Promote what needs promoting

The real estate year started with a slap in the face for many private and professional property developers. The completely unexpected halt to applications for the KfW programmes for energy-efficient building refurbishment and new construction funding caused quite a stir. 24,000 applications that had been submitted but not yet approved were left hanging in the balance. More than 20,000 new buildings to efficiency standard 55, around 3,000 new buildings to the EH40 standard and around 700 conversions were affected. The response from the real estate industry was unanimous. This was no way to achieve the ambitious housing construction targets on the one hand, or the new German coalition government’s climate protection targets on the other. As a result of the great public and media pressure, Economics and Climate Protection Minister Robert Habeck was forced into a U-turn and withdrew the sudden funding freeze.

However, Habeck’s plans for a stripped-down programme, which have subsequently come to light, are no less serious. Based on what we know so far, the Green Party’s former leader is planning to cut subsidies under the Efficient House 40 (EH40) new-build programme in half. He also wants to introduce a cap of one billion euros. A subsidy program with a one-billion-euro cap is likely to be exhausted after little more than a year.

With these announcements, the German government’s goal of creating 1.6 million new apartments in this legislative period is becoming a distant prospect. Many developers are already forecasting significant cost increases, which will drive rents up accordingly. Various calculations show that without EH40 subsidies, rents for social housing would rise by €3.00 per square metre and more. If the subsidy were halved, as Habeck is now planning, rents would rise by at least €1.50 per square metre. The result of slashing subsidy programmes for affordable housing couldn’t be more obvious: If housing is to be built – and built in an environmentally-friendly way – developers need a permanent and adequate funding framework. Policymakers must promote what needs promoting. During the first weeks of the new year, a great deal of trust has been squandered. In terms of housing policy, the most important task facing the new government is to quickly regain that trust. Otherwise, by the end of the current legislative period 1.6 million new homes will be little more than a pipe dream – and the legislative period has only just begun. The chaotic funding freeze, the halving of the EH40 programme, and the unrealistic cap must all be taken off the table as quickly as possible.