Written by 10:00 TOP-NEWS

3 questions for Florian Rentsch, Chairman of the Board of the Association of Sparda-Banken e.V.

The Sparda study “Housing in Germany 2024” shows the urgent need for energy-efficient refurbishment in order to achieve the climate targets. Rentsch emphasizes the importance of political measures to increase the renovation rate and to support young households in purchasing and renovating existing properties. Especially in expensive regions such as Frankfurt, targeted subsidies and a progressive housing policy are essential.

Mr Rentsch, the Sparda study “Housing in Germany 2024” highlights the immense importance of energy-efficient refurbishment of existing properties for achieving climate targets. What specific political measures do you consider necessary to significantly increase the renovation rate of existing residential buildings?

It will be crucial to take measures that make use of the enormous leverage effect in the energy-efficient refurbishment of private residential properties. This is precisely what all decision-makers have failed to do in recent years of good economic growth and the low interest rate environment. However, the German government’s package of measures for the real estate market from last fall contains many of the right things to improve the situation – but there is still a lack of implementation. At half a billion euros, the home ownership program is too small and more investment is needed here. We also need targeted support for refurbishment of existing properties at the time of sale. The existing refurbishment backlog, particularly in rural areas, is leading to a veritable erosion of assets. In addition to tax incentives or subsidy programmes for private households, a homogenization of building regulations would also be expedient – to date, each federal state has its own building regulations. This slows down planning and approval procedures in the federal states and construction costs cannot be distributed across regions. As a result, the ambitious goal of creating 400,000 new homes a year is receding into the distance. It is also important to refrain from taking measures that could even prevent refurbishment of existing buildings in the future: Take, for example, the introduction of ever more valuation standards, such as the “green asset ratio”. This entails the risk that financial institutions and investors will withdraw from financing so-called “brown properties” – especially if they have to be backed by higher risk provisioning in future.

You have emphasized that the acquisition and renovation of existing properties by younger households is a major challenge. In your opinion, what are the most important steps that politicians should take to make it easier for young buyers to purchase and renovate old properties to make them more energy efficient?

In view of the high financing and construction costs, a pragmatic promotion of home ownership in existing buildings is primarily necessary. As already mentioned, this should start at the time of sale, as this is when there is the greatest chance of bringing an energy-inefficient building up to a reasonable standard, for example through the “Young buys old” program announced by the German government, which is to be handled by KfW. It is also important to refrain from debates on heating systems, demands for mandatory refurbishment and market interventions such as the rent freeze or the termination of funding programs in the middle of their term. Such actions lead to uncertainty when purchasing property, especially among young families. Secondly, the equity hurdle for younger households must be lowered. The abolition of the real estate transfer tax, which relieves the buyer of incidental costs when purchasing in favor of a possible refurbishment, is expedient here. We are very concerned that if targeted countermeasures are not taken now, there is a risk that the housing issue will become the socially explosive topic of the next few years and the climate targets in the building sector will move into the unattainable distance.

As Chairman of the Association of Sparda Banks, which is based in Frankfurt am Main, how do you assess the situation here locally and what role do city and state politics play in this?

“Go straight to the checkout and not by lot”, wrote BILD am Sonntag on the occasion of the publication of this year’s residential study. This also applies to Frankfurt as a location. The affordability of residential real estate has declined significantly, and many buyers in the metropolis would now have to pay at least 10,000 euros per square meter to buy a house. Even if the uncertain economic situation, inflation and the energy issue have a considerable impact on the real estate market under the cloak of geopolitical risks – the Rhine-Main region is and remains attractive. With regard to the financial market, this also has a European component with Frankfurt as the central location for various European supervisory authorities such as the ECB and, in future, AMLA. This makes us an international hub for the European economy and a destination for numerous specialists who want to settle in the region. In order for this to work, Frankfurt and the surrounding region must also set the necessary course for a functioning infrastructure – this includes, in particular, sufficient living space for all those who come to us and affordability for those who are already here. And this is precisely where there is a huge problem. We urgently need a more progressive housing policy on the part of local authorities that also, but not only, keeps an eye on social housing and designates areas for new builds. The last discussions on this were anything but uplifting and have contributed to a further shortage of supply. Other major cities, such as Vienna, are also much more successful than us when it comes to inner-city densification. Furthermore, there are other concepts that are interesting in addition to traditional subsidies – cooperative housing, the conversion of empty office space into new living space. As far as the state of Hesse is concerned, Minister of State Alexander Lorz launched the “Hessengeld” at the beginning of his term of office as Minister of Finance – a subsidy that is intended to at least partially offset the expenses for land transfer tax when purchasing property. Although this does not meet our demand for a general abolition of real estate transfer tax, it at least contributes to the cross-state discourse – and that is a good start. Overall, politicians simply need to do much more to make it possible for young families in particular to acquire property in an undeniably expensive region.

Renovation potential for residential properties in Germany

Study for the Association of Sparda Banks e.V.

The study is only available in German.

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