410 with the housing market under pressure – are local authorities turning to tiny houses too?

Whether it is Backnang in Württemberg or Bad Tölz in Bavaria, Offenburg in the Ortenau region or Osnabrück in Lower Saxony, Wendelstein in Middle Franconia or Woltersdorf in Brandenburg – one issue unites a total of 410 towns and municipalities across Germany: a tight housing market.

Whether a municipality is officially designated as having a tight housing market depends on key assessment criteria.

The criteria

• Population growth: Has there been continuous population growth in recent years?
• Housing supply trends: How is the supply of housing developing in relation to population growth?
• Rent trends: How do asking rents compare to the state and national averages?
• Vacancy rate: How high or low is the vacancy rate in the housing market?
• Commuter and employment trends: Is there an increase in the number of commuters without sufficient housing being available or built?
• Social housing situation: How many social housing units are there?
• Planning permission and construction activity: How high is construction activity despite demand over several years?
• -Purchase price trends: How sharply are prices for flats and houses rising, and is there excess demand?
• Housing cost burden: How much money is spent on housing, measured against monthly income?

If a town meets several criteria, it is awarded the ‘tight housing market’ label. The consequences can be far-reaching. Households on medium or low incomes in particular can usually barely afford, or can no longer afford, housing in the centre of towns. Social housing suffers from a tight housing market. In the medium and long term, businesses find it harder to attract skilled workers to the region.

One option available to local authorities facing a tight housing situation is the rent cap. This was introduced in 2025 and extended in June 2025 until the end of 2029. The rent cap limit is another tool at the disposal of local authorities. Furthermore, towns with a tight housing market are permitted to deviate from current building regulations to create housing.

Enquiries in Offenburg, Karlsruhe and Radolfzell

One city with a tight housing market is Offenburg. How does the city intend to tackle the housing shortage, and do tiny houses play a role in its plans? NEW HOUSING asked.

According to the response to our enquiry: “The City of Offenburg pursues an active property policy and supports developers in inner-city development within the framework of the city’s urban planning vision. Building land development takes place on the basis of the local council’s building land policy resolutions, which, amongst other things, provide for the conclusion of a building obligation as well as the creation of subsidised and affordable housing.”

Local council approves Bauturbo

There is as yet no experience of the effects of the Bauturbo. The Bauturbo has not yet been approved by the local council in Offenburg for the city itself. Regardless of a decision that was actually due to be taken on 16 March but was then postponed, the regional centre in the Ortenau region does not believe in the power of the legislative change anyway. On enquiry, it is stated that the existing economic barriers (construction costs, lending, interest rates) to housing construction will not be affected by the Bauturbo. And further: “Tiny houses will not solve the housing problem and are subject to the same planning and building regulations as other residential buildings.”

Bauturbo helps in designating new areas

The city of Karlsruhe is also on the list of local authorities with a housing shortage. To address this, there is the “Urban Development Strategy 2035”. This has been used to designate new residential building areas, as Sigrun Hüger from the City Planning Office explains: “We were able to designate new areas, for example, on Erzbergerstraße or in Neureut.” The ‘Bauturbo’ has already been applied in this context: “The ‘Bauturbo’ is particularly helpful for infill development,” Hüger continues. However, it is always important to comply with the climate requirements.

Tiny houses do not play a major role in tackling the housing shortage, says Hüger’s colleague Neininger: “So far, we have had very few enquiries regarding tiny houses. However, some have already been approved, for example in Oststadt. There, a workshop was demolished and a tiny house built on the same site.”

Open to tiny houses, but…

In principle, however, the city does not distinguish between conventional and small houses. Nevertheless, tiny houses are also rejected. The reason is primarily soil sealing. As an example, Neininger and Hüger cite rows of houses with a meadow behind them. If one person were allowed to erect a tiny house there, others would also have the right to do so. The ground would thus be sealed, and the area used for housing by a comparatively small number of people. “We tend to think along the lines of: adding storeys rather than building new,” says Hüger.

However, the council is certainly open to mini-houses in the right circumstances. In Karlsruhe-Rintheim, for instance, Volkswohnung has built small houses on top of garages. The council is very open to similar projects, but: “We won’t be able to solve our housing problems with tiny houses alone,” concludes Hüger.

Construction drive already underway

The housing market in Radolfzell is also under pressure. According to the town’s own statements, it adopted the Housing Action Programme in May 2024. The main objective: to create affordable housing for younger people and, in particular, families, as well as age-appropriate housing for older residents of Radolfzell. As stated in response to an enquiry from NEW HOUSING, this could take the form of rental, cooperative or owner-occupied housing. The first projects have already been approved with the help of the ‘Bauturbo’ scheme, and further ones are in the pipeline.

Tiny houses already approved

The municipality of Radolfzell further states: “When it comes to building new homes, the focus is increasingly shifting towards ‘cost- and space-efficient construction’. It is therefore necessary to rethink the requirements for construction methods and plot sizes in the urban development of building land. Detached houses are no longer in keeping with the times. In Radolfzell, a number of tiny houses have been approved and built. The town council is focusing on the construction of affordable multi-storey housing comprising rental, cooperative or owner-occupied flats.”