Law's Enactment to Promote Rapid and Extensive Construction, Suggests Vice Chancellor
Busting Barriers: Unshackling Housing Construction in Germany
Red tape and bureaucratic hassles stand in the way of Germany building enough new apartments to alleviate the affordable housing crisis. The federal government plans to loosen the reins on construction projects, and Vice-Chancellor and Finance Minister Lars Klingbeil is optimistic about the new legislation, expected to be approved this Wednesday.
"This law will allow for swifter construction, providing relief for the affordable housing shortage," said Klingbeil, speaking to the partner newspapers of the New Berlin Editorial Society. He stressed, "Young people often find it impossible to purchase or rent their own homes, and some are even struggling to find rental accommodation."
Housing is a significant social issue, Klingbeil continued, referring to the draft bill by Housing Minister Verena Hubertz (SPD). "With mounting construction costs and growing interest rates, the construction industry faces a crisis. And yet, we're grappling with a shortage of skilled workers in the field."
Tackling the Housing Crisis
In 2020, over 215,000 building permits were issued, short of the 400,000 new apartments per year promised by the previous SPD-led government but never attained.
To overcome these obstacles, some regulations require modification, Klingbeil added. Hubertz has proposed a comprehensive legislative package for this purpose. "As Finance Minister, I'll bolster this initiative by substantially increasing investments in apartment construction," Klingbeil declared.
To expedite the building process, municipalities will be granted increased flexibility, with the ability to streamline approval procedures by deviating from development plans, a practice known as the "construction turbo." This will enable faster construction, densification, or raising building heights. Moreover, rental apartments will be protected from conversion to ownership.
Streamlining Approval Processes
- Simplifying Regulations: The government will work to reduce bureaucratic hurdles and streamline approval processes for new housing projects, aiming to counter the slowdown in the housing market.
- Relaxing Noise Regulations: A bill will be introduced within the first 100 days of the government's term to loosen noise control regulations, which often hinder development projects.
- Extending Protected Status: Provisions on conversion protection and designation of tight housing market areas will be extended by five years to maintain focus on these critical zones.
- Reforming the German Federal Building Code (BauGB): The BauGB will undergo reform in two stages, initially addressing speedy regulatory improvements, followed by comprehensive reforms to enhance construction processes, including adjustments to municipal pre-emptive rights and removal of barriers in construction, energy-efficient refurbishments, and facilitating owner-occupier projects in protected neighborhoods.
- Updating Noise and Air Pollution Directives: The Technical Noise Abatement Directive and Technical Air Pollution Control Directive will be revised to better manage conflicts between residential, commercial, and agricultural land use, thereby easing development constraints.
Supporting Housing Projects
- Investment and Tax Incentives: Accompanying the regulatory easing are financial incentives to reduce financing costs and stimulate the construction of apartments priced below EUR 15.00 per square meter. These incentives include simplified funding programs consolidated under the German Development Bank (KfW), reinstatement of the EH-55 energy efficiency standard for new buildings, equity replacement measures, and state guarantees for mortgage loans.
These measures aim to accelerate the pace of housing construction, reduce construction costs, and alleviate the affordable housing shortage in Germany.
Finance Minister Lars Klingbeil intends to strengthen his initiative by substantially increasing investments in apartment construction, focusing on business opportunities within the housing sector. To compliment this, the government will streamline approval processes for new housing projects, reducing bureaucratic hurdles and facilitating swifter construction.
