Why the real estate industry should welcome the return of the FDP

It's clear that real estate will play a dominant role in the forthcoming German elections, more so than in the recent past – and all the main political parties are rehearsing taking strong, principled positions before the hustings begin in earnest over the summer.

We had a foretaste of what's to come at last week's gathering of Germany's top real estate leaders at the ZIA Real Estate Day in Berlin, an event which has truly established itself as the get-together par excellence of the industry. Among others, Angela Merkel addressed the audience, as did Finance Minister Wolfgang Schäuble and Housing Minister Barbara Hendricks, all from the current governing coalition.

That Merkel and Schäuble both came is a measure of the seriousness with which the CDU party recognises how rising rents, affordable housing, complicated regulation and lengthy delays in issuing appropriate building permits are all taking their toll on tenants and potential landlords alike. The left-of-centre SPD under Martin Schulz, after an anemic start full of empty generalisations about injustice, is now honing its own property arguments to appeal to a worried electorate. Cue a sharper tone very soon.

While Merkel gave a highly forgettable speech that her aides had ensured at least touched on most of the hot buttons, few in the audience felt that she personally identified with any of the concerns she check-boxed. Finance minister Schäuble could count on a certain sympathy for his need to balance the macro-picture, and then decide how to disperse the exchequer's burgeoning surplus.

He soothed his audience by assuring us that Germany was not in the grip of a property bubble, but warned of the growing cost of building land, and the need for the Länder to lower their ever-rising dependency on the property transfer tax, or Grunderwerbsteuer - at up to 6.5% and rising, now a major hindrance to property acquisition for low to normal income earners.

If anyone has day-to-day responsibility in government for solving the housing problem, it is Frau Hendricks. The SPD politician knows what's required, since she's addressed the same audience on the same subject for the last four years. The solution is more housing, and housing where it's needed. Still, like the other parties, the SPD want to solve the problem through more regulation, stiffer energy-saving measures, more rent-capping, tighter restrictions on bank lending, and more support for anti-gentrification in the big cities. That way lies a lot more trouble.

This enthusiasm for interference by the parties of the left is also hindering commercial property development, as high-profile residential initiatives garner all the public accolades, while countless new ordinances block or delay development in the office, retail or logistic sectors. The Greens, apparently committed to their own self-destruction, are even demanding that internet shopping on Sundays be outlawed, as it gives the online merchants an unfair advantage over their bricks-and-mortar cousins. Given that Sunday is the busiest day for online shopping, that's just one way the Greens are choosing to get unelected in September.

In the liveliest speech of the day, the liberal FDP leader Christian Lindner proved to have the clearest ideas as to what will work and what will not for real estate initiatives. His party has been without representation in the Bundestag for the past four years, but he seems likely to lead them back with more than the required 5% of votes come September. His party in opposition, or indeed as a junior coalition party, will be welcomed by many in the real estate industry who are plagued by the ever more stifling webs of regulation that are hampering critical development.

As Lindner pointed out, the much-heralded Mietpreisbremse, or rental cap, in the bigger cities has so far not helped in the creation of even a single new apartment in places where they are needed, as several reliable studies now testify. Quelle surprise!

Nonetheless, Justice Minister Heiko Maas of the SPD has a pre-election range of refinements in place to further tighten the already restrictive capping measure, with plans for draconian penalties on errant landlords. He's largely supported by all the parties of the left and the right, currying favour with their prospective voters. It will prove another costly waste of time that does little to help those in genuine need.

In a refreshing nod to reality, Lindner's FDP, which is a coalition partner in the governments of the populous North Rhine-Westphalia and Schleswig-Holstein, has convinced his coalition partners there that the Mietpreisbremse is counter-productive, and should be abolished. They've agreed. This is a significant political breakthrough for a small party, and a genuine achievement.

But abolition is not enough. So a host of new proposals is also on the agenda designed to cut through to the root of the problem – a shortage of the right kind of properties. These include a radical slashing of the review period for planning permission to three weeks, with the planning authorities obliged to rule within a further two months, and a sharp reduction in the eco-regulations that strangle new investment by overburdening it with spurious energy-saving and CO2 reduction enhancements.

The FDP are also refining plans to lower the threshold for the imposition of the property transfer tax – a burden which companies have largely been able to avoid by acquiring assets through share deals, an option not open to private individuals. The federal states have become addicted to the easy revenue generated by the tax, and are loath to cut off such a source of soft funding. There is more juggling required by the FDP to fine-tune their policies, and sharpen their approach. But the real estate industry will have good cause to welcome the return of the liberals in September's election.