Angela Merkel at the annual meeting of the German Tenants' Association
"The best way to address housing shortages is to create new housing," said Chancellor Angela Merkel at the annual meeting of the DMB (German Tenants’ Association) in Cologne. The German government is standing by its target of creating 350,000 new housing units a year. At the same time the Chancellor advocated stronger action against exorbitant rents and exploding rental prices.
2 min reading time
The German government is providing 13 billion euros for social housing construction, incentives for families with children to buy homes and urban development
Photo: Bundesregierung/Bergmann
Housing construction, said Chancellor Angela Merkel is the crucial factor in addressing the social side of the housing problem. To encourage construction the right framework must also be in place for private investors, who in turn must serve the common good.
At the housing summit on 21 September 2018 the German government and the federal states and leading municipal associations agreed on a large package of measures to encourage the construction of new housing and ensure a supply of affordable housing.
These measures have since been translated into practice, step by step. The Chancellor pointed out, for instance, that the government has agreed to increase housing benefit by 30 per cent as of 2020, and that over 100,000 applications have already been received for the new incentive payment to encourage families with children to buy homes (Baukindergeld).
Action needed to counter exorbitant and exploding rents
For tenants too, a number of actions have already been launched, said the Chancellor. These include the cap on rent increases and reducing the modernisation fee they can be charged. "In the light of the evaluation of the cap on rent increases we will now consider what further action we can take," said Angela Merkel. She is considering primarily regulations to ensure greater transparency, such as obligations to provide information and well-founded rent indexes.
Currently, the German government is looking at two bills produced by the Federal Ministry of Justice relating to the cap on rent increases and the rent index, to determine whether or not the proposed regulations are suitable in practice to tackle rising housing costs and rents in the long term.
Strengthening social housing construction
Social housing construction is to be stabilised in the long term at today’s level at least. The federal government is substantially involved in funding the social housing promotion programmes of the federal states, and will continue this engagement in 2020 and 2021, providing a total of 2 billion euros. Angela Merkel called on the federal states to use the funding for social housing construction, which has not always been the case to date.