
The importance of rent levels and their influence on the amount of housing benefit
A decisive factor in the calculation of housing benefit is the so-called rent level, which varies depending on where you live. Germany is divided into seven rent levels (I to VII), which reflect the average housing costs in a region.
Rent level I: Applies to regions with very low rents. The subsidy is comparatively low here, as housing costs are generally also lower.
Rent level VII: Concerns large cities and regions with particularly high rents. In these areas, a higher eligible rent is taken into account when calculating housing benefit.
The rent level thus directly influences how much living allowance a household can receive. The regional differentiation ensures that the subsidy is appropriate to the actual housing costs.
Living allowance requirements: Who is entitled?
When it comes to living allowance, a distinction must be made between tenants and owners. Depending on the type of use, the rent subsidy is paid for tenants and the encumbrance allowance for owners of owner-occupied residential property. For both cases, this regulation can be found in §3 WoGG.
Requirements for entitlement to rent subsidy?
The following requirements must be met in order to receive living allowance as a rent subsidy:
Tenants of a flat or room (including subtenants)
Users of rights of use similar to tenancy, such as
permanent tenancy rights
User of a co-operative or foundation apartment
Owner of a house with at least two flats
Residents of a home (within the meaning of the Home Act)
Requirements for owner and encumbrance allowance
The following persons are entitled to a living allowance as an encumbrance allowance:
Owners of a house or flat
Owner of an agricultural sideline
Owner of a full-time agricultural holding (with restrictions)
Leasehold owner
Users of an owner-occupied property:
Right of permanent residence
usufructuary right
right of residence
Persons entitled to the above-mentioned properties or residential rights
The prerequisite for the encumbrance allowance is that the persons live in their own property and bear the costs themselves!
This includes owners of an apartment block with three or more flats, owners of a commercial building or a business. In addition, owners of a detached or semi-detached house that has business premises to such an extent that it can no longer be regarded as a condominium. Finally, owners of a full-time agricultural property whose utilisation part is not separated from the economic part are also included.
If in doubt, apply for living allowance
The legal provisions for living allowance are not always easy to understand. Therefore, if you are not sure whether you are eligible for housing benefit, you should always check your entitlement and apply if you are eligible.
Do you still need to apply for living allowance? With our housing allowance calculator from LeistungsLotse, you can quickly and easily check whether and how much living allowance you are entitled to. Check now!
No entitlement to living allowance with transfer benefits
Recipients of transfer benefits are not entitled to housing benefit. Here, the legislator has decided that the subsidy towards housing costs must be covered by transfer benefits. These transfer benefits include citizens allowance and basic income support in old age and in the event of reduced earning capacity (social assistance). However, this regulation does not apply to transfer benefits that are refused, withdrawn, denied or provided exclusively as a loan.
Recipients of:
Citizens allowance according to SGB II
Basic income support in old age and in the event of reduced earning capacity (SGB XII)
Assistance with living expenses (SGB XII)
Grants in accordance with § 22 Para. 7 SGB II (vocational training allowance (BAB) and training allowance)
Injury benefit according to SGB VII
Supplementary assistance for living expenses
Assistance in inpatient facilities (if the assistance is provided for living expenses); e.g. in accordance with the Federal Pension Act or other laws
Benefits in special cases and basic benefits in accordance with the Asylum Seekers Benefits Act
Due to the fact that housing costs are already included in the benefits provided by other institutions, members of the community of need / household living in the same household as a recipient of the above-mentioned benefits are also excluded from the living allowance.
Please note: As living allowance is always applied for for the entire household, recipients of the benefits listed are only to be excluded from the "household members to be taken into account". The rest of the household can still receive living allowance.
Housing benefit reform 2025: Higher allowances and more beneficiaries
With the 2025 housing benefit reform, important adjustments have been made to provide financial relief for more households and to cope with rising housing costs. The reform includes a significant increase in income limits, which means that significantly more people will be entitled to living allowance. According to forecasts, the number of eligible households will increase by several hundred thousand. This means that middle-income groups will also be able to benefit more from the subsidy.
In addition, the housing benefit amounts have been increased to compensate for rising rental costs and the cost of living. A regular adjustment to the development of housing costs is firmly anchored in the law so that the allowance remains dynamic and reflects actual needs. The reform will lead to a higher average housing benefit amount, which will support low-income households more effectively.
The 2025 housing benefit reform thus marks an important step towards promoting social housing and at the same time providing financial relief for people in tight rental markets. Find out whether you will benefit from the new regulations and check your entitlement with a housing benefit calculator.
Conclusion
Living allowances are essential support for low-income households, helping to reduce the financial burden of housing costs. With clearly defined conditions, the subsidy is aimed at both tenants and owners, with the individual income situation, household size and housing costs playing decisive roles. The reforms, in particular the Housing Benefit Reform 2025, have significantly expanded the group of people entitled to claim and adapted the support to the rising cost of living. It is important that potential recipients do not hesitate to submit an application, even if there are uncertainties. The ability to apply online further simplifies the process and modern tools such as housing benefit calculators make planning easier. Despite these advances, recipients of transfer payments are still excluded from living allowances as their housing costs are already covered by other benefits. Living allowance remains a valuable and flexible form of assistance that enables many people to live decently.
Do you still need to apply for living allowance? With our housing allowance calculator from LeistungsLotse, you can quickly and easily check whether and how much living allowance you are entitled to. Check now!