Social housing in Leipzig: The available funding falls far short of what is needed

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It would actually have been worthwhile if the resident of Leipzig who had submitted the residents’ enquiry regarding the construction of social housing in Leipzig had followed up on the matter at the council meeting on 28 October. Simply to draw more attention to the issue at a time when some political groups are looking to make deep cuts to the city budget.

This is because it is no longer possible to build rent-controlled flats at a rent that complies with the KdU rates – that is, at 5.50 or, more recently, 6.50 euros per square metre.

“How many newly built flats with rents below 10 euros per square metre in the city does the Department for Housing estimate there have been in recent years (from 2020) and in the coming years (up to 2030), and what is the estimated demand for such flats?”, was how the resident phrased the question.

And the response from the Office for Housing Construction and Urban Regeneration

was unequivocal: “The administration does not have an overall overview of rents for newly built flats. Based on land, construction and interest costs, it can be assumed that no rents below 10 €/m² have been charged in privately funded new-build housing in the recent past.

This assumption is supported by an analysis of average advertised rents for flats, broken down by age of construction. In 2025, an average asking rent of 14.00 €/m² was recorded for the most recent building age category (built between 2015 and 2025). In 2020, the average asking rent for flats in the most recent age group (built between 2015 and 2020) was still €11.00 per square metre. This means that average asking rents have risen sharply over the last five years.

Thanks to social housing funding, around 1,700 flats with an initial rent of less than €10 per square metre have been created since 2020. From 2026 to 2030, there is expected to be a need for 5,520 new subsidised flats.”

Too few flats per year

That is the demand. If the timeframe is extended further, the figure is even higher, according to the Office for Housing Construction and Urban Regeneration: “For the years 2026 to 2034, an estimated 8,720 flats will be required in the form of new socially-subsidised housing.

The grant for the construction of housing subject to rent and occupancy controls is based, amongst other things, on the current market rent and the length of the occupancy commitment.

For a funding agreement concluded in 2026 under Funding Stream 1, with an occupancy commitment period of 20 years and completion of construction in 2029, the new-build grant from the state’s social housing scheme amounts to €6.28 per m². For a 60 m² flat for two people, the grant would amount to €90,432.

For funding under the second funding stream – i.e. for rent-controlled housing – the grant would be €4.88 per m². For a 60 m² flat for two people, the grant would amount to €70,272.

The current benchmark figures for calculating housing subsidies are available on the City of Leipzig’s website at www.leipzig.de/soziale-wohnraumfoerderung.”

At first glance, this sounds as though everything is on the right track. But it isn’t. Anyone can work this out for themselves. Since 2020, an average of just 340 subsidised flats have been built each year. The funding from the federal and state governments simply wasn’t enough to achieve more. If you extrapolate this figure over the next nine years, you end up with just 3,060 new social housing flats with a rent of less than €10 per m².

That is significantly below the 8,720 flats required.

Well above the KdU rates

And this, too, is likely to be a bitter pill to swallow, particularly for those urgently seeking an affordable home: the foreseeable new rents in these subsidised flats are well above the figures currently regarded as reasonable – between 5 and 6.50 € per m².

If one takes the current asking rents for new-build properties of €14 per m² as a basis, this results in rents of €7.72 per m² for subsidised housing or (in price-capped housing) €9.12 per m². This is significantly higher than the rates for accommodation costs and also well above what many average earners in Leipzig can still afford.

The funds available to Leipzig to finance rent-controlled housing at all are therefore insufficient both to build the required number of social housing units and to guarantee a rent that meets the accommodation cost rates. The problem will therefore continue to worsen.

And the allocation of municipal land under hereditary building rights is unlikely to alleviate this crisis, as the Office for Housing Construction and Urban Regeneration explains in response to a question regarding possible cost reductions in housing construction.