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As the upcoming German elections approach, the major political parties have placed home ownership firmly on their agendas, reflecting a widespread - if largely unfulfilled - desire among citizens to own their homes. However, the strategies proposed by each party differ significantly, highlighting their varied approaches to addressing Germany’s low home ownership rate. (See The decline of home ownership in Germany’s housing market).
SPD: Supporting families, renovating existing properties
The SPD aims to make home ownership more attainable for families, especially those looking to buy existing properties. Their plan includes expanding the existing KfW development programme, “Young People Buy Old,” which provides low-interest loans and grants for energy-efficient renovations of older homes. This initiative is targeted at families in small towns and rural areas. Additionally, the SPD backs “local models” where municipalities offer building land to local families and individuals at reduced prices to counteract speculative price increases.
Analysis suggests that while the SPD’s focus on families and energy-efficient renovations aligns well with Germany’s sustainability goals, the impact may be limited by the relatively small pool of eligible properties in urban centres, where demand is highest. Furthermore, the success of local models will depend heavily on municipal budgets and their willingness to allocate land at reduced prices.
CDU/CSU: Reducing transaction costs, promoting construction
The CDU/CSU’s manifesto focuses on reducing financial barriers for home buyers. They propose allowances for land transfer tax (Grunderwerbsteuer) of €250,000 per adult and €150,000 per child when buying a first home. To support low-income earners, they plan to merge the employee savings allowance and the home-building premium into a single capital-building premium with increased funding amounts and standardised income limits.
The CDU/CSU also advocates for increasing the supply of building land, particularly in metropolitan areas and growth regions, through densification, the development of new areas, and brownfield redevelopment. They aim to realign KfW funding programmes to raise income limits and include the purchase of existing properties. Inheritance tax allowances for owner-occupied homes would also be significantly increased to ease the transfer of properties across generations.
These measures address some of the most significant cost barriers to ownership. However, their reliance on federal-state cooperation for land transfer tax reforms and increased building land supply introduces uncertainty, as past initiatives have stalled due to intergovernmental disagreements. The emphasis on new construction could be constrained by the current building crisis and high construction costs.
Greens: Lowering ancillary costs, supporting collective ownership
The Greens prioritise reducing the ancillary costs of home ownership, such as estate agent and notary fees. They propose a home-building subsidy that adjusts for inflation and includes a climate component, aimed at assisting low-income households. Additionally, the Greens want to support tenants who wish to collectively purchase their apartment buildings by providing low-interest loans or guarantees.
The Greens’ focus on ancillary costs and collective ownership reflects a progressive approach to housing equity. However, critics point out that these measures may have limited appeal in urban areas where high property prices dwarf the impact of fee reductions. Their emphasis on collective ownership aligns with broader affordability goals but could face logistical challenges in scaling up.
FDP: Tax incentive and flexible ownership models
The FDP’s approach centres on tax incentives and flexibility in property ownership. They propose a tax-free allowance of €500,000 for the first property used as a primary residence. Following the Swiss model, the FDP suggests allowing individuals to use funds from company pension schemes to purchase property. To encourage mobility, they advocate for the abolition of speculation tax on the sale of owner-occupied properties, enabling owners to respond flexibly to changing life circumstances. Additionally, inherited properties held for at least ten years would be eligible for tax-free inheritance.
The FDP’s focus on tax flexibility and long-term ownership benefits resonates with wealth-building strategies. However, the effectiveness of their proposals hinges on whether high-income earners disproportionately benefit, potentially sidelining middle-income families. Their reliance on pension schemes for property purchases may also be challenging to implement without substantial policy restructuring.
A shared goal, with different pathways
While the SPD’s emphasis on supporting families and the CDU/CSU’s focus on financial incentives address crucial barriers, they may fall short without stronger cooperation across federal and state levels. The Greens’ progressive measures on cost reduction and collective ownership reflect innovative solutions but face practical hurdles in urban areas where property values are highest. Meanwhile, the FDP’s tax incentives and flexibility appeal to wealth-building strategies but risk favouring higher-income groups over middle-income families.
Ultimately, the effectiveness of these proposals will hinge on their ability to address Germany’s structural housing challenges, including high land prices, regulatory barriers, and construction bottlenecks. The outcome of the upcoming elections will determine whether these policies can deliver meaningful change or remain aspirations in the face of entrenched obstacles. By focusing on practical implementation and equitable access, Germany has the potential to create a more balanced housing market that meets the needs of its citizens.
