Experts Debate Reviving 1990s Tax Incentive to Address Germany's 1.4 Million Housing Shortfall

Germany currently faces a shortage of approximately 1.4 million apartments, sparking discussions on how to stimulate new housing construction. A proposal to revisit the 1993 Fördergebietsgesetz, known as the Ost-Sonderabschreibung, has been suggested. This law previously provided significant tax deductions that boosted housing investments in the 1990s, resulting in millions of apartments built and renovated.

However, experts express skepticism about the effectiveness of reintroducing this measure today. Joachim Ragnitz from the Ifo Institute points out that while the original law facilitated investment, it also concentrated ownership of East German apartments in West German hands due to financial disparities. Rising construction costs and interest rates reduce the viability of such tax incentives now, a view also supported by Axel Gedaschko of the GdW housing association.

Gedaschko advocates for alternative cost-lowering strategies, including avoiding further tightening of building regulations and improving land use efficiency. Florian Becker from the German Tenants' Association emphasizes supporting housing cooperatives and non-profit housing companies that prioritize affordability over profit. He also highlights the importance of sustained federal investment in social housing, particularly in urban centers, to provide planning security and prevent past pitfalls.

The debate underscores the challenges in addressing Germany's housing crisis, with experts favoring a mix of regulatory adjustments, support for affordable housing models, and continued government funding over simply reviving old tax incentives.