German broker association IVD’s president Jürgen Michael Schick spoke out strongly last week against changes in tenancy law and recommended greater focus on the encouragement of residential property ownership.
The IVD president took advantage of the combined New Year reception of several leading property associations’ to voice his opinion that the German government should focus less on new regulation and more on residential new-build and offer greater encouragement for freehold ownership.
“What the market needs right now is a cessation of changes in tenancy law. Whilst there are undoubtedly positive influences such as construction child benefit, the increase in housing benefit, the promotion of social housing development and tax breaks for refurbishment projects to improve energy efficiency, the other regulations will not bring about what is most urgently needed: the development of new apartments. Whilst the numbers of new building permits are stagnating, new regulations are on the increase, which is a discrepancy now badly in need of correction” said Schick in front of 500 guests from the political, business and scientific communities.
Schick criticised a further forthcoming regulation to make the conversion of rental apartments to condominiums more difficult, which he believes is a big mistake. The planned hindrances to those conversions mean that politicians are actively counteracting home ownership. “If the conversion of existing apartments is further restricted, the only route left to prospective purchasers will be new-build, which means that they will be consigned to the most expensive price segment”.
At the reception the federal ministers Horst Seehofer and Peter Altmaier praised the social market economy in Germany and spoke plainly against excessive regulations such as the rental price cap. Schick appealed to the German government not to put further obstructions in the way of the conversion of apartments, to extend and expand construction child benefit which is due to expire at the end of the year, to introduce the KfW loan guarantee programme and a tax allowance for first-time buyers.
Schick views the encouragement of home ownership as a political necessity. He referred to the results of a YouGov survey carried out on behalf of the IVD at the start of the year, in which 51% of all tenants responded that they would like to buy a home. He concludes that “Germany is potentially a nation of owner-occupiers rather than tenants. Politicians should turn their attention to home ownership instead of turning the screw even further on what is already a heavily regulated sector”.
