Federal Administration Pushes for Expanding Housing Development
Gear up, construction industry! The German Federal Cabinet is set to discuss a government bill aimed at accelerating residential construction on Wednesday (10:00 session). This ambitious project, known as the "Boosted Building Boom," intends to kickstart a housing building revolution, particularly in tight markets struggling with a shortage.
This initiative, often referred to as "Construction Turbo," was initially proposed by the previous government but never fully realized. The current coalition agreement between CDU/CSU and SPD has taken up the mantle, integrating these ideas under the heading "Construction and Housing" for a fresh start.
So, what exactly does this "Boosted Building Boom" entail?
- Cost-Cutting Measures: The government aims to build countless apartments at less than €15 per square meter in congested housing markets, all thanks to measures aimed at minimizing bureaucracy and slashing financing costs for developers and investors.
- Investment and Tax Boost: The initiative promises tax benefits for new construction and renovation projects, equity replacement measures to reduce developers' capital requirements, and potential state mortgage guarantees. These perks are designed to spur investment in the housing sector.
- Simplified Funding Programs: The timeless funding initiatives of the German Development Bank (KfW) are being condensed and streamlined into two central programs—one for new construction and the other for existing buildings modernization. The ultimate goal is to encourage simple, eco-friendly, and budget-friendly construction.
- Return of the EH-55 Standard: The initiative intends to reintroduce (temporarily, at least) the EH-55 standard for new buildings. This standard calls for new structures to consume only 55% of the energy of a conventional new structure, promoting eco-conscious construction.
- New Investment Fund and Public Guarantees: A new investment fund for housing, supported by public guarantees from entities such as KfW, is expected to lower financing costs, making projects more appealing to investors.
To speed things up, the "Bau-Turbo" fast-track scheme for building approvals aims to cut through the red tape, further reducing the time and costs associated with new housing projects. Furthermore, major property companies aim to slash construction costs by up to 30% and double annual investments by 2028.
In essence, the "Boosted Building Boom" brings together policy, financial, and procedural reforms to spark a housing construction revolution in Germany, making it more affordable, eco-friendly, and efficient.
Stay tuned for the comments from Federal Minister of Housing Verena Hubertz, Federal Minister of Finance Lars Klingbeil (both SPD), and an address from Federal Chancellor Friedrich Merz (CDU) after the meeting (11:15).
Sources:1. German Federal Government, "Construction and Housing" (coalition agreement).2. Deutsche Welle, "Germany accelerates housing construction with 15-billion-euro package."
- The "Boosted Building Boom" includes cost-cutting measures, such as minimizing bureaucracy and slashing financing costs for developers, to build apartments at less than €15 per square meter in congested housing markets.
- The initiative also promises tax benefits, equity replacement measures, and potential state mortgage guarantees to spur investment in the housing sector, as part of its financial reforms.
- In the political arena, the "Boosted Building Boom" is a collaboration between the German Federal Cabinet and key parties, aiming to create a more affordable, eco-friendly, and efficient housing construction revolution in Germany.
