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HOUSING

Election 2021: How do Germany’s political parties want to tackle rising rents?

There is major agreement between all of the parties represented in the Bundestag that rising rents in Germany are a problem that needs to be tackled after this autumn's election. But what exactly are they planning to do about it?

Election 2021: How do Germany's political parties want to tackle rising rents?
Stuttgart is one of the most expensive cities in Germany to rent. Photo: picture alliance/dpa | Christoph Schmidt

There is significant overlap between many of the manifestos published by the six parties represented in the Bundestag when it comes to housing. Most of them want to encourage young people to get a foot on the property ladder so as to help them build up wealth that will secure their financial situation in old age.

Adapting buildings to make them more suitable for an ageing population is also a common thread through most of the manifestos.

Most of the parties also want to see a big step up in the number of properties being built. The differences become apparent on the role of the state in regulating rents. The parties on the right say that rent regulation discourages construction and thus worsens the situation: they want to reduce red tape for construction.

READ ALSO: EXPLAINED: Where rents are falling (and going up) in Germany’s biggest cities

The parties on the left want to bring existing housing stock under state control and increase the government’s power to set rental prices: they say this is necessary to prevent speculation on the housing market.

Here’s what they say in detail.

The Greens

Pledging to create affordable housing for all, the environmentalist party have a stated goal of building an additional one million affordable rental apartments in German cities.

They also have plans to strengthen the rights of tenants. They want to prevent evictions by allowing tenants to pay their rent in arrears; they plan to create a federal ‘rent ceiling’ law that would limit rents to prices set by a state commission. Another plan would see them limiting landlords’ power to use modernisation of properties to get around current rent controls. Specifically, they would limit the amount the rent can be raised after modernisations to €1.50 per square metre.


The Greens want to strengthen tenants’ rights and refurbish old buildings to improve energy efficiency. Photo: picture alliance/dpa | Mohssen Assanimoghaddam

They also want to make getting on the property ladder easier by limiting estate agent fees and lowering land transfer taxes for private buyers.

This being the Greens, there is also a big focus on climate protection in their housing policy. They say they will “launch a climate refurbishment offensive for buildings.” A third of the cost of such renovations would be placed on tenants, with the landlord paying a third and the state contributing the rest.

Such modernisations would include installing new heating systems based on renewable energy and ensuring houses are better insulated. They also want to introduce a “timber construction strategy” which would incentivise building new properties with as much wood as possible rather than concrete.

The CDU/CSU

The conservative party – currently in the lead on the polls – make clear that they have no plans to to increase the state’s ability to set rents. Calling rent ceilings “legally questionable and unfit for purpose”, they say that the answer to the problem of rising rents is to build more homes. Specifically, they plan to build 1.5 million new apartments by 2025.

The CDU say that the best way to stimulate construction is to create incentives for private investors to build; to this end they would allow 5 percent of building costs to be deducted from the tax bill.

READ ALSO: Compare – the cities in Germany with the fastest rising rents

They also want to reduce the regulation around building and say that planning applications will have to be approved of rejected within two months – otherwise approval will be granted automatically.


The Union (CDU/CSU) want to incentivise building projects with tax cuts for developers. Photo: picture alliance/dpa/AFP-Pool | Armando Babani

Like the Greens, the CDU want to encourage the use of environmentally friendly building materials.

Another four years of CDU rule would also see cities become more densely inhabited. They say they want to exploit the potential for adding more floors to buildings, while approving building over supermarkets and carparks.

They also say they want to “support” the renovation of housing to make it suitable for the elderly and those with disabilities – a pledge which lacks specific detail in the party manifesto.

Also thin on detail is a pledge to support the modernisation of housing to make it more energy efficient.

Lastly, they say they want to free first-time home buyers from land transfer tax up to a value of €250,000 per adult and an additional €100,000 per child.

SPD

Just like the other two parties that have put forward a Chancellor candidate, the SPD have pledged to put the diggers into action if they are elected. They want to build 100,000 new social housing apartments each year. 

They also plan a significant intervention in the housing market, pledging a moratorium on rent increases in areas where rents are rising too fast.


Headed up by Olaf Scholz, the Social Democratic Party want to put the diggers to work and build more affordable homes. Photo: picture alliance/dpa | Jonas Walzberg

The centre-left party have also said they want to help young people to be able to buy their own property under a plan called “young-buy-old” aimed at helping young families secure their financial situation when they retire. The SPD say they will particularly focus on enabling the purchase of empty properties in city centres.

FDP

The liberal party, traditional coalition partner of the CDU, are polling just behind the SPD in the build up to this year’s election.

Just like the CDU, they say they are against state intervention in the rental market by way of rent controls and instead want to incentivise property companies to build more. Their main plan for making construction cheaper is to cut the regulation around building; they say they will achieve this by introducing a TÜV for building regulation which will evaluate the costs of specific regulations.

SEE ALSO: Munich’s radical new approach to solving the housing crisis

Similarly to the CDU, they want to drop the land transfer tax for private buyers, but they go even further saying that it should not apply up to a value of a half a million euros and regardless of whether you are a first time buyer or not.

They also plan to digitise and semi-automate the planning application process in order to speed it up. People who make an application based on a standard kit home build, will be able to enter the application online and it will then be dealt with in a semi-automated way.

AfD (Alternative for Germany)

The right-wing populist party wants to increase the land transfer tax for non-Germans whose primary residence is outside the country to 20 percent. At the same time they want to abolish this tax for people who buy properties for private use.

Like the other parties, they say they want to encourage people to become property owners in order to stave off poverty in old age. But their idea for achieving this is selling state-owned apartments to tenants.

The AfD insist that state subsidies to the poor are a better mechanism for helping lower income tenants than social housing, which they describe as “failed.”

Die Linke (The Left party)

The party furthest to the left of the German political spectrum unsurprisingly want the toughest state interventions, something they say is necessary in order to stop wealthy investors from driving up rental prices in pursuit of profit.


Chancellor candidate Dietmar Bartsch of the Left Party wants to curb rampant property speculation with regulation. Photo: picture alliance/dpa | Christophe Gateau

They want to introduce a nationwide rent ceiling akin to the Berlin rental ceiling that was overturned by the constitutional court earlier this year. They would tie rent increases to inflation, saying this would mean maximum increases of around 2 percent annually.

READ MORE: Half of big city households in Germany ‘spend over 30 percent of income on rent’

Die Linke also want to set aside €10 billion of the state budget for the purchase and construction of social housing, with plans to build a quarter of a million such flats each year. They would also create a minimum requirement for social housing in each district.

They also want to take half of the country’s housing stock into the public hand, and “in the future completely remove housing stock from the private market.”

Member comments

  1. The problems with the German property market.
    1. Rental culture. With rates at it historical lows now is the time to beg steal or borrow a deposit and buy and buildup some wealth. Paying rent is just paying off the the Landlords mortgage and enriching them. I know, I’m one of them!.
    2. German Land Transfer Taxes of in excess of 5% are a massive disincentive to buying. By the Government reducing the land tax percentage by at least half would increase the volume of sales massively and actually increase the amount received by the Government.
    3. Agents charging the seller not the buyer is a hang over from pre Internet days when you paid and agent to go and find you a house. That market does not exist anymore. Switch to a system of whoever instructs the agent pays would increase competition and reduce agents fees to about 1%.
    4. A The Central Bank needs to put pressure on Commercial banks to come up with new mortgage products that do not demand such high deposits. A simple risk calculation of lower deposit = higher rate will do
    5. Invest in the Countryside outside of the cities, streamline and speed up the planning process. Create communities that are green and highly desirable to live in

    German needs a dynamic and flexible property market where people can buy and sell with ease and at low cost. A strategy adopted to achieve this would create a mobile and dynamic work force, highly quality green energy efficient properties in communities fit for both singles and families as well as old gits like me.

    Bob Dylan sang ‘It’s not a house, it’s a home’. Well no it’s not, it’s just a house. Well, actually it’s a big fat money box so pressure whatever Party/Government to enable you to get one!

  2. The biggest problem right now with big cities is that they dont have proper satellite towns around them. Big cities are literally surrounded with villages with low to no facilities. In case of Berlin its even within city, the east berlin region beyond friedrischain still has a communist feel to it, they dont have local shops outside malls at all, despite having the biggest residential buildings of the city, the region looks deserted as if noone lives there, because there are very small number of spatis or any other recreation facilities there. Despite have really good connection to center, nobody wants to live there. and when you move in the outskirts it gets completely weird.
    The government need to promote horizontal distribution of population rather than the vertical one. and invest in quick and cheap transport between cities and outskirts to relieve the pressure.

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OPINION & ANALYSIS

OPINION: Sweden’s ‘historic investment’ has failed to solve the housing crisis

Five years after Sweden's government promised to solve the country's housing crisis with a "historic investment", things are as bad as ever, David Crouch argues. Radical action is needed.

OPINION: Sweden's 'historic investment' has failed to solve the housing crisis

Forced to move house 20 times in the past eight years, Maria’s situation was desperate. She and her daughter had arrived in Stockholm from Latin America in search of a better life. She found work, no problem – but housing was impossible.

“Sometimes I was paying 12,000kr in rent and it was very hard because I only had 15,000kr in monthly salary,” says Maria (not her real name). So she took a high-interest loan of 240,000kr and tried to bribe someone in the Housing Agency to get to the front of the queue for affordable housing.

But she was caught. Her fate is unknown. And she didn’t even get an apartment.

This recent story, in the excellent newspaper of the Tenants’ Association, sums up the problems facing people who move here to work. The market for rental accommodation is tight as a drum. Finding a home means competing with Swedes, but with all the disadvantages of being an outsider. So people find themselves pushed into short-term, insecure rental contracts at inflated prices.

It wasn’t supposed to be this way. Five years ago this month, the government announced a “historic investment in housing”, including subsidies for construction companies, easing restrictions on building permits, and making more land available.

The housing situation at the time was grim. Spotify had threatened to leave Sweden if things didn’t improve – how could the company attract skilled young people to a city where there was nowhere for them to live? More than half Stockholm’s population – 600,000 people – were in the queue for a coveted rental apartment, because strict regulation meant these rents were low. But it took as long as 20 years to get to the front of that queue.

The result was a thriving rental property black market, with large bribes changing hands. Many tenants exploited the situation by sub-letting their homes, or parts of them. “It is almost impossible for immigrants and new arrivals to penetrate this market – it is all about who you know and how much money you have,” said Billy McCormac, head of the Fastighetsägarna property association, in 2015.

READ ALSO: 

So what has been the outcome of the grand promises the government made five years ago? House-building at the time was already rising steadily, and it has continued to do so. Look around you in the big cities and you will see that new apartment blocks have sprung up here and there.

But we shouldn’t go only on appearances. To understand the reality, we need to look at some numbers.

The gap between demand for housing and the existing housing stock has indeed started to shrink. “As housing construction has gradually increased and population growth has begun to slow down, the gap has decreased since 2017,” Stockholm’s Housing Agency noted in December.

The Agency has broken records four years in a row for the number of rental homes it has provided. The proportion of young adults living independently has also increased somewhat, the Tenants’ Association found, probably due to the pace of construction.

But this smidgen of good news is outweighed by an avalanche of bad.

The average queuing time in 2021 for a Stockholm apartment was more than 9 years; for somewhere in the city centre you have to wait 18 years. Only 936 homes came with a waiting time of less than one year. More than three-quarters of a million people are now registered in the queue for housing – a big increase on five years ago.

The rate at which the housing shortage is shrinking is nowhere near fast enough to alleviate the huge accumulated demand.

Assuming that the current pace of construction can be maintained, it will be the end of this decade before any significant dent is made in the deficit of homes, according to Boverket – the Swedish National Board of Housing, Building and Planning. The current rate of construction is “only marginally more than the long-term need”, it says.

The challenge is even greater when it comes to producing affordable housing, Boverket says, especially for the young and those entering the housing market for the first time. Almost one in four young Swedes up to the age of 27 are forced to live at home – the second-highest figure since the measurements began.

There are already signs that housing construction is actually slowing down, owing to higher building material prices, rising interest rates and an incipient labour shortage. Construction prices rose by more than 8 percent last year, and there is concern in the industry that war in Ukraine will further affect costs, in turn slowing the pace of building.

There is another fly in the ointment, a consequence of the collapse of Sweden’s governing coalition in November. The new, minority administration was forced to adopt the opposition’s budget, which halted investment subsidies for house building, throwing the construction industry into confusion.

In short, the “Swedish model” for providing people with a roof over their heads is failing. The folkhemmet, or “people’s home”, has not enough homes for its people.

Swedes themselves understand this: in a survey last month, nine out of ten voters said they thought that politicians did not take the housing shortage seriously.

We have waited too long. It is time for fresh thinking and radical action to solve the housing crisis.

David Crouch is the author of Almost Perfekt: How Sweden Works and What Can We Learn From It. He is a freelance journalist and a lecturer in journalism at Gothenburg University

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