A proposal by Christian Democratic Union (CDU) leader Friedrich Merz to cap rental costs for individuals receiving citizen’s income benefits has drawn sharp criticism from across the political and economic spectrum. The proposal, intended to address rising living expenses, has been widely deemed impractical and potentially counterproductive.
Timon Dzienus, spokesperson for the Green Party parliamentary group on the Committee for Labour and Social Affairs, condemned the suggestion as “unsocial and incorrect” arguing it fails to address the underlying issue. He warned that further reductions in housing cost allowances could trigger widespread homelessness, as many families already struggle to cover their rent obligations within the current system.
Verena Bentele, President of the Social Association (VdK), echoed this sentiment, stating Merz’s plan ignores the realities of the housing market. She highlighted that even administrative courts frequently acknowledge that many job centers are failing to adequately cover actual rental prices. The VdK cited a current limit of €713.70 for cold rent that job centers will cover in cities like Berlin for a four-person family, a sum insufficient to secure suitable accommodation.
Marcel Fratzscher, President of the German Institute for Economic Research (DIW), also expressed skepticism, asserting the proposal would be more detrimental than beneficial. He further pointed to the significant bureaucratic burden and potential short-term increase in costs associated with attempting to relocate a large number of citizen’s income recipients to more affordable housing.
The Institute of the German Economy (IW), an organization closely linked to employer associations, voiced similar concerns. Economist Ralph Henger suggested the proposals would likely have a negligible impact on the strain on social welfare programs, noting that local authorities already regularly implement rent caps, making a federal-level change unfeasible. He also emphasized the existing tightness in many local housing markets, hindering the enforceability of stricter regulations.
Elke Ronneberger, Head of Social Policy at the Diakonie Deutschland charity, urged the federal government to clearly outline how the proposal would comply with legal requirements. She emphasized that failure to address the issue could result in a considerable increase in homelessness and advocated for policies to stabilize housing costs and improve affordability, which would ultimately reduce costs associated with basic security provisions.