Finance Minister Lars Klingbeil (SPD) plans to tackle the severe housing market issues by establishing a “Federal Company for Affordable Housing Construction”. This proposal stems from a concept presented by the Vice Chancellor, reported by the “Süddeutsche Zeitung” (Saturday edition).
The three-page document argues that the private housing market alone cannot generate the necessary new construction at affordable prices. Consequently, they argue that the federal government must become more actively involved.
Klingbeil intends to implement this concept over the coming months, working alongside Housing Minister Verena Hubertz (SPD) and the coalition partners CDU and CSU. The SPD leader first announced the idea of a federal housing construction company during a reform speech in Berlin some time ago.
According to Klingbeil’s concept, the new federal company-which aims to secure private investors as majority shareholders alongside the federal government-will not function as a construction company or a mere administrative body. Instead, it will be tasked with developing housing projects in the “affordable price segment”. The state would then publicly tender for the implementation of these projects and provide loans at rates cheaper than those available to private companies. The document specified that “contracted construction companies will deliver the apartments”. The overarching goal is to reduce raw construction costs to under 3,000 euros per square meter, a target given that current costs are often significantly higher.
Since housing legislation is exclusively a matter for the federal states, establishing such a federal company would necessitate a constitutional amendment, requiring a two-thirds majority in both the Bundestag and the Bundesrat. Because the current coalition lacks these necessary majorities, they would need to bring at least the Greens, and possibly the Left Party, into the alliance.
From the Finance Ministry’s perspective, a constitutional amendment is appropriate because the federal government’s contribution to building cost-effective housing serves the “improvement of living conditions” and is therefore deemed a “whole societal task”.
Data from the Pestel Institute, an economic and social research society based in Hannover, indicates that Germany currently faces a shortage of 1.4 million dwellings. This shortage is a major contributor to the nearly eleven percent surge in net cold rents nationwide over the last five years. In major cities, this increase is even more dramatic, leaving young people, in particular, struggling to find affordable housing.