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New Initiative Wants to Increase Housing Construction and Homeownership Rate

It hardly qualifies as news anymore that Germany’s housing market has been unimpressed by the coronavirus crisis so far. Property prices have nowhere to go but up, and buying a condominium is a paying proposition. The real estate market is “going great guns,” in a manner of speaking, and there is nothing to suggest this could change any time soon. Apart from a lack of investment alternatives because of the low interest rate environment, pent-up demand will remain massive in the foreseeable future, not least because the pace of construction in Germany is simply too slow. The fact that the Federal Government has missed the targets for its own housing offensive clearly illustrates the point. Actual completions are expected to fall 300,000 units short of the originally stated target to create one-and-a-half million new-build flats by 2021.

It is against this background that 34 organisations and industry associations of the construction and real estate sectors—among them GDW, the leading industry association of the housing industry—joined forces to launch a new housing development drive: “Wohnraumoffensive 2.0.” They demand that the body politic send a signal by tackling the housing shortage early on in 2021, an important election year and the second year of the COVID-19 pandemic. To this end, the new alliance for construction and housing, which considers itself the largest of its kind nationwide, has submitted a catalogue of eight demands to bodies politic on the state and federal level.1

Promoting Homeownership

On the one hand, this to-do list calls for the promotion of homeownership, ideally by simplifying the acquisition process. The latter is often hampered not just by the difficulties to save enough capital for the down-payment, but also by the incidental acquisition costs on top it, such as agent fees, real estate transfer tax and the costs for the land register entry. The initiative’s demand is now that the surety bond program anchored in the coalition agreement of the Federal Government be implemented. Another demand is to review dedicated measures to lower the incidental acquisition costs, and to extend the child tax credit for first-time home buyers that will expire by the end of March.

Promoting New-Build Housing Construction

On the other hand, the initiative demands measures to promote the construction of new housing. One proposal is to swiftly implement the measures for affordable development land that are already included in the Development Land Release Act. In this context, the initiative demands support for the efforts in building materials production to improve the resource-efficiency and the circular economy as well as the targets of a carbon-neutral building materials production, ideally to be achieved by 2050. Specific first steps, in the eyes of the initiative, could include additional federal funding programs toward research and development and toward the evaluation of building materials and construction types. On top of that, the idea to anchor preferred building materials in building legislations should be abandoned in favour of technological openness.

The initiative is also convinced that new strategies are needed to ensure and promote the proper implementation of the climate-efficiency building works not just in new-build units but also in standing properties. This, the initiative argues, requires changes in the building code, for instance in regard to building density, separation spaces, fire protection and noise abatement.

Energy Refurbishments of Tenant-Occupied Residential Buildings

Since tax incentives for energy refurbishments of owner-occupied homes hav already become available, the promotion of energy efficiency upgrades of tenant-occupied residential buildings should be intensified as well now, for instance through tax allowances or subsidy programs. Funding options for a combination of energy-efficiency and senior-oriented refurbishments should be optimised, the initiative believes. Not least, as it went on to say, there is a need to bring programs for serial energy refurbishments to market maturity. To finance all of these demands, the initiative calls upon the Federal Government to earmark an adequate amount from the European Union Reconstruction Fund, which is endowed with 750 billion euros.