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Tax incentives for new buildings - repeating the success story of German unity
Rainer Zitelmann: Approaches to solving the housing problem in Germany - Find out how the expert analyzes the situation and what measures he suggests. Will tax incentives or market forces solve the problem? Find out!
Tax incentives for new buildings - repeating the success story of German unity
In his guest article, Rainer Zitelmann explains that two essential points are necessary to solve the housing problem in Germany. He emphasizes that new construction is at a low level and government targets for the creation of 400,000 new homes per year have not been met. According to Zitelmann, the current incentives and depreciation will not be enough to change this situation.
In Zitelmann's view, there are two main ways to address the problem. The first approach involves the abolition of a wide range of building regulations, a radical liberalization of tenancy law and the reduction of eco-regulations - a strategy that relies on more market and less state. The second way is to provide comprehensive tax support for new construction. Zitelmann personally prefers the first option because he has doubts about the feasibility of the second option, especially since the FDP does not have an absolute majority to implement such measures independently.
To effectively address the housing problem, Zitelmann draws on historical experiences from the 1990s, when Germany was faced with housing shortages in the new federal states after reunification. At that time, strong tax advantages were introduced for investors, which led to the renovation and construction of new apartments in the former GDR. A total of 80 billion euros were mobilized through special depreciation, which led to a real construction boom and ended the housing shortage.
Zitelmann proposes to implement a similar tax incentive for the whole of Germany, but with specific restrictions for residential buildings. Despite possible misallocations and concerns about these measures due to envy of higher earners and the rich, he believes that a repetition of the assisted areas law is essential for Germany in order to combat the acute housing shortage. Ultimately, Zitelmann warns of the serious consequences of inaction, which would lead to further massive increases in rents and property prices.