Berlin Exploding prices, rising interest rates, an uncertain subsidy environment: According to reports from the economy, housing construction is on the verge of collapse. “It was a year without everyone taking a deep breath,” says Federal Building Minister Klara Geywitz. “We’re going to continue like this for the next few months.”
The SPD politician announced that housing will continue to be addressed as a social issue, building laws will be modernized and the construction industry will be supported in its transformation towards climate-friendly production. We will “work hard to bring stability to this difficult time”.
But the start in construction, housing and urban development policy desired by the traffic light is a long time coming. The goal of 400,000 new apartments will be missed in 2022, Geywitz admitted again in mid-December. “Indeed, we will not reach 400,000 this year,” she said in the Bundestag. But even in 2021, when there was no war, interest rates were historically low and “a lot of money was put into new construction subsidies”, fewer than 300,000 apartments were built.
The list of upcoming work orders in the Ministry of Construction is long. Here is an overview of the main projects:
Top jobs of the day
Find the best jobs now and
be notified by email.
Expand construction capacity
Geywitz is sticking to the goal of 400,000 new apartments per year, 100,000 of which are publicly funded. However, the situation in the housing market is alarming. High construction, energy and material costs, increased interest rates and lengthy construction and planning processes are leading to a downward spiral in residential construction. The Munich-based Ifo Institute recently reported that the number of cancellations is increasing.
In order to counteract this, the Bundestag decided to increase straight-line depreciation for new rental apartments from two to three percent annually from January 2023. For buildings that are completed by the end of 2022, depreciation should remain at two percent annually.
With higher depreciation, Geywitz would like to further promote the new building in the coming year.
(Photo: dpa)
In addition, the MPs decided on a temporary special write-off. Within four years, five percent of the production costs for newly created rental apartments with the energy-efficient building standard “Efficiency House 40” in conjunction with the so-called Sustainable Building Quality Seal (QNG) can be tax deductible.
Geywitz also wants to expand serial and modular construction. Once granted, type approvals should apply nationwide; corresponding regulations are to be anchored in the state building regulations.
Accelerate planning and approval
Changes to the building code are planned. In December, the Federal Cabinet passed a draft law with improvements in the administrative, planning and approval processes. Citizen participation is to be digitized and deadlines shortened. “And we ensure that, for example, when plans are changed, public participation only applies to the changes and no longer to the entire plan,” said the minister.
You can see, for example, “that project developers want to switch from privately financed housing to social housing, which I welcome at first,” said Geywitz. “Of course it’s easier here if you only change this part of the development plan and don’t have to hold another hearing for the rest. This is a very practical contribution to being able to change development plans quickly.”
With the amendment to the building code, former opencast mining areas or traffic areas on motorways should also be able to be used.
decarbonize buildings
The construction and housing sector is facing a major transformation. Two questions are central. First: How will we build in the future? Second: How will we heat in the future?
Geywitz wants to move away from the sole focus on the energy requirements of a completed building. She would like to focus on the energy requirements during the construction phase. This includes, for example, questions about the energy requirements for the production of building and insulation materials. The use of recycling material should tend to be strengthened.
“We have to understand that the solution cannot be to create the most highly technical solutions possible,” says Geywitz. “Rather, we have to look at the total greenhouse gas emissions of the building sector, both from the heating sector and for the building sector itself.”
Realign new construction funding
In this context, there is also the question of which criteria will apply in the future for new construction subsidies. The economy is waiting for the new funding conditions. While the Ministry of Construction is responsible for the promotion of new construction, the renovation remains in the hands of the Ministry of Economics.
>> Read here: “30,000 euros more for a normal single-family house” – the construction industry fears a massive slump in orders
The federal government had decided to change its multi-billion building subsidies. The focus will be on renovations. Here, twelve to 13 billion euros are to flow annually, only one billion will be allocated to the new building. Of this, 350 million euros are to be made available for the promotion of climate-friendly homes.
Reorganize the promotion of home ownership
In future, only the purchase of energy-efficient new buildings will be subsidized by the state, no longer the purchase of existing apartments. According to plans known to date, 350 million euros will be available for “threshold households” from June 2023. The state development bank KfW is to award low-interest loans for this purpose.
This means families with one child and a maximum taxable annual income of 60,000 euros. Each additional child increases the threshold by 10,000 euros.
Promote social housing
There is a lack of affordable housing throughout Germany, but especially in the metropolitan areas. The coalition has set itself the goal of building 100,000 publicly funded apartments every year and is making a total of 14.5 billion euros available to the federal states for this from 2022 to 2026. For years, too little was invested in social housing, says Geywitz.
With the housing benefit reform, 1.4 million households are entitled to housing benefit for the first time or again.
(Photo: dpa)
However, the federal states are responsible for social housing construction. You have to top up the federal funds with your own funds and promote housing construction. The required co-financing share of the federal states is at least 30 percent.
Introduce new non-profit housing
By the end of March 2023, Geywitz wants to develop the cornerstones for the introduction of a “new non-profit housing scheme”. The aim is “that permanently inexpensive, socially bound apartments are on the market,” said the minister. One of the basic problems at the moment is that social housing ties are expiring year after year – and thus there is a minus at the end of the year despite newly created social housing.
Implement housing benefit reform
January 1, 2023 will see the largest housing benefit reform in the history of Germany. The “Wohngeld Plus” is intended to support three times more people financially than before. 1.4 million households are entitled to housing benefit for the first time or again, including an integrated heating cost component.
>> Read here: Buyers of existing properties get nothing
The challenge will be to get the reform started. Many municipalities are expecting extreme delays in payments. According to Geywitz, no one should lose money if processing takes longer. In cases of hardship, the possibility of a provisional payment was made.
fight homelessness
More than a quarter of a million people in Germany have no roof over their heads. In order to overcome homelessness by 2030, the ministry intends to present an action plan next year.
Geywitz is planning a trip to Finland in February. The Scandinavian country has managed to reduce the number of homeless people while it is increasing in many other European countries.
More: Federal construction should become faster and more efficient