Bavaria: New problems for affordable rents – Bavaria

High prices, hardly any funding opportunities, a shortage of skilled workers: the association of Bavarian housing companies warns of a slump in new projects – although record numbers are being reported.

Representatives of the housing industry warn that, among other things, a lack of funding opportunities and price increases are making it increasingly difficult to create affordable housing. The first companies would already put their project planning on hold, said Hans Maier, director of the Association of Bavarian Housing Companies (VdW Bayern), on Monday. “Our problem is the calculation.” Above all the most recent KfW funding freeze at federal level make planning difficult. However, due to high inflation, the Bavarian subsidy conditions were not always sufficient to enable socially acceptable rents. According to the VdW, around 500 cooperatives as well as church, state and municipal housing associations are organized.

The industry has been struggling with rising construction prices for years, for example for steel or wood. The Ukraine war additionally fueled this development. Other trades are therefore also demanding more help from politicians: the state association of Bavarian building guilds spoke out last week in favor of “reliable and consistent new construction funding”. Other hurdles on the way to affordable housing are delivery problems caused by the war and Corona, strict regulations for climate-friendly construction, high land prices, rising interest rates and the shortage of skilled workers. The goal once proclaimed by the state government to build 70,000 new apartments a year is likely to become increasingly difficult to achieve. For 2020, the statistics list around 64,000 construction completions across Bavaria, figures for 2021 are not yet available.

Problems do not only exist in metropolitan areas

The need is no longer only great in metropolitan areas. Representatives of the housing industry from Upper Franconia recently traveled to Munich to hand over a resolution for more affordable housing in the region. It calls for a “strengthening and reorientation of a Bavarian modernization program” and “subsidy rates adapted to the rent level”, which take into account the different market conditions within Bavaria. In Upper Franconia, for example, there is a “demographic issue,” says Rainer Mayerbacher from the Coburg district housing association: Tenants are getting older and staying at home longer. At the same time, it is important to convert their apartments to be climate-neutral, for example with modern heating systems. In many places, however, this can only be financed by increasing rents – which in turn cannot be the point of the matter. Mayerbacher fears that social housing construction will come to a standstill. “It’s not enough to define goals. We need support programs that can be planned over a long period of time.”

The VdW is therefore looking rather bleakly into the future – despite its own record numbers. Also because many projects were completed last year that were put on hold when the pandemic began, the member companies were able to report the highest number of new buildings since 1995. In total, they completed around 5,200 apartments, 3,200 of which were publicly subsidized housing. For the future, association chief Maier expects stagnation, also due to the lack of predictability. “We need funding now for what we’re going to build next year,” he said. In addition, more investments could flow into the renovation of existing apartments. Bavaria’s Economics Minister Hubert Aiwanger (FW) also warned of a “slump in the construction industry” at the weekend. An immediate measure could be a reduction in energy prices, especially for diesel.

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