Coalition Agreement 2025: What is Really in Store for the Housing Market

Germany's new coalition government's agreement for 2025 concerning the housing market holds both relief and risks for real estate investors. Key feared measures, such as a nationwide rent cap and the abolition of the 10-year tax-free sale period, have not been included. Instead, the rent brake will be significantly tightened, featuring new fine catalogs and the inclusion of index-linked rents.

The corporate tax rate is being reduced from 15.83% to 13.83%, which is beneficial for property-holding companies. However, according to Gerald Hörhan, CEO of Investmentpunk Academy GmbH and a long-time investor, the agreement lacks substantial incentives for new construction. He argues this will exacerbate the housing shortage in German metropolitan areas.

The agreement also includes a reform or repeal of the Building Energy Act (GEG), citing practical issues with skilled labor shortages. The property tax remains transferable to tenants. The absence of these measures is a notable relief for existing property owners.

While the agreement mentions simplifying KfW funding programs and introducing incentives for new construction, specific details remain vague. Hörhan criticizes that convoluted and unclear subsidy programs fail to stimulate new building activity. He emphasizes that addressing the fundamental housing crisis requires more than regulatory adjustments, demanding clear policies to boost new housing supply.