Real estate purchase

Agenda-Setting for Accelerated Housing Construction now Initiated

24.

January 2019

In September 2018, the housing summit organised by Germany’s Federal Government took place at the Chancellery. It was supposed to be something of a starting signal for the “housing offensive,” as the coalition agreement of Christian Democrat bloc and Social Democrats called it. The housing summit was also attended by representatives of the German Länder, and legislative impulses to jump-start or speed up the housing construction process have indeed started to come from some of the states.

In North Rhine-Westphalia and Lower Saxony, the state building codes were revised as of 01 January 2019 with the objective to facilitate housing construction, as the Immobilien Zeitung trade paper reported (source: www.immobilien-zeitung.de). North Rhine-Westphalia adjusted certain regulations to the Model Building Regulation, for instance by reducing the minimum gap between buildings in order to promote infill densification in inner cities. Another state that has shifted its legislative focus to the Model Building Regulation is Lower Saxony, and the building code of Baden-Württemberg is being re-enacted to make it easier to top up buildings. Hamburg, Hesse and Bavaria already passed similar amendments last year.  

Grand Coalition Preoccupied with Landlord-Tenant Law

Meanwhile, the Federal Government made headlines of its own since the housing summit, but did so with measures aiming in the opposite direction. Of all things, the weightiest housing policy reform initiated by the governing coalition in the intervening month was the tightened rent control (“Rent Freeze”), which became effective on 01 January 2019, and the reduction of the modernisation allocation—both measured that are likely to hamper rather than promote investments in residential accommodation. By contrast, the special depreciation allowance deduction for rental housing construction was approved by the Federal Government, yet the legislative process has stalled.

However, there are positive impulses as well. According to the Immobilien Zeitung, Dirk Salewski, a board member of the BFW Federal Association of Independent Housing Companies, joined the executive body of the German institute for standardisation (DIN) on 01 January 2019, making him the first representative of the real estate industry in such a position (source: www.immobilien-zeitung.de). Considering excessive and non-pragmatic standards are blamed for an unwarranted surge in construction costs, his appointment is hoped to improve the situation.  

Agreement Reached on Type Approval

Moreover, the option to have building types approved rather than individual blueprints is also likely to be added to the Model Building Regulation, which would facilitate serial construction. This is something the construction ministers of the German Länder agreed on (source: www.deutschlandfunk.de). But the standardisation of the different state building codes that has been called for by many representatives of the real estate industry will probably be a long time coming, if it comes at all.

For what it is worth, the building land commission set up in the wake of the housing summit can be expected to present proposals on how to accelerate and simplify the zoning process, as the lack of zoned land is one of the biggest challenges in German housing construction (source: www.bmi.bund.de). In short, there is mounting evidence that various construction policy adjustments are actually, if slowly, being made.

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