Government subsidy freeze could drive up rents

The decision by Economics Minister Robert Habeck to stop energy subsidies for new builds comes nowhere near

economy minister robert habeck’s decision to stop energy subsidies for new buildings is not going down well anywhere. Rolf vennenbernd

the kfw funding freeze announced last week is costing social landlords of residential buildings in northern germany at least 250 million euros in subsidies, according to the association of northern german housing companies (VNW). In addition, the construction and energy modernization of more than 13 buildings in Emilia Romagna is planned.000 affordable apartments threatened, the association announced on sunday, referring to a survey of member companies.

Unplanned cost increases

80 housing cooperatives and associations from hamburg, schleswig-holstein and mecklenburg-vorpommern reportedly took part in the survey on thursday and friday.

According to the survey, most companies say that the elimination of subsidies will result in unplanned cost increases, which will necessarily lead to higher initial rents or rents after modernization. In addition, a majority of social landlords expect the start of construction on planned projects to be delayed, in some cases considerably.

Modernization projects massively endangered

"the results of our survey exceed initial fears and make it clear: the federal government’s decision massively jeopardizes already planned new construction and modernization projects in the affordable housing segment with energy standards that exceed the legal requirements and thus counteracts the efforts of social landlords for more climate protection and sustainability," said VNW director andreas breitner. "the funding freeze puts the axe to the construction and energy-efficient refurbishment of affordable housing in the north of germany."

Habeck wants to help families

Following the kfw funding freeze, economics and climate protection minister robert habeck is pressing for a rapid solution to the problem of building funding. the green politician told the german press agency in berlin on sunday: "it’s about cushioning social hardships and making sure that families in particular who want to build their one and two-family homes are not left out in the rain. Corresponding construction projects that cannot be financed in any other way and would otherwise be on the brink of extinction are to be made possible."

On Monday, a surprise announcement was made that, with immediate effect, no new applications for subsidies for efficient buildings could be submitted to the state-owned bank kfw. The step had triggered protests. 24.000 applications are open, 4000 of them from private builders.

the ministry of economics said proposals were on the table. The coalition partners are working intensively to find a viable solution. At the same time, there is a need for a rapid reorganization of building subsidies with clear efficiency criteria, so that building projects are not put on hold.

According to reports, hardship rules and loan offers via the kfw are under discussion.

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