Extensive bundle of measures needed to combat housing shortage
Berlin, September 21, 2023
In run-up to housing summit, vdp calls on policymakers to take immediate and extensive action
In view of the forthcoming housing summit to be held at the Chancellery on September 25, 2023, the Association of German Pfandbrief Banks (vdp) calls on policymakers to pass wide-ranging resolutions to stimulate the housing market, and to implement them quickly. “The housing market situation is growing more and more tense with every quarter that passes. The Federal Government must act now and consistently address the good suggestions that have been on the table for quite some time and carry them out,” Jens Tolckmitt, the vdp’s Chief Executive, said emphatically, referring to the many ideas for measures that the Alliance for Affordable Housing (Bündnis bezahlbarer Wohnraum) has compiled.
Considering the housing problem is already alarming and the resolutions will not have an effect until months or years later, Tolckmitt went on to say it is no longer enough to agree only on individual measures. “An extensive package of measures is needed, comprising many individual measures that can be implemented quickly and in parallel, to stimulate housing construction.” This is the only way, he added, to combat the housing shortage and to curb the rise in rents in highly sought-after locations.
“Degressive depreciation can only be the beginning of a broad bundle of measures.”
The vdp expressly welcomes that the Federal Government has already provided a first, important incentive for housing construction with the temporary introduction of a special depreciation allowance, which is anchored in the so-called Growth Opportunities Law recently passed by the Federal Cabinet. “It is important that the Bundestag and Bundesrat quickly agree to the Growth Opportunities Law, because a short-term signal is needed. Degressive depreciation offers the construction sector a new perspective, and can help reduce existing construction backlogs and speed up new construction plans,” Tolckmitt said. However, he warned that this measure can only be the beginning of a broad bundle of measures. Against this background, the vdp supports the ideas already presented by the Federal Ministry of Housing, Urban Development and Building (BMWSB) and the Federal Ministry of Finance (BMF).
Amongst others, these ideas include lowering or abolishing property transfer tax for first-time buyers and/or owner-occupiers. This measure would reduce considerably the burden on property buyers and stimulate new demand for residential properties, Tolckmitt commented. He went on to emphasize the great importance of again creating stable funding conditions in Germany that all market players can rely on. Moreover, he encouraged policymakers to consistently address the projects announced in the coalition government agreement, such as de-bureaucratization and digitalization, in order to accelerate building permit processes.
The vdp also believes promoting the addition of new living space to the building stock, referred to as densification, to be a suitable means of giving fresh impetus to housing construction. It makes sense to examine which properties could be extended by building additional floors, particularly where housing markets are strained. In this way, new living space could be created without having to seal new areas, Tolckmitt stressed.
“Given how dramatic the current housing shortage is, our society cannot at present afford a further political increase in the cost of housing construction and renting.”
At the same time, he pointed to the ongoing conflict of objectives between creating affordable housing and improving climate protection. The importance of lowering the energy consumptions and CO2 emissions of properties has to be weighed against the high costs involved. “Given how dramatic the current housing shortage is, our society cannot at present afford a further political increase in the cost of housing construction and renting.” For this reason, the vdp welcomes the push by Federal Minister of Building, Klara Geywitz, to postpone the further tightening of climate protection requirements for housing construction and to stick to the EH 55 standard for the time being, as the EH 55 already leads to considerably lower CO2 emissions and energy consumptions than those of most existing properties.
Moreover, the vdp reiterated its demand that the systemic risk buffer for residential property financing, introduced at the beginning of this year, be scrapped. The buffer requires credit institutions to hold 2% more capital for residential property loans. “The systemic risk buffer fights a problem that did not exist when it was announced or when it was introduced, and certainly does not exist now,” Tolckmitt remarked. The opposite is true, he explained: the buffer works counter to the goal of increasing the housing supply because it makes lending more expensive, thereby making it more difficult to create new housing.
None of the above measures on its own will remedy the housing shortage, the vdp’s Chief Executive conceded. But: “Combined, the measures can activate the housing market. It is high time that an extensive bundle of measures to stimulate the housing market was set in motion.”
“Deliberations on tenancy law regulation are completely counter-productive.”
On the other hand, the SPD parliamentary group’s deliberations on tenancy law regulation are completely counter-productive, Tolckmitt continued. The vdp vehemently opposes proposals such as extending the so-called rent brake, lowering the cap on rent increases to 11% or a nationwide rent freeze, as they would not result in new housing. Worse than that, they would further restrict housing construction because they would block the market and deter investors. “The rent cap, that political experiment by the Berlin Senate Government, failed two and a half years ago.” The paralysing effect discussions surrounding the Berlin rent cap had on the housing market and housing construction is ongoing, Tolckmitt commented, as the particularly sharp rise in rents in Berlin compared with Germany as a whole demonstrates. Anyone wanting to build or let needs a viable economic perspective – but there is no such thing in totally over-regulated markets. “After the negative experience the SPD-led Senate Government in Berlin had with the rent cap in the German capital, it is impossible to understand why the SPD parliamentary group should now want to make the same mistake across all of Germany,” Tolckmitt remarked.