Apartment buildings in Berlin, Source: Depositphotos

Germany resurrects an old policy - non-profit housing

Germany resurrects an old policy - non-profit housing

The benefit to landlords subscribing to the program will be in the form of tax breaks

The German government has adopted the Wohngemeinnützigkeit (common good housing) law with the aim of promoting the concept of non-profit housing among landlords so that they will rent at affordable prices to people with low incomes. The chief benefit for landlords will be the possibility to get attractive tax breaks on their annual declarations.

To qualify for the tax break support, landlords must offer their properties permanently below the market rent and make these affordable properties available for people in lower income brackets. The income limits have been set so that around 60 per cent of households in Germany will be able to benefit from the new non-profit housing scheme.

Tackling Germany's housing crisis was one of the key pledges of the centre-left Social Democrats (SPD) when they came into power in the federal government. Their ambitious goal was to build 400,000 new homes a year, with a quarter of these in the social housing category. They have, however, failed to meet their own target due to various factors, such as inflation costs of building materials and shortage of labour.

Doubts in the housing sector

The new policy is actually a revived old one, which used to exist in West Germany before the unification but was scrapped in 1990 due to a fraud scandal in the 1980s involving a non-profit housing organization.

The current housing sector has been lukewarm towards the news of the policy revival. According to estimates by the Federal Government, around 100 rental housing providers could initially use the model. 105,000 tenants could benefit from it.

However, the German Tenants' Union expressed doubts about the effectiveness of the plan citing concerns that tax breaks alone would not be enough without investment grants. The housing sector is of the opinion that a short-term interest rate program would be a more robust way to create affordable housing.



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