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2 billion Euros for the construction of affordable homes

The German government invests further into housing

Berlin, 21 January 2016 | Published in Economy, Social
Minister Barbara Hendricks
Minister Barbara Hendricks

The Federal Minister for housing (SPD) would like to boost construction of affordable houses – not only for the refugees. The financial support should be doubled and increased to 2 billion euros.

A solution to the housing shortage is necessary; refugees must be accommodated in time; and it should be avoided that they occupy the accommodations that are needed by low-income German families.

The Federal Government would like to mobilise the capital from private investors. Barbara Hendricks, Federal Minister for housing (SPD) calls for a public financial support double as high. Together with the Federal Minister of Finance Wolfgang Schäuble, she also wants to create tax incentives in the form of special depreciation, however, limited to the neighbourhoods where there is no affordable housing. This could be decided by the government already in February.

The pressure to act is big not only because of the refugee crisis. The government estimates that there is a need for 350.000 new dwellings per year. For the construction of short-term shelters for refugees, the Minister has already decreed temporary technical derogations.

At the same time, SPD (Socialists) leads a debate whether the competence and the responsibility for social housing should or should not go back at Federal level. Since the last major reform of the German federalization, the federal states have the exclusive competence of social housing; and the government supports them with financial aid for this mission aides.

According to the Federal Minister, the results of the federal states in terms of social housing are inadequate; especially the initial problem was that the States had the freedom to use the aid for other purposes, e.g. for sanitation of their regional budgets. However since the fall of 2015, when the government increased the aid to 1 billion Europs, the States pledged to allocate these resources exclusively in the construction of housing, but without a legally binding obligation.

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Eckhardt Rehberg (CDU), member of the budgetary Commission, does not think it is a good decision to increase the aid. At present, there is no reason to change anything to the agreements of September 2015 between the government and the States. In his view, as the year just started, the States should firstly make a wise and efficient use of the current aid.

KfW (German Promotional Bank), just announced that it is going to increase its aid to 1 billion euros for the construction of houses for refugees. The aid is in the form of subsidies with zero interest rate and reserved only for municipalities to enable them to invest in the construction refugee shelters.

The program was launched last September with an initial sum of 300 million euro. Meanwhile, KfW had already added 200 million immediately and another 500 million in October 2015 to reach one billion. With this special fund of one billion and a half already, they can build homes for around 150,000 refugees. In addition to this KfW wants to launch another 2 billion program to help municipalities in building social homes.