New Bill Aims to Reduce Housing Shortages

In order to promote affordable living space, the ministry of finance presents a new plan.

Affordable living space is rare - this should be changed with funding amounts. (Bild:

Housings are rare and rents are rising: In order to ease the tense situation of the real estate market, the German government discusses a new bill by the ministry of finance. Instead of tightening up the political regulations, private investors should get a promotion through this new proposal.

The core idea behind this bill is providing certain building projects with impairments of up to five percent, should they meet certain requirements. One of these is a cap for the acquisition costs: The price for these objects must not surpass 3,000 euro per m². In addition, the planning application needs to be set until the 31st December of 2021. That way, up to 2,000 euro per m² could be written off the value of these objects. With these measures, the ministry hopes to set incentives for an increasing supply of affordable flats, which should counter the raise of rental costs.

Criticism follows by the head of the federal association of free housing and real estate companies, Andreas Ibel. Since building costs raise steadily every year, these planned price caps would be surpassed very soon. Another settlement, which intends to restrict tax benefits of three assessment periods to 200,000 euro, should lead to increased promotions of rather smaller projects with lesser residential units. According to Ibel, this contradicts and defeats the purpose of this new plan.

Between 2020 and 2022, the ministry of finance expects a total funding of up to 310 million euro, which should be provided by both federation and federal states. The draft is expected to be approved in autumn this year.

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