Government subsidy freeze could drive up rents

The decision of Minister of Economics Robert Habeck to stop the energy subsidy for new buildings comes nowhere

Economics Minister Robert Habeck’s decision to halt 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 funding, according to the Association of North German Housing Companies (VNW). In addition, the construction and energy modernization of more than 13.000 affordable homes threatened, the association announced Sunday, citing a survey of member companies.

Unscheduled cost increases

According to information, 80 housing cooperatives and associations from Hamburg, Schleswig-Holstein and Mecklenburg-Western Pomerania took part in the survey on Thursday and Friday.

According to the survey, most companies say that the elimination of subsidies will result in unbudgeted cost increases, which will necessarily result in higher first occupancy rents or rents after modernization. In addition, a majority of social landlords anticipate a delay, in some cases considerable, in the start of construction of planned projects.

Modernization project at massive risk

“The results of our survey exceed initial fears and make it clear that 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 renovation of affordable housing in northern Germany.”

Habeck wants to help families

Following the KfW subsidy freeze, Economics and Climate Protection Minister Robert Habeck is urging a rapid follow-up solution for building subsidies. The Green politician told the Deutsche Presse-Agentur in Berlin on Sunday: “It is a matter of cushioning social hardship and ensuring that families in particular who want to build their one- and two-family homes are not left out in the cold. Appropriate construction projects that cannot be financed otherwise and would otherwise face cancellation should be made possible.”

On Monday, it was surprisingly announced that no new applications for the promotion of efficient buildings can be submitted to the state-owned bank KfW with immediate effect. The step had triggered protests. 24.000 applications are open, 4000 of them from private builders.

From the Ministry of Economics it was said that proposals were on the table. A viable solution is being worked on at full speed and in intensive exchange between the coalition partners. At the same time, there is a need for a rapid reorganization of building subsidies with clear efficiency criteria so that construction projects are not put on hold.

According to reports, hardship rules and offers of loans via KfW are under discussion.

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