Ger­many plans tax breaks, ex­tra child al­lowances for home­own­ers

Financial Mirror (Cyprus) - - FRONT PAGE -

Real es­tate in­dus­try ex­perts in Ger­many are in a state of dis­agree­ment over plans sug­gested by Fed­eral Con­struc­tion Min­is­ter Hendricks (SPD), which would see the state co­fi­nance fam­i­lies’ home pur­chases, and pro­pos­als from the CDU/CSU to in­tro­duce an ex­tra child tax al­lowance for home­own­ers.

Ac­cord­ing to re­ports in Frank­furter Al­ge­meine Zeitung, as well as in Im­mo­bilien Zeitung, Michael Voigt­lander, from the Cologne-based In­sti­tut der deutschen Wirtschaft (IW), spec­u­lated that the pro­pos­als may largely be the prod­uct of elec­tion­eer­ing, but stressed that the ideas were at least head­ing in the right di­rec­tion.

He ex­pressed his re­lief that, af­ter so much at­ten­tion has been given to the rental hous­ing mar­ket, politi­cians now seem to be turn­ing their at­ten­tion to home­buy­ers and own­ers.

Voigt­lander com­plained that the amount of per­sonal sav­ings needed to buy a home in Ger­many are too high. The av­er­age Ger­man home cur­rently costs EUR 250,000, which means that a fam­ily needs to save EUR 75,000 for their 20% down­pay­ment and the 10% they will need to cover an­cil­lary pur­chase costs, a fig­ure which is, in many cases, sim­ply un­re­al­is­tic.

Nev­er­the­less, he be­lieves that any form of state sub­sidy or a pro­gramme to pro­vide govern­ment-funded eq­uity loans would be too ex­pen­sive. Voigt­lander thinks it would make far more sense to di­rect ef­forts to­wards re­duc­ing an­cil­lary pur­chase costs, such as land and prop­erty trans­fer taxes.

One pos­si­ble ap­proach would be to spread the pay­ment of land trans­fer taxes over a ten-year pe­riod.

Reiner Braun from em­pir­ica re­mains am­biva­lent to the pro­posal as he be­lieves it does noth­ing to com­bat the un­der­ly­ing short­age or af­ford­abil­ity of build­ing land and in­stead merely treats cos­metic symp­toms. As a re­sult, he thinks that such an ap­proach would only re­ally make sense if it were tar­geted ex­clu­sively at those high-price re­gions where fam­i­lies have to com­pete with prop­erty in­vestors, and not ev­ery­where.

The ZIA Ger­man Prop­erty Fed­er­a­tion greeted the min­is­ter’s plans. The fed­er­a­tion be­lieves that younger home­buy­ers would ben­e­fit via the in­clu­sion of prop­erty in their re­tire­ment plan­ning. At the same time, it would make no sense if any sup­port for home­buy­ers were then can­celled out by in­creases in prop­erty taxes or changes to mort­gage lend­ing reg­u­la­tions.

In a sep­a­rate re­port, the FAZ quoted Michael Psotta as say­ing that such ‘gifts’ could soon add up to bil­lions in li­a­bil­i­ties for tax pay­ers.

He also cau­tioned that, if the mea­sures are in­tro­duced uni­ver­sally, i.e. with­out up­per in­come thresh­olds, there is a se­ri­ous risk that they would end up largely sub­si­dis­ing wealth­ier house­holds who would have had no prob­lem buy­ing prop­erty any­way.

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