More affordable home ownership

A “nationwide effort” is necessary to promote affordable home ownership and socially responsible rental housing construction, argued IVD President Jürgen Michael Schick at the beginning of June at the German Real Estate Day 2017 in Berlin, which broke all records with over 1,600 participants and 60 exhibitors.

“Housing must become a top priority,” demands Schick, with the Chancellor at the helm of an agenda “in which all stakeholders participate.”
“We need a homeownership rate of 50 percent in Germany and almost 1.5 million new apartments,” he says, adding that this cannot be achieved with a “policy of small steps.” (Note: Recent results from the Deloitte Property Index have shown that Germany has the highest proportion of rented housing in Europe at 54.3 percent.) Building wealth through homeownership must also be feasible for middle-income earners and families with children. The IVD president attributes the current situation to what he considers the failed 2015 reform of tenancy law. “Some politicians still think that increasingly stringent price regulations can help combat the housing shortage. But this won't create a single new apartment. And that's all that matters,” Schick argues.

"Overregulation stifles investment"

The only sensible solution to the housing shortage is to increase the supply. However, this goal cannot be achieved through stricter rent controls and stringent environmental regulations – which offer ever-decreasing environmental benefits – according to the IVD president. Overregulation, he argues, stifles urgently needed investments in existing and new rental housing.

"Only low interest rates are keeping investors in the housing market," Schick explained in an interview with "Die Welt." In this context, he also criticized the planned reduction of the modernization rent increase from eleven to eight percent as a step in the wrong direction: "This will make age-appropriate conversions and energy-efficient renovations of German housing stock virtually impossible," the real estate economist criticized.

Schick described the extension of the observation period for determining local comparative rents from four to eight years as a "rent index manipulation law." "Should these plans be implemented, existing rents in Germany would effectively be frozen," the IVD president fears.

Such measures would drive investors out of the market, investors we desperately need. "Because 85 percent of those who are currently building new residential buildings and thus alleviating the housing shortage are private companies," the IVD head emphasized.

Promoting small and middle incomes

Schick is calling for a rethink in real estate policy. The problem of urban housing shortages cannot be solved by constantly imposing new price regulations. Promoting affordable homeownership is a socio-political imperative – not least in light of the looming pension gap. "We want low- and middle-income earners to receive a subsidy for their equity. Furthermore, the real estate transfer tax should be suspended for first-time homebuyers," Schick declared, showing his fighting spirit. He received support from the owners and managers of the approximately 6,000 member companies, as well as their employees and property managers, who were invited to the 2017 German Real Estate Day.

The invited politicians, however, sent their apologies at short notice.

Federal Minister for Construction Barbara Hendrix (SPD) at least sent her State Secretary Gunther Adler, who, in addition to pointing to the federal government's successes in promoting new housing construction, also expressed self-criticism: "In many areas, the compromises reached between the parties have left potential untapped," Adler admitted. "The numerous standards and regulations must not slow down housing construction." Rather, it must be examined whether all of this is necessary to guarantee quality housing.

In the medium term, a model building code for all federal states is being sought.

Sources: German Real Estate Association (IVD), welt.de, www2.deloitte.com, haufe.de, immonewsfeed.de