German Government Approves Draft Law for Faster Housing Construction

By Ludwig Burger, Christian Kraemer and Miranda Murray

BERLIN (Reuters) – The German government approved on Wednesday a draft law aimed at accelerating housing unit construction, which has slowed amidst a broader property market crisis. The law seeks to cut red tape that often delays projects for years.

The number of apartments built in Germany fell sharply last year by 14.4%, resulting in only 251,900 units—significantly below the previous government’s target of 400,000 annually. This decline is part of a tentative recovery in Germany’s property sector, which faced its worst slump in decades starting in 2022.

Residential building permits, a key indicator of future construction activity, rose by 4.9% in April, marking the second consecutive month of increases in construction planning, according to data from the federal statistics office.

While the new government has not set a specific target for housing, Chancellor Friedrich Merz emphasized affordable housing as a crucial social issue. He informed parliament that “building, building, building” is essential for making housing more affordable.

The proposed bill would allow municipalities to streamline the approval process for residential buildings and provide more flexibility in development plans, which typically take years to finalize. Construction will be automatically approved if the municipality does not vote against it within two months.

The goal is to expedite construction, enhance urban consolidation, and facilitate the addition of storeys to existing homes or apartments, according to Construction Minister Verena Hubertz. She stated, “We obviously don’t throw all the rules out the window, but we do want to tackle them pragmatically and more quickly.”

In a news conference, Finance Minister Lars Klingbeil announced plans for extensive investments in affordable housing, noting that key figures in draft budgets to be presented next week would reflect this commitment. “With the 500 billion euro special fund, we have also created the necessary conditions for more investment,” Klingbeil added.