Housing market: Tight housing market: Associations call for reforms

Because new housing construction is making little progress, the situation on the market is becoming increasingly difficult for many people. In order to stimulate construction activity, one needs, among other things, lower interest rates and affordable building land, the German Tenants’ Association and the Haus und Grund owners’ association demand in a joint policy paper.

“There is a lack of hundreds of thousands of affordable apartments in the country,” it says. “The associations are calling on the government and parliamentary groups to finally introduce measures before the 2025 federal election that will lead to more new construction in order to send an important signal in terms of social policy.”

What the associations demand

The associations are bringing into play an interest reduction program from the federal and state governments for the construction of affordable housing. The municipalities would also have to make more building land available in order to respond to the high demand. “The prices for building land rose by 83 percent on average between 2012 and 2022, and in large cities like Berlin the prices have almost tripled during this time,” the associations write in the paper.

Tenants’ Association and Haus und Grund also criticize the possibility for large real estate groups to save billions in taxes through so-called share deals. The company does not acquire the real estate directly, but rather shares in a company that holds the real estate. As long as no more than 89.9 percent of the shares are taken over, there is no real estate transfer tax, which is normally due when buying developed or undeveloped land.

Both associations are therefore calling for a reform and an associated reduction in the real estate transfer tax, which can currently be up to 6.5 percent depending on the country. This primarily affects citizens and fuels the “sell-off of the real estate portfolio in Germany” by large real estate companies through share deals.