In 2014, the state of Berlin set out to boost new housing construction for middle and lower income groups. At the second meeting of the "Forum Wohnen", 25 representatives from the housing industry, interest groups and politics discussed how to achieve this goal. State Secretary Engelbert Lutke Daldrup stated the objective plainly: households with lower incomes should also benefit from new construction.
Three instruments from the Senate
The Senate Department for Urban Development and the Environment had prepared a package of measures:
- Housing construction subsidies: Grants and low-interest loans were intended to make mid-range housing projects financially viable.
- Allocation of state-owned land: Plots belonging to the state of Berlin were to be transferred more frequently to municipal housing companies, speeding up the construction of affordable apartments in Berlin.
- Cooperative land development: When designating new building land, private investors were to be contractually required to include a share of subsidised housing.
In addition, the concept-based allocation procedure was to be applied systematically for state-owned plots. Instead of awarding land solely to the highest bidder, proposals with a social component were to be favoured.
Background: a tense rental market
The initiative came during a period of strong population growth. Affordable housing was becoming scarcer, particularly in central locations such as Neukoelln and Friedrichshain. Rising population numbers increased pressure on the rental market and called for new policy tools.
Outlook for developers
For project developers and investors, the measures opened new opportunities. Those specialising in subsidised or rent-controlled housing stood to benefit from the concept-based allocation process. The construction subsidies could make projects viable that would not have been feasible under pure market conditions.
Lutke Daldrup emphasised that the instruments would be adjusted as needed: "Experience will show which modifications are necessary." A central concern was speeding up approval and processing procedures. The market development of the following years showed that some of these instruments did take effect.
