Social Housing in the German Port City of Kiel

I visited the German city of Kiel in late July of 2015. I met with Emily Sittel from the department of Housing and Social Help. Attending the meeting from the Ihre Forderbank was Imme Reiben-Mucha a specialist in real estate funding. We discussed the theme of social housing in the city of Kiel and how it compares with other cities and areas of Germany. First off we discussed the situation of the population demographics. The development of population is an important theme and can shape the direction that the housing market takes. Staff informed me that Kiel and another city called Flensburg are the only major cities in the Bundeslander of Schleswig-Holstein that are growing. The last official statistics count and prognoses completed in 2014 stated that by the year 2035 the city will see anywhere from 11,000 to 17,000 additional people move to Kiel. Below is a history of the population development in Kiel.







The development of the real estate market has slowly changed over time without extreme changes due to sensible planning and development. The economic situation in Kiel remains stable with an unemployment rate that is low and constant.   One large change that the city is seeing is the number of students studying in Kiel. Of the current population of around 240,000 people, around 30, 000 of them are students. That puts an extreme pressure on the real estate market around October when the students come back to the city. This problem is noticeable throughout German University towns because the high school system changed a few years ago allowing more students to go to college earlier. The number of people from other towns including refugees especially from Syria continues to climb. The actual percent of people from outside Germany living in the city now stands at around 9.6%. The number of elderly continues to also grow but that is a common theme in Germany. In comparison with other German cities, Kiel has a lower percentage of older persons. In 2014, the number stood at around 18.58% percent of the city population compared with a national average of more than 30%. The average age of a Kieler is 41.5 years old.

In comparison with other German States Schleswig-Holstein has an active and innovate social housing funding politic. They feel like they adapt extremely quickly to changes in the market and ensure that the financing packages offered are attractive for investors. They work extremely hard with their financing partners to ensure that there is a wide array of new social housing built, strong packages available to remodel and redevelopment of older housing including methods to make them more energy efficient and opportunities to create home ownership units.

The average rent price for social housing units in Kiel is around 5.43 euro per square meter rented.   The rental index for the city shows that the average private rent per square meter in Kiel was 6.60 euro in 2013 and raised closer to 7 euro by 2014. Kiel is focusing attention right now on several special populations one being elderly. They are working with developers to ensure that there are more units being built for people with handicaps, in wheelchairs or units that older people can grow with and not need to move out of because of mobility issues. Another group is students. Kiel is a University town and that means that the market for single bedroom units or large houses to share is crowed every year. The city is looking to develop more single bedroom apartments and student dormitories when possible.   Student dorms give an opportunity to house large numbers of students extremely quickly. Refugees are another target population that the city wants to build for. Right now many families are living in tight situations because of the shortage of housing. It is extremely important to integrate refugees so more single apartments are needed. Last is young families that want to own homes. The city is working on creating better financing schemes to meet the needs of these young families that wish to own and stay in Kiel.

The city itself is in a strong position when it comes to having enough affordable housing. Germany as a country does not just count on social housing to fill the need when it comes to housing for low income families and persons. There are other programs like Wohngeld that operates like a voucher program and provides money for those who are out of work or disabled. There are enough normal private market rental units with reasonable enough rent that the city can use its various subsided programs to ensure those who need a roof over their heads receive it. With that said, there are around 6,100 units of social housing in the city. One must remember that does not count the units that are being subsided through programs like Wohngeld or Harz IV which is a sort of welfare program that can make housing payments. The city helps the development of housing by using methods like free land for developers willing to build social housing with a contract that locks in rent prices at affordable rates for a defined period of time. The city works with its financing bank to provide funding in multiple ways.


In the last year, the city and state realized that their low interest rate loans were not competitive enough because the market rate loans were just as low. Because the market rate loans do not come with red tape and restrictive rental conditions, the developers in the area choose the private market rates. The city and state reacted quickly offering extremely low interest rates with long term guarantees of anywhere from 20-35 years. That made the state and city’s programs far more interesting.

One example of a funding program is as follows. The funding contract stays in place for 20 years which means once it is locked in it becomes impossible to increase rents more than what is stated in the terms of the contract. The rent prices range from 4.85 euro to 5.80 euro per square meter depending on the size of the bedroom and the income of the family that comes into the program. The ability to increase rents is limited to 6% over 3 years. Depending on the units being developed and people being helped, the loan available can be as high 85% of the total costs of the development. In this situation the interest rates are set at .25% for the first 20 years. After year 21 the rate increases to 2.5% for the remaining years of the loan which is another 21 on average. There are opportunities for extra funding depending on amenities added or building for special populations. The conditions for a contract are similar for longer contracts of 35 years with some differences in the total credit time in years and how much the interest rates may vary over time.

The question that came next is how many new units were being developed vs. how many were being lost. Cities across Germany are losing social housing units at a drastic rate as old contracts expire and landlords look to maximize profits. The city provided me with the following numbers for built and remodeled units for both the state and city. This includes the number of units built and the corresponding euros spent.

Years 2011 2012 2013 2014 Total 2011-2014
Statewide New Building 509- units 41.128.069 euro 355 units 25.422,144 euro 547 units 44,341,197 euro 462 units 49,892,760 euro 1,873 units 160,784,170 euro
Statewide Renovation and Remodeling 174 units 6,542,650 euro 224 units 7,191,600 euro 173 units 3,835,400 euro 448 units 43,259,937 euro 1019 units 60,829,587 euro
Kiel New Building 40 units 3,928,400 euro 149 units 9,112,300 euro 62 units 2,514,700 euro 106 units 10, 696,300 euro 357 units 26,251,700 euro
Kiel Renovation and Remodeling O units 0 euro 0 units 0 euro 154 units 2,866,000 euro 31 units 2,279,816 euro 185 units 5,145,816 euro

In the last five years the city of Kiel lost over 4,200 social housing units which are out of proportion with how many were built. Mrs. Kittel told me that a prior agreement to let over 3,000 older contracts expire is what led to the higher than normal number. On average 200-300 social housing units are lost every year so last year s drastic loss is an outlier. The goal moving into the future is to develop anywhere from 800-900 units of housing pro-year with about 1/3 of them being social housing units. It is extremely important in Kiel to have a strong mixture of income and populations in the city.

One last important note is that the city of Kiel considers itself a climate protection city. That means no new housing social or private will be developed without extremely high environmental standards. In the USA if high costs for green building might jeopardize a project, those elements can be pulled out to ensure the project is built. In Germany, and especially Kiel that is not possible. The project will be canceled before a low standard is allowed.

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