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Replacement of Heating Systems, Electricity Costs, Housing Crisis: Traffic Light Savings Plan Makes Renting Even More Expensive

“What the traffic light coalition has decided for construction this week is a guarantee of significant rent increases, a program for less new construction, and a setback for heat pumps,” said Axel Gedaschko, President of the Federal Association of German Housing and Real Estate Companies (GdW), to Bild.

Construction Industry Expert Warns of Rising Rents

Following the traffic light coalition’s decisions, the funding for the replacement of heating systems for landlords is being reduced. “The ones who will suffer are tenants with low incomes,” said Gedaschko. Landlords would pass on at least part of the costs to their tenants. “Tenants can expect that with the replacement of the heating system in a multi-family building, an average of 3000 euros will be added to the rent per apartment,” Gedaschko told Bild.

In addition, the federal government has temporarily halted its subsidy program for climate-friendly new construction. However, Germany is facing a shortage of housing. The traffic light coalition had set a goal of implementing 400,000 new housing units per year. In 2023, there were only about 250,000 new residential units. The housing shortage continues to cause tension and high rents. In addition, rising electricity prices due to the abolition of grid fee subsidies. As a result, the traffic light coalition is making the installation of heat pumps less attractive, according to Gedaschko.

Housing Crisis Growing in Germany

The construction industry is warning of a worsening of the tense situation after the subsidy stop for climate-friendly new construction. It is already a reality that every second company in the housing construction sector is suffering from a lack of orders, and the housing crisis in Germany is growing from week to week, according to Peter Hübner, President of the German Construction Industry Association.

“Nothing harms an investment industry like the construction industry more than unclear or constantly changing conditions,” emphasized Felix Pakleppa, Managing Director of the Central Federation of German Construction Industry.

The Federal Association of Free Real Estate and Housing Companies (BFW) stated that the construction industry has been demanding support in the crisis for more than a year. However, there is no sign of reliability and planning security. “The loss of confidence in politics could not be greater,” said BFW President Dirk Salewski.

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