Overbooking fee

Occupancy-based surcharge (also known as an occupancy retention fee or compensation payment) is a special fee that tenants in publicly subsidized housing (social housing) must pay if their income has since exceeded the income limits in effect at the time they moved in-meaning they are no longer eligible to occupy the unit. The aim is to keep state-subsidized housing available for lower-income households or, at the very least, to offset the subsidy benefit.

Basic Principle and Legal Basis

Publicly subsidized housing is funded by tax revenues to provide affordable housing for low-income households. Anyone who met the income limit upon moving in but later earns more is occupying social housing “improperly”-hence the term “misallocation.”

The legal basis used to be the Federal Act on the Reduction of Misallocation of Subsidies (AFWoG). Since the 2006 federalism reform, housing subsidy law has been a matter for the states. Bavaria has not introduced its own misallocation levy-in the Free State, the approach is regulated through income reviews and occupancy agreements with housing associations.

In federal states with a misallocation levy (e.g., North Rhine-Westphalia, Hamburg), the following applies:

Income Exceedance	Levy Amount (Example)
up to 20% above the limit	€1.00 / m² / month
21-50% above the limit	€2.50 / m² / month
over 50% above the limit	€4.00-5.00 / m² / month

The exact rates vary depending on the state and municipality.

Implications for Landlords and Housing Associations

Landlords of publicly subsidized housing are required to regularly review their tenants’ income levels. In Bavaria, this task is primarily handled by municipal housing associations:

• wbg Nürnberg GmbH (largest municipal housing provider in Nuremberg)
• GBW Group (Bavarian housing association)
• Non-profit housing cooperatives

If income exceeds the limit, the housing association may seek to adjust the rent, charge an occupancy fee, or-in extreme cases-terminate the lease, provided the subsidy agreement permits it.

Social Housing in Nuremberg: Current Situation and Challenges

For years, there has been a significant shortage of affordable housing in Nuremberg. The stock of social housing has declined significantly in recent decades-nationwide, many units fell out of the social housing commitment upon the expiration of their commitment periods and were rented or sold at market rates. In Nuremberg, the average rent-to-income ratio for low-income households is well above the recommended benchmark of 30% of net income.

The City of Nuremberg and wbg Nürnberg GmbH are therefore pursuing active new construction strategies for affordable housing. New subsidy programs from the Free State of Bavaria (BayernFonds, Social Housing Modernization Program) are intended to expand the housing stock. Owners planning to build subsidized housing can benefit from low-interest loans from BayernLabo (Bayerische Landesbodenkreditanstalt)-these are tied to occupancy and rent restrictions that typically last 25 to 40 years.

What Private Owners of Subsidized Housing Need to Know

Not only public housing associations but also private individuals can own subsidized rental housing-for example, by purchasing a subsidized apartment or by taking out subsidized loans for housing construction themselves. In such cases, the following special provisions apply:

Occupancy Restrictions: Subsidized apartments may only be rented to tenants with a valid housing eligibility certificate (WBS). The housing eligibility certificate is issued upon application to the municipal registration office of the respective city and is dependent on household income.

Rent control: The permissible rent level is regulated in subsidy notices and subsidy agreements and is typically below the local comparative rent. Rent increases are only possible within the limits permitted by the subsidy agreement.

Income verification: In Bavaria, owners of subsidized housing must verify tenants’ income when they move in (by requesting the WBS) and may only rent to households eligible for subsidies.

Commitment periods: Once the commitment periods expire (often 25-40 years after completion or the granting of subsidies), occupancy and rent controls cease to apply. The apartment can then be rented at market rates.

Practical tip for owners in Nuremberg and Franconia

In Bavaria, and specifically in Nuremberg, the traditional misallocation levy does not play a direct role as a separate tax, as Bavaria has opted out of this instrument. Nevertheless, owners of subsidized rental housing should be aware of the occupancy restrictions in their subsidy agreements: The commitment periods for publicly subsidized housing in Bavaria are often 25 to 40 years.

We recommend that owners who own and manage subsidized rental apartments regularly review the relevant subsidy notices from the Free State of Bavaria and, in case of uncertainty, contact the Bavarian Housing Promotion Agency (BayernLabo, Brienner Straße 30, Munich). When commitment periods are about to expire, it is worth planning early on how the apartment should be used or marketed after the commitment ends-there are often options here regarding rent increases or a sale for owner-occupancy.

Frequently Asked Questions

Is there a misallocation tax in Bavaria?

No, Bavaria does not have a separate misallocation fee. Instead, the state relies on income checks upon move-in (housing eligibility certificate) and occupancy agreements with housing associations. In practice, ongoing income checks after move-in in Bavaria only take place with municipal and cooperative housing associations.

What happens if a tenant in Nuremberg exceeds the income limit for their public housing unit?

wbg Nuremberg and other municipal landlords may discuss reclassification or a voluntary move to another apartment if the income limit is exceeded. Eviction solely due to exceeding the income limit is rare in practice and difficult to enforce legally. In states with a misallocation fee, the higher fee is paid as compensation instead, without forcing a move.

What is the income limit for social housing in Bavaria?

In Bavaria, the income limit is determined by the Bavarian Housing Commitment Act (BayWoBindG). For a single-person household, the limit was most recently set at approximately 12,000 euros in annual income (countable income according to BayWoBindG). The limits increase on a sliding scale for each additional household member and each child. These limits are regularly adjusted by the Bavarian State Ministry of Housing, Construction, and Transport.

Can private owners also offer subsidized housing?

Yes. Private owners can build or purchase subsidized rental housing under the Bavarian Housing Promotion Program (BayWoFP) and benefit from low-interest loans. In return, they agree to occupancy and rent controls. This can be an attractive long-term investment strategy-especially if there is growing demand for social housing in the region.

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