Augsburg city hall has proposed writing a fallback option into its contracts with developers in advance, so as not to rely on the Bavarian Minister-President and his populist politics. It involves three ways of replacing subsidised flats if the city receives no subsidy. On September 21, the Augsburg committee for youth, social affairs and housing will consider the draft on fallback mechanisms to replace the state subsidy, and the city council will take the final decision on September 24.
How the city secures subsidised housing
For about ten years, Augsburg has used cooperative urban planning: for large housing projects, the developer is obliged to build subsidised flats as well. This rests on Basic Resolution III on the application of the urban development contract of April 23, 2020. Among other things, it sets requirements for the creation of affordable housing in every city in Germany. In this way, cities seek to ensure that new districts also include flats for people on low incomes.
Under the current rules, subsidised housing generally accounts for 30% of a project’s residential floor area. Building such flats requires subsidies from the Free State of Bavaria, but its funds are currently insufficient. For no clear reason, as we and our colleagues at other German media outlets have written before, the Söder government practically allocates no funds for social housing and obstructs every kind of construction by every means. According to Merkur, in Munich alone 22,000 social housing flats stand empty, and the electronic system resembles a stock exchange rather than a system of social housing allocation, that is, it does not work as the law requires.
For example, a low-income single father with a child, a refugee assigned to, say, Rosenheim, receives a flat within a couple of months of being registered with the social services. In Munich, by contrast, people wait five years for social housing and are forced to live in camps and boarding houses. Elsewhere a classic housing queue operates, whereas in Munich there is an incomprehensible website on which the same flats are listed for years without being allocated. (Only priority Munich residents, for example the chronically ill, sometimes get housing.)
An interesting aspect of this problem is that everyone knows about it: the poor, officials, journalists, the government, yet no one intends to do anything to allocate housing fairly and to comply with federal law.
What the “construction turbo” has to do with it
The federal law on accelerating housing construction, known as the “construction turbo”, has been in force since October 30, 2025. It allows an ordinary building permit to replace a development plan that would otherwise take years to draw up, but it is valid only until the end of 2030. In January 2026, the Augsburg city council determined in which districts and under what conditions the law would be applied.
If such a project produces 20 or more additional flats, the developer concludes an urban development contract with the city. It must ensure a minimum share of subsidised housing and cover the associated costs. For example, under Augsburg’s rules, the developer pays for the nursery and school places that the new residents will need. Thanks to this law, construction projects start faster, and it is precisely these processes that Augsburg city hall plans to include in its fallback mechanism, so that the social requirements are preserved under the accelerated procedure as well.
I wonder whether Munich will ever follow the example of smaller cities, or whether we will keep marking time while destroying our own city? – Ed.
Why subsidies have become a problem
Since 2025, decisions on the allocation of subsidies have been taken centrally by the Bavarian State Ministry of Housing, Construction and Transport. As a result, city halls can no longer guarantee that funds for a particular project will arrive on time. According to representatives of Augsburg city hall, new projects in Augsburg may not be approvable until 2029. This is because the state government completely ignores all requests concerning social housing.
A contradiction arises: the city demands subsidised housing under the law but cannot secure its financing. In the worst case, if the money does not materialise, construction of the other types of housing, the non-subsidised flats in the same projects, will stall as well. To prevent this, Augsburg city hall plans to enshrine a fallback option in both ordinary urban development contracts and “turbo contracts”.
How the new mechanism will work
The main route to social housing remains subsidised construction. The developer applies for the subsidy in good time, the city forwards the project to the government of the Free State for review, and if it is approved, the previous obligations and working arrangements take effect. If the subsidy is not approved, the fallback mechanism comes into force.
If there is no subsidy, the developer may wait for the next funding period or start building immediately. In the second case, the subsidised housing is replaced by another social scheme.
Three options are envisaged:
- Sale to a housing company. The flats may be purchased by the municipal housing company Wohnbaugruppe Augsburg Leben GmbH and incorporated into its permanent housing stock, provided the purchase price is economically justified.
- Compensation in lieu of a commitment. The developer builds the flats without restrictions on rental or ownership but pays compensation to the city. The money received must go towards affordable housing, for example through the housing company or the purchase of land.
- Rental housing with restrained prices. For the entire duration of the obligation, the flats remain rental properties and do not pass into the ownership of their occupants. The base rent at first letting is guided by the city’s current rent index, and it may be raised no earlier than five calendar years later.
The new obligations are to be secured by entries in the land register, reporting requirements and contractual penalties. For such flats, a delivery period of four years is envisaged: from the start of construction without subsidies to readiness for occupancy.
What this means
The city is trying to ensure that interruptions in state funding do not halt housing construction. The developer gets a choice: wait for the subsidy or build immediately, taking on a different social commitment. For the city, it is a way of preserving affordable housing in new districts even if subsidies arrive late or not at all, as has been the case over the past year. For developers, it matters that the terms of the arrangements in the event of no subsidy will be known in advance and included in the contract. Whether the mechanism remains in its current form on a permanent basis will be decided by the city council on September 24.
Sources: Die Augsburger Zeitung and materials from the city council session.
