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Housing Germany

The second tenancy law package becomes an investment-blocker

Berlin, 22 April 2016 | Social, Economy

Energy transition and demographic adaptation are slowed down. Quality of housing and investments in new construction decline.

"The "Push-and-Pull-Strategy of the Federal Government is a meander. On the one hand the housing ministry tries to intensify new construction, energetic renovation, and demographic adaptation within its „alliance for affordable housing and construction“ (Bündnis für bezahlbares Wohnen und Bauen). On the other hand the plans of the ministry of justice for the tenancy law impede these efforts: refurbishment turns economically unattractive. This way the project “affordable housing for all in Germany” will not succeed”, Axel Gedaschko, president of GdW, explained.

At the end of last year, the cornerstones of the second tenancy law package have been made public. The ministry of justice proposes to reduce the percentage of the modernisation costs that can be factored into the rent from eleven to eight per cent.

At the same time a cap on rent increase after modernisation is introduced. Within eight years rent may not increase by more than 50 per cent and four Euro at most. Furthermore the rent index (Mietspiegel) shall be calculated for ten instead of four years. A regulation for a case of hardship will be present when a tenant has to spend more than 40% of income for rent and charges. This will affect low-income households severely as the regulation will make it harder even for them to find an apartment on the rental market.

Justice minister Heiko Maas will soon put forward a draft bill. “If these plans become law, all efforts for creating more affordable housing and sustaining quality living quarters will be reduced to absurdity”, stated Gedaschko.

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„Landlords and tenants look at a cost problem in the case of modernisation that cannot be solved by changes in tenancy law”, Gedaschko continued. “One has to get down to the root of the problem. Instead of operating legally we need to implement the findings of the alliance for affordable housing and construction as fast as possible, especially the measures lowering construction costs. In addition a compelling and responsible political strategy for modernisation of the existing housing stock has to include:

  • The federal government has to adjust and simplify funding policy for housing refurbishment in the KfW-Bank: Not the most expensive refurbishment measures should receive the highest funding, but the ones with the highest cost-benefit effect for tenants and beneficiaries.
  • The increasing cost of housing due to refurbishment need to be compensated in form of a climate component in the housing allowance (Wohngeld) and according provisions for the accommodation costs. Thus far only a revision has been mandated.
  • Black sheep - who by means of modernisation push tenants out of their homes - must be stopped.

“Responsible landlords that take care of the future of their housing stock are punished threefold. Modernisations become economically inefficient”, Gedaschko concludes. “This way we cannot reach our climate goals in housing and will not be able to adjust the stock to the demands resulting from the demographic change. The ministry of justice contradicts the goals of its own government.”

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