New coalition agreement in Germany is in place – What are the likely effects for the real estate sector? | Allen & Overy LLP

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The 177-page coalition agreement of the three parties to form the new government in Germany provides for many innovations in the German real estate sector. In the future, construction and housing must be affordable, climate neutral, sustainable, barrier-free where possible, innovative and with vibrant public spaces.

On November 24, the parties of the new government coalition presented their coalition agreement in Berlin. In addition to the creation of 400,000 new residential units per year, it provides for comprehensive legislative changes for the construction and housing sector. For example, tax loopholes related to acquisitions of real estate by corporations in equity transactions have yet to be filled in order to finance a planned facilitation of the acquisition of owner-occupied residential properties. The newly created Ministry of Construction and Housing goes to the Social Democrats.

I. Housing

The stated goal of the new coalition is to build 400,000 new homes per year, 100,000 of which are subsidized by the state. In order to be able to implement this plan, the parties are considering a new “Affordable Housing Alliance” with all important stakeholders. The further introduction of construction, housing cost and climate control as well as a register of potential development spaces to be kept at the municipal level should create long-term planning perspectives for the construction sector. construction and real estate. As a financial incentive, straight-line depreciation for new home construction should be increased from two to three percent.

In order to promote the acquisition of real estate in the private sector, the granting of capital replacement loans should be facilitated and the Länder should be allowed to structure real estate transfer rights more flexibly by means of an allowance. As a counter-financing, the tax loopholes linked to the acquisitions of real estate by companies in the context of equity transactions have yet to be filled.

Illegal financing of real estate must be combated by introducing a tax certificate for buyers of commercial and private real estate from abroad for all real estate acquisitions in Germany. Cash payment for the acquisition of real estate will no longer be allowed in the future.

II. Climate protection in the building sector

Climate protection is another central topic of the coalition agreement.

In this context, the implementation of a digital passport for building resources aims to facilitate the first big step towards a circular economy in the building sector.

In addition, the scheme to promote the construction of new housing that meets the Kfw 55 standard for energy-efficient buildings (EH 55), which expires in 2022, must be replaced by a new subsidy program. The Building Energy Act (GEG) must be amended so that from 1 January 2025 each newly installed heating system must operate on the basis of 65% renewable energy; in addition, from January 1, 2024, all replacement parts intended for use in extensions and major conversions of existing buildings must comply with the EH 70 standard. The standards for new buildings set out in the GEG will be implemented. in accordance with the KfW EH 40 standard by January 1, 2025.

In view of rising heating costs, the parties intend to consider a swift shift to a new rent concept whereby base heating costs will be included in the base rent. At the same time, the modernization tax for energy-related measures must be rearranged to be part of this new system, and in this way a fair distribution of the CO2 price to be paid between owners and tenants must be achieved. . From June 2022, a multi-level model based on the energy classes of buildings is to be introduced, which will govern the attribution of the CO2 price in accordance with the Fuel Emissions Trading Act (BEHG). If this deadline for introducing the tiered model cannot be met, the parties expect owners and tenants to share equally the costs of increasing the price of CO2.

III. Other planned legislative changes

From a tenant protection perspective, the parties intend to assess existing tenant protection rules and consider extending them. In this context, qualified rent indices become compulsory for municipalities with 100,000 inhabitants or more. In addition, a review of the existing lease law, in particular the existing regulations on grace period payments, is planned.

A global modification of the construction code (BauGB) is planned with the aim of digitization and simplification. This aims to facilitate the complete digitization of urban land use planning procedures as well as the future mobilization of building land and to optimize the existing procedural structures in terms of timing. An extension of the provision of § 13b BauGB is not foreseen. At the same time, it is planned to abolish the time limits provided for the corresponding provisions of the law on the mobilization of building land.

Finally, it is necessary to examine to what extent the judgment of the Federal Administrative Court of November 9, 2021 on the communal pre-emption right in areas with conservation status could lead to the need for legislative action (we have pointed out).

In addition, a reform of the official scale of fees for architects (HOAI) is under consideration.

As part of a forward-looking urban development, the parties also endeavor to establish a comprehensive assessment of noise in urban areas, which should result in a modernization of the technical instructions on noise protection. In addition, the introduction of zones for internal urban development measures should be considered.

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