Finance Minister Lars Klingbeil (SPD) plans to address the severe issues in the rental market by establishing a “Federal Corporation for Affordable Housing Construction”. This proposal originates from a concept presented by the Deputy Chancellor and was reported on by the “Süddeutsche Zeitung” (Saturday edition).
The three-page paper argues that the private construction market alone cannot deliver the necessary volume of affordable new housing, necessitating greater federal involvement. Klingbeil aims to implement this concept in the coming months, collaborating with the Minister of Construction Verena Hubertz (SPD) and the coalition partners CDU and CSU. The SPD chief previously announced the idea of a national housing construction corporation during a reform speech in Berlin.
According to Klingbeil’s concept, this new corporation, which will seek private investment alongside the federal government as the majority owner, will not function as a construction company or a government agency. Instead, it is intended to develop housing projects specifically in the “affordable price segment”. The corporation would then publicly tender for the realization of these projects and provide loans at rates that are more favorable to the state than to private entities. The paper notes that the “contracted construction companies will deliver the apartments”. The overarching goal is to reduce the raw construction costs to below €3,000 per square meter, as these costs are currently much higher in certain areas.
Because housing matters are exclusively a state competency, establishing a federal corporation would require an amendment to the Basic Law. This would mandate two-thirds majorities in both the Bundestag and the Bundesrat. Since the current coalition lacks such majorities, they would need to secure the support of at least the Greens, and possibly the Left Party.
From the Federal Ministry of Finance’s perspective, amending the constitution is appropriate because the federal participation in building lower-cost housing serves the “improvement of living conditions” and constitutes a “task for the entire society”.
Meanwhile, a study by the Pestel Institute, an economic and social research society based in Hanover, indicates that Germany currently lacks 1.4 million dwellings. This shortage is a key contributor to the fact that net cold rents have risen by nearly eleven percent nationally over the last five years. The increase is even more dramatic in large cities, where finding affordable housing is proving extremely difficult, particularly for young people.
