On 23 February 2025, Germany will hold general parliamentary elections. One of the campaign issues is the continuing housing shortage as one of the most pressing socio-political challenges of our time. The current German government’s target of 400,000 new units per year has been repeatedly missed. There is still a significant discrepancy between the high demand for housing, especially affordable housing, and the low level of construction activity in recent years.
Above all, the industry is calling for deregulation and a reduction in bureaucracy in order to speed up planning and permitting procedures and effectively reduce the sharp rise in construction costs. As incentives to increase investment in housing further deliberate tax relief and funding programs are being considered. Existing rent control regulations, in particular the so called “rent brake”, continue to be the subject of heated debate.
A look at the election manifestos of the political parties (here: CDU/CSU, SPD, AfD, Greens and FDP) shows how they intend to address the various issues:
Speed up planning and approval procedures and reduce costs in the construction industry:
In order to boost housing construction, planning and permitting procedures need to be speeded up and simplified, as well as construction costs effectively reduced. All parties agree on these two points. And their general direction is also similar: more digitalization, less bureaucracy – which should also reduce the planning and ancillary costs of construction projects.
In order to reduce costs, the parties also consistently focus on simplifying and streamlining building regulations, for example through simplified standards (buzzword: building type E – “E” as in “easy”), facilitating densification and the designation of new building land, as well as facilitating the use of brownfield and conversion sites.
The Christian Democrats (CDU/CSU), in particular, is calling for temporary special regulations for tight housing markets, which would allow exceptions to current planning law for housing projects.
The liberal party (FDP) even advocates presumed approvals if the authorities do not decide in time. It is also calling for a federal-state offensive for uniform requirements and nationwide approval standards, in order to achieve standardization despite the fact that building regulations are the responsibility of the federal states.
The Greens want to make it easier to add storeys and increase the densities of buildings if this is combined with energy-efficient renovation of existing buildings.
The Social Democrats (SPD), for example, wants to provide more funding for serial and modular construction in order to exploit the savings potential in this area.
Tax and funding policy:
In principle, the parties agree on the need to increase funding for low-income households (individual funding) and social housing (property-based funding).
CDU/CSU focus on property-based funding and want to concentrate on funding the construction of multi-storey residential buildings in tight housing markets. They also want to give a “kick start” to new construction by significantly increasing special depreciation for affordable housing, supplemented by effective degressive depreciation. The existing “EH 55” energy efficiency standard for new buildings should be made eligible again as the threshold for funding has been shifted to “EH 45” by the current federal government. Housing allowance as individual funding should be adjusted on a regular basis.
In addition, FDP wants to improve tax depreciation in the housing sector and also improve individual funding through housing allowance.
SPD also wants to improve the housing allowance. In addition, a “Germany Fund” should provide housing associations and co-operatives with equity capital in order to boost housing construction. The market should also be relieved by a federally owned housing company, which would create housing for federal employees and civil servants. As regards the allocation of building land, SPD favours the “Einheimischenmodell“, in which locals are given preference, as well as a “concept allocation model”, which would promote housing projects and socially mixed residential areas. In addition, the municipalities’ pre-emption right should be strengthened.
The Greens still see “tax loopholes” in property transactions (e.g. share deals) that should be closed. The pre-emption right of municipalities should also be extended. Funding for social and non-profit housing should be increased.
The “Alternative für Deutschland” (AfD), on the other hand, wants to focus more on expanding the housing allowance as an individual promotion than on property-related funding. However, housing cooperatives should be given preference in the allocation of public land, as are local residents in the “Einheimischenmodell“.
Rent regulation:
Germany is a country of tenants. In no other European country the ratio of private households living in rented homes is higher than in Germany. According to the Federal Statistical Office, in 2023 more than half of the German population (52.4 per cent) lived in rented accommodation. Accordingly, residential lease law plays a major role in the election campaign – especially the aforementioned “rent brake” limiting rent increases.
SPD and the Greens want to extend the “rent brake”, which is currently a temporary regulatory measure, and make it permanent. In addition, they want to close “loopholes”, such as for the rental of (partially) furnished apartments, and include properties built in 2019 or later in the scope of the rent brake.
CDU/CSU call for effective and adequate tenant protection, including through rent level regulations, without going into further detail.
FDP and AfD, on the other hand, are largely opposed to regulations and see rent control and rent ceilings as an obstacle to investment.
In addition to the rent brake, SPD and the Greens demand further regulation of rising rents. For example, they want to introduce caps on index-linked rents and reduce the maximum amount of renovation costs that can be passed on to tenants. In addition, the Greens want to abolish the passing on of property tax to tenants, while SPD wants to at least limit this.
The federal elections on 23 February 2025 and the subsequent coalition negotiations and government formation will soon show which reforms can be expected in the future, so that construction projects can be planned and implemented with the necessary planning security. As soon as the direction is clear, we will provide an update here and present the new government’s plans for the housing market.
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