The Left Party demands system change in social housing construction in Saxony

The Left Party in the Saxon state parliament has called for a change in the social housing system - "away from bureaucratic, inflexible application procedures towards a non-profit housing system". "Those who make a long-term commitment to social housing should be rewarded with tax breaks and preferential access to federal funding and public land," MP Juliane Nagel told the German Press Agency. In return, the companies should commit to purely cost-covering rent levels and profits must be reinvested. This type of non-profit housing already existed in Germany until 1990 and accounted for almost a third of the housing stock at the time.

Nagel pointed out that a funding instrument for social housing has been in place again in Saxony since 2017 with the funding guideline for tied rental housing. "This was long overdue, as the number of apartments for people on low incomes fell rapidly for years." In 2015, more than 20,000 apartments in Leipzig were no longer subject to rent control. The high number of social housing units in Dresden, on the other hand, is due to the privatization of the municipal housing association. At the time, the city had negotiated fixed rents for 10,000 apartments. "However, this regulation expires in 2036, and the loss of these social housing units must be compensated for." Nagel regularly asks small questions on the subject in the state parliament.

"The city of Leipzig needs around 2,200 new social housing units every year to meet demand. But construction progress is far too slow," reported the MP from her home city. Only 2,294 social housing units have been added in Leipzig since 2017, compared to 1,074 in Dresden. The drawdown of funds for social housing subsidies paints the same picture. This is not only due to the fact that the Sächsische Aufbaubank is processing funding applications too slowly, but also to rising construction costs and interest rates as well as a lack of materials.

"For many developers, the funding conditions for the creation of tied rental housing are also far too complicated. Without supplementary funding, as in the city of Leipzig, the number of new social housing units would be even lower," emphasized Juliane Nagel. In Dresden, several social housing projects had been put on hold due to the difficult conditions. Lengthy approval processes would also delay construction, meaning that funds would be called up with a delay.

"As the Left Party, we have repeatedly demanded that the funding guideline for tied rental housing be adapted to reality. The subsidy rates for the approved rent - i.e. the subsidized rent of 6.50 euros per square meter for social housing - must increase and the development of construction costs must be absorbed with a dynamic adjustment," concluded the MP. The low drawdown of funds by local authorities shows that the funding guideline, which is valid until the end of 2023, poses major problems for investors. "Everything must be done to ensure that no funds for social housing funding are forfeited, as was obviously the case in the 2021/22 funding period. In Dresden in particular, there was a massive slump in social housing construction in 2023."

At the end of last year, Saxony increased funding for social housing construction in Dresden and Leipzig by an average of 20 percent. According to Regional Development Minister Thomas Schmidt (CDU), this is the state's response to the sharp rise in construction and financing costs. Social housing construction should still be possible: "This will certainly help many a new housing project that is already planned but is currently on the back burner due to the cost situation."