The City Council met: Can a tax on under-occupancy help alleviate the social housing crisis in Leipzig?

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How can Leipzig secure more social housing? This issue has been on the city council’s agenda for years. There is simply not enough funding from the federal and state governments to build the 1,100 to 1,300 new social housing units required each year. Only 400 to 500 are actually being built. And so the list of Leipzig residents who hold a housing eligibility certificate but still cannot find a vacant social housing flat is getting ever longer.

What can be done? The Green Party parliamentary group asked itself this question and tabled a motion on a misallocation levy, which was put to the vote at the council meeting on 30 September.

It was a three-stage motion, linked to the hope that the Free State of Saxony would eventually create the legal framework for such a levy. After all, this law does not yet exist.

Dr Tobias Peter, chair of the Bündnis 90/Die Grünen parliamentary group, at least expressed confidence that this measure would bring a little money into Leipzig’s coffers, which could then be reinvested in social housing. And support even came from an unexpected quarter – from the AfD parliamentary group, which had at least tabled a question on the matter some time ago.

The city’s response regarding the imposition of a misallocation levy was, at the time, rather brief and to the point: “The City of Leipzig takes a critical view of the introduction of a misallocation levy in Saxony. Regular checks on the income circumstances of the households concerned involve a high administrative burden.”

However, the CDU parliamentary group, represented by Lucas Schopphoven on 30 September, also viewed the Greens’ proposal favourably. In Schopphoven’s view, levying an under-occupancy charge on tenants who earn significantly above the income threshold for social housing would be a matter of fairness. Whilst these people should not be forced to move – that would, after all, defeat the purpose of the levy – they should, through paying the levy, help ensure that the city can build social housing.

Disproportionate administrative burden

Meanwhile, Left Party city councillor Juliane Nagel made it clear straight away that her group would vote against the proposal because the measure simply would not achieve enough, whilst other measures to alleviate the housing crisis were far more important – measures against rent gouging, for example, and action against the misuse of flats.

Several speakers highlighted that the problem in Leipzig is also a lack of flats into which higher earners could then move. The housing market is – to put it mildly – under strain.

The social welfare office, too, expressed considerable scepticism about the proposed measure in its statement: “The implementation of a misallocation levy would entail a disproportionately high administrative burden, as the income circumstances of the households concerned would have to be checked on a regular basis. Furthermore, it is necessary to verify the local comparative rent for the respective flat in order to determine the amount of the misallocation levy. There is a lack of staff resources for these tasks.

Based on the results of a survey of households in subsidised accommodation carried out in 2024, it can be assumed that a significant proportion of households have experienced such a small increase in income that they are likely to remain within the income thresholds. The potential for imposing a misallocation levy is estimated at just 10 per cent.

This is consistent with the experience of the City of Frankfurt am Main. For Leipzig, however, significantly lower revenue would be expected. This is due to the lower income level and the significantly smaller total number of social housing units.

As at 24 April 2026, the City of Leipzig had approximately 2,400 subsidised flats. According to the survey results from 2024, approximately 1,000 additional income assessments would be required. This would correspond to an additional staffing requirement of four full-time equivalents (FTEs). Given the City of Leipzig’s current budgetary situation and the ongoing staff reduction processes, implementation is not justifiable.

The City of Frankfurt am Main classifies the imposition of the misallocation levy as an uneconomical administrative task. The City of Leipzig shares this assessment. Compensation for the costs through the revenue from a misallocation levy is also not to be expected, given the income situation in Leipzig.”

No recourse without regulations in Dresden

Reason enough, then, to vote on the Greens’ motion at least on a point-by-point basis. But that changed nothing. Perhaps even to their own surprise, all three points received clear approval in the council meeting.

This included the key point without which Leipzig cannot take any action at all: “The City of Leipzig is lobbying the Free State of Saxony to create a legal basis under state law for the introduction of an income-based compensation payment for rental accommodation subject to rent and occupancy controls (misallocation levy). The revenue from the misallocation levy is to be earmarked and channelled, in addition to state funding, into municipal support for social housing construction in Leipzig.”

Even if the legal framework were in place, the administrative burden would only just begin. After all, the income levels of all tenants in rent-controlled flats would then, of course, have to be assessed in some way. Something that is currently not at all possible. And then, according to Tobias Peter, the cases of misallocation identified in this way should be dealt with with as little red tape as possible. He expects this to generate at least between 500,000 and 1 million euros in additional revenue for Leipzig, which should then be channelled back into social housing construction.