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Merkel pledges affordable housing

May 26, 2018

An extra 1.5 million apartments and houses must be built in Germany, says Chancellor Angela Merkel. Her commitment to alleviate rental and property price hikes and ease shortages is timed to be fulfilled by 2021.

A residential area in Germany
Image: Imago/J. Tack

Chancellor Angela Merkel said Germany "urgently needed" extra affordable housing and used her weekly video podcast Saturday to reel off a series of steps — outlined in February as her coalition took shape — to get it built before the next federal elections in 2021.

At the same time, the board chairman of Germany's BA Labor Agency, Detlef Scheele, told Stuttgart-based SWR public broadcasting that affordable housing had become the "burning topic of our times."

Read more: Europe's homeless as housing prices soar

More and more people were seeking second jobs to supplement their incomes, especially in Germany's urban hubs, said Scheele.

Last year alone, Berlin property prices soared 20.5 percent, prompting some 10,000 protesters to demand remedies last month, and caused squatting by activists in two long-vacant buildings.

'Well-balanced' housing 'offensive'

Merkel said her Cabinet of Christian Democrats (CDU), allied CSU Bavarian conservatives and center-left Social Democrats (SPD) had earmarked €6 billion ($7 billion) for its "well-balanced housing offensive."

It would include measures to strengthen tenants' rights and to assist landlords when modernizing their rental properties, she added.

Grants for families with children

Would-be parents should not be forced to decide between having children or acquiring property, Merkel insisted, saying part of the remedy lay in her Cabinet's planned housing grant for children (Baukindergeld).

Parents would receive €1,200 per child annually, for ten years, when they built or purchased a house, assuming their taxable income lay below €75,000.

Parents would also be able to claim an exemption on taxable income of €15,000 for each child.

'Massive' input into social welfare housing

Merkel told podcast viewers that €2 billion of her coalition's agenda package would flow as a "massive" injection into social welfare housing projects run by Germany's 16 federal states.

The situation in Germany's metropolitan hubs would "hopefully relax somewhat," she predicted.

Developers of new rental housing catering for the "middle segment" — defined as being about €10 per rented square meter per month — would also get special tax dispensation.  

Landlords wanting to modernize their rental properties would also benefit from levies readjusted so that work was not done in the "wrong direction," Merkel added.

Converting barracks into housing

To acquire construction plots, state and local bodies would be offered further unused federal land plots to erect social apartment blocks complete with public facilities, Merkel said. 

In 2013, Germany's municipalities' association had warned Merkel's previous coalition government that prevailing low interest rates used by commercial investors were not solving the housing problem.

Merkel on Saturday also reiterated a February coalition proposal to allow municipalities to apply a dissuasive tax on owners of vacant land who leave their plots unused, hoping to speculate on future windfall sales.

This so-called Grundsteuer C [land tax C] was applied from 1961 until 1963 but then dropped as the era of Merkel's distant conservative predecessor Konrad Adenauer ended.

Tenants who suspected a rent hike was being imposed would be entitled to learn how much the rent was previously, Merkel said, to improve the application of law intended to restrain neighborhood tenancy prices.

ipj/jm (AFP, Reuter, epd)

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