The heads of the housing industry recently attracted attention with a fire letter to the federal government. One of the demands to stimulate housing construction was to make use of heritable building rights only in exceptional cases. Hamburg intends to go the opposite way and allocate more land with heritable building rights.
This causes resentment in the city, especially among the housing associations. They have now put the topic on the agenda for the next Hamburg real estate meeting.
The format has been around for 21 years, the next meeting is on February 21st. Among other things, there will be a lecture by Wolf-Georg Ringe. He is director of the Institute for Law and Economics at the University of Hamburg and will assess the consequences of the new regulation on the allocation of municipal land from a legal and economic point of view.
“It is always problematic to intervene in the free rental market,” explains Ringe in advance in an interview with WELT AM SONNTAG. Studies, such as those on the effects of rent controls, would show this regularly. Tenants who already have an apartment or who find an apartment in the newly regulated segment would benefit from the regulations. “However, it has been proven that investors are more reluctant to intervene in the rental market, want to invest less or move to the surrounding area if they find better conditions there.”
In the long term, according to the law professor, there would usually be negative consequences, mostly a shortage of living space and thus rising rents in the free rental market. “That’s why you have to weigh up very carefully whether and to what extent you intervene as a politician.”
Ring describes the idea of controlling rents politically, with the city only allocating its properties as leaseholds, as a “relatively new approach”. In order to be able to say what effect this will have in concrete terms, you have to look at what arrangements are made with the housing construction companies. “A great deal will depend on how the contracts on leasehold rights – and here above all on leasehold interest – are specifically designed.” The specific conditions, such as leasehold interest or value retention, could also make the approach “more attractive” for the housing industry.
As long as the ground rent is to be fixed at the standard land value and it is not clear what will happen at the end of the lease period, “cooperatives in particular will find it difficult to build on these properties,” says Andreas Breitner, director of the Association of North German Housing Companies (VNW). He will sit on the podium at the real estate meeting with other players from business and politics.
Breitner also wants to discuss an idea there that the association believes could be part of a compromise solution. “How about aligning the ground rent with the profit of the respective housing company?” Breitner asks. As a result, companies that charge low rents would have to pay a lower interest rate than those that charge high rents. “The standard land value would then not play a role.”
However, Breitner will also use the forum to make clear the criticisms of the VNW members. The award by way of heritable building rights would only spread high property costs for the companies over a longer period of time. After the end of the heritable building right contract period, the rising land values in Hamburg meant that companies had to pay for the land a second time.
The real estate transfer tax would also be due twice. In addition, companies that want to build on a leasehold property received “worse conditions from the banks”. Breitner: “We are assuming that the building lease alone will double the borrowing costs.”
The city’s compromise with the popular initiative “No profits with land and rent” will exacerbate the problems on the Hamburg housing market and “will not lead to more affordable housing being created. Instead, it significantly endangers the construction of apartments on the city’s land,” Breitner fears. He describes the compromise as “a dramatic wrong decision.” For fear of an upcoming referendum, the Senate “committed urban suicide.”
SPD faction leader Dirk Kienscherf will also sit on the podium. Weeks ago he had offered the housing industry talks to talk about the differences about the new regulations for the allocation of municipal land. It is important to be in dialogue, says Kienscherf, who also sees his participation in the discussion as an opportunity to straighten out misunderstandings.
For example, the idea of not continuing to sell municipal land in large quantities did not first come up in negotiations with two popular initiatives, but was adopted by the citizenship two years ago. “Even then, the new land policy was not very popular with many,” says the SPD parliamentary group leader.
He sees the problems with housing construction elsewhere. “The extremely increased construction cost financing is killing the projects, not that someone is building on a leasehold property.” In the talks, he therefore wants to explore above all how the city can help companies to be able to build more cheaply again.
According to Kienscherf, it could also be a matter of checking existing requirements – such as those on climate protection – for their necessity and effectiveness. “We have to exchange ideas so that we can get back together.”
