a_medvedkov/Envato
The Reichstag Building in Berlin is the seat of the German national parliament
Germany’s new CDU/CSU–SPD coalition government has laid out its legislative blueprint under the banner Verantwortung für Deutschland, with housing, energy modernisation and deregulation at its core. For the real estate industry, the agreement offers a mix of reassurance, regulatory risk and lingering scepticism. The coalition’s tone is more pragmatic than ideological, but the practical impact on capital deployment and investor confidence remains uneven.
Among the first items on the agenda is the so-called Bau-Turbo—a 100-day package promising to accelerate housing construction by streamlining planning, procurement and environmental law. This includes anchoring Building Type E in federal law, embedding Building Information Modelling (BIM), and overhauling technical norms that have long inflated costs and stalled approvals. In parallel, the EH55 energy standard is being temporarily reintroduced, and the contentious Building Energy Act (GEG) is to be restructured. CO₂ emissions, rather than kilowatt-hour efficiency metrics, will now serve as the primary retrofit benchmark—a significant, industry-endorsed pivot in climate regulation.
Key Measures at a Glance
• Rent freeze extended for another four years in tight markets
• Legal safeguards for Building Type E and deviation from DIN norms
• Indexed leases, furnished flats and short-term rentals under review
• EH55 standard reintroduced temporarily to spur new builds
• CO₂, not energy efficiency, to guide retrofit strategy
• New state-backed fund targets sub-€15/sqm housing
• First-time buyer support via guarantees and equity tools
• KfW programmes consolidated into new build and modernisation tracks
• Property transfer tax remains untouched
For housing providers, the shift to CO₂ as the primary emissions metric is particularly welcome. “This cuts a Gordian knot,” said Axel Gedaschko, President of the GdW. “A CO₂-based approach lowers costs for landlords and tenants, and provides a practical route forward for retrofitting existing stock.” Others described the move as long overdue, given the legal chaos and investor hesitancy triggered by the failed Heizungsgesetz under the previous coalition.
The coalition also promises a new investment fund combining KfW-sponsored public guarantees with private capital to build housing at below €15/sqm, targeting strained urban markets. Municipal and co-operative housing providers are expected to play a lead role. The scheme is to be exempt from EU state aid restrictions, although practical implementation details are scarce.
Confusion around Mietpreisbremse and lease regulation
Yet for all the positive signalling, several measures are sowing confusion and concern. Chief among them is the extension of the rent freeze (Mietpreisbremse), alongside proposals to regulate indexed leases, furnished apartments and short-term rentals—categories that many recent developments depend upon to remain financeable. Roman Heidrich of JLL warns of the consequences: “Any regulation of indexed or short-term leases would hit recent development projects hard and jeopardise financing. Uncertainty here could hang over the market like a sword of Damocles.”
The coalition’s refusal to address property transfer tax reform has been another disappointment. “This is a missed opportunity,” said ZIA President Iris Schöberl. “Transaction tax relief is critical to improving market liquidity and encouraging home ownership.” The German Tenants’ Association supports the extended rent freeze but has criticised the lack of a proper rent cap, while Haus & Grund sees the tenancy law proposals as a “step backwards” that will deter private investment.
Some observers caution that the attempt to legalise deviations from DIN norms could backfire. Heiko Fuchs, construction law expert at Kapellmann und Partner, argues that removing the legal status of established technical rules eliminates minimum construction standards. “We’ll get buildings that are approved but that no one wants to live in,” he warned. The insurance and financing sectors are likely to resist abandoning DIN-based assessments, meaning that contractual adherence to traditional standards may persist in practice despite legal reform.
Meanwhile, the GEG is being reframed to reflect a more flexible, technology-open energy policy. The CO₂-first approach aligns with Germany’s obligations under the forthcoming EU Buildings Directive, which kicks in by 2026. Yet Paul Kowitz, a Berlin-based political adviser, warns that the government’s abolitionist rhetoric on heating law is misleading. “This is not a paradigm shift. It’s a tactical reframing to buy planning time,” he said. The target of 65% renewable heating remains, albeit with more routes to compliance.
€500bn infrastructure fund seen as worrying for real estate sector
The newly pledged €500bn infrastructure fund—intended for schools, hospitals, and bridges—has also sparked anxiety among residential developers. Labour and materials are already in short supply, and overlapping public and private procurement could crowd out capacity. JLL’s Heidrich notes: “The construction industry cannot serve all segments at once. Labour bottlenecks and price inflation are a real threat to housing output.”
Despite these concerns, many industry associations have cautiously endorsed the coalition’s direction. The GdW, VNWand BFW welcomed the renewed emphasis on social and co-operative housing, the support for serial and modular construction, and the consolidation of federal support schemes. Andreas Breitner of the VNW praised the plan as “free of ideological zeal and finally grounded in practical reason.” BFW President Dirk Salewski added: “The coalition agreement contains good decisions that can make building in Germany faster and cheaper.”
Still, much hinges on the execution of these promises. The government has reaffirmed its commitment to digitalisation, with the creation of a dedicated digitalisation ministry and proposals to revise building codes across federal states. Yet the industry remains sceptical about delivery. As Florian Bauer of Bauer Immobilien put it, “A number of proposals are a step in the right direction. But without faster, digitalised approval processes, we risk repeating the same bureaucratic failures.”
SDP to maintain control of housing policy
One clear political outcome is the consolidation of housing competencies under SPD leadership. The Ministry for Housing, Urban Development and Construction remains in Social Democratic hands, while climate policy moves to the Environment Ministry, and the CDU controls the Economy and Energy portfolio. The Ministry’s expanded remit could include oversight of renovations, BIMA, and energy supply interfaces—though final allocations are pending. Observers are watching closely to see whether Minister Klara Geywitz retains her post.
From a regulatory standpoint, the government pledges to avoid “gold-plating” EU rules and will seek delays in implementing the European Buildings Directive. The ZIA supports this intent, but remains unconvinced. “The German tendency to over-implement remains strong,” said ZIA Vice-President Jochen Schenk. Others, like Paul Muno of SICORE Real Assets, voiced open scepticism about any real shift in approach.
For investors, the message is mixed. On the one hand, the coalition appears committed to lowering legal and construction hurdles, reducing CO₂ costs, and stimulating homebuilding. On the other, it is tightening tenancy law, retaining high transaction taxes, and complicating asset planning through legal ambiguity. Developers and institutional landlords find themselves simultaneously supported and constrained.
The coalition has, at the very least, articulated a clearer direction. But clarity is not the same as certainty. Investors remain wary—not of political ambition, but of the gap between policy and delivery, especially in a system where municipal inertia, legal appeals and regulatory fragmentation remain formidable obstacles. As Dirk Wohltorf of the IVDsummarised: “The housing turnaround hoped for by the property industry has not materialised. The contradictions are still too great.”
Until those contradictions are resolved, many investors will remain on the sidelines—watching not what the government says, but what it actually builds.