The Institute for Macroeconomics and Business Cycle Research (IMK), an organization closely associated with trade unions, has strongly warned against the creation of a federal housing construction company as announced by the federal government. This cautionary stance comes out, according to a report by the Handelsblatt, following an independent study conducted by the institute.
The authors of the study determined that both the option of a pure state-owned company and a model incorporating private participation carry significant constitutional risks. The rationale is that under the Federal Basic Law (Grundgesetz), the federal government lacks competence in housing construction. Furthermore, the institute believes it is highly unrealistic to imagine a single central company being able to manage the necessary construction volume in a timely manner. Regarding public-private partnerships, such as those proposed by major landlord Vonovia, private investors demand higher returns, which would ultimately lead to noticeable increases in rent prices.
Instead of a federal company, IMK Director Sebastian Dullien and former Berlin finance senator Matthias Kollatz propose establishing a new funding line for housing construction. This initiative would target interested housing companies beyond traditional social housing projects. These companies could receive a state credit guarantee or a direct state loan with substantial financial leverage for 50 percent of the total construction cost.
In return for this support, the companies would be required to commit to offering moderate rents over the loan duration-for example, a maximum of eleven to thirteen euros cold per square meter for the initial 20 years of a 40-year loan. The funding would be strictly limited to projects that demonstrably lower construction costs through efficient design, prefabrication, short building times, and reduced standards, such as omitting underground parking.
From IMK’s perspective, a new funding line is both more effective and cheaper for the public purse than a federal construction agency, and it would avoid legal obstacles. Such funding could be handled through the KfW, which already serves as a joint lending bank for the federal and state governments and possesses extensive experience with guarantee programs. Additionally, cities and municipalities would play a critical role in securing affordable construction land.
