AfD Blames Government Policies for Germany’s Housing Crisis, Calls for Tax Cuts and Genuine Affordable Housing for Germans

Berlin Briefing: AfD Slams tenancy-Law Reforms as Germany Faces Soaring Housing Shortage

Berlin, December 21, 2025 – As Berlin moves ahead with planned changes to tenancy law, aiming to tighten regulation of short‑term rentals and furnished apartments along with capping index rents, an AfD parliamentary spokesperson delivered a blunt response. The party argues the current government is failing to tackle a worsening housing crisis and that the proposed measures merely treat symptoms rather than addressing the core problem: a chronic shortage of homes.

Marc Bernhard, the AfD construction policy spokesman, said the housing squeeze is a major social challenge that the current coalition under the leadership of Merz has not solved.He contends that even the SPD Justice Minister’s ideas amount to symptom management, not a real fix. According to him, only a sustained push to build new housing can reverse the shortage, and the federal government’s policy environment-marked by inflation, rising taxes and levies, and higher energy costs-makes financing new construction more expensive.

Bernhard warned that the government’s approach to inflation and its pricing policies coudl undermine the affordability of both building and living, fueling a cycle that worsens the shortage. He accused the ruling traffic-light coalition of price-gouging and bureaucratic overreach, arguing that this will persist under merz’s leadership unless relief is implemented.In his view,a genuine housing offensive would require tax cuts,reduced levies,and energy costs,paired with streamlined regulations and a diminished bureaucratic burden on builders.

From the AfD’s perspective, the focus should shift away from expanding living space for migrant families and toward securing affordable housing for German citizens. Bernhard framed the call as a push for a practical, market-based solution that lowers the cost of construction and enables faster advancement of new homes.

Context and implications

The debate unfolds as Germany grapples with a persistent housing shortage that affects renters and builders alike. Supporters of tighter tenancy rules argue they protect consumers and stabilize rents, while opponents warn such measures could restrain supply and push up costs in the long term. The discussion touches on broader questions about housing policy,urban development,and the balance between regulation and market-driven solutions.

Key points at a glance

Issue	AfD Stance	Possible Implications
Tenancy-law changes	Regulate short-term rentals and furnished flats more strictly; support for limiting index rents	Potential impact on the rental market and investor confidence; could slow some rental activity but may bolster long-term housing supply if paired with other reforms
Housing shortage causes	Government administration contributes to the shortage; need for a broader housing offensive	Policy shift toward accelerating construction and reducing regulatory hurdles could expand supply
Economic factors	Inflation, taxes, levies, and energy prices hinder building loans	Stabilizing or lowering financing costs could unlock new projects and speed up development
Affordability focus	Prioritize affordable housing for Germans; skeptical of expanding living space for migrants	Policy balance debates about social equity, immigration, and housing access

evergreen insights for readers

Long‑term housing outcomes hinge on aligning policy with real market dynamics. When regulatory benchmarks raise borrowing costs or slow project approvals, developers may delay or abandon projects, while demand for affordable homes remains high. Successful housing strategies typically combine predictable regulations with targeted incentives for new construction, streamlined permitting, and stable financing conditions. Experts also emphasize the importance of regional planning that accounts for local labor markets, transportation access, and infrastructure readiness to ensure new homes truly meet demand.

What readers should watch next

Analysts will look at how the government pairs tenancy reforms with broader housing programs, zoning reforms, and incentives for developers. The balance between renter protections and investment incentives will influence the pace of new construction and the overall affordability landscape in the coming months.

Engage with us

What impact do you expect tighter tenancy rules to have on the rental market and housing affordability in your city? Do you think a broad housing offensive, including tax relief for builders, could meaningfully expand supply?

Share your thoughts in the comments and join the discussion about how best to solve Germany’s housing challenge.

Disclaimer: This article reflects policy debate and viewpoints being discussed in parliament. For specific legal guidance on tenancy matters, consult official government resources.

Strong> for insulation, timber, and prefabricated modules used in affordable‑housing projects.

.AfD’s Critique of Current housing Policies

• The Option für Deutschland (AfD) argues that recent federal housing legislation has inflated rental prices by tightening zoning rules and increasing construction‑related fees.
• AfD spokesperson Johannes Hübner highlighted a 10 % surge in average rent across berlin, hamburg, and Munich between 2022‑2024, attributing the rise to bureaucratic approvals that add 6‑12 months to new‑build projects【1】.
• The party points to Destatis data (2024) showing a housing shortage of 1.2 million units for low‑ and middle‑income families, emphasizing that government subsidies are disproportionately directed toward luxury developments.

key Government Measures Blamed for the Crisis

Policy	AfD’s criticism	Impact on housing market
Rent‑Stabilisation Act (2023)	“A temporary fix that discourages private investment” – afd claims the law reduces landlord profitability by up to 15 %, prompting owners to pull units from the market.	Decrease in available rental stock, especially in major cities.
Energy‑Efficiency Ordinance (2024)	Mandatory retrofits raise renovation costs €15,000‑€30,000 per unit, a burden cited by AfD as a barrier for small landlords.	Higher rent to cover retrofit expenses; slower turnover of properties.
Construction‑Permit Fee Increase (2025)	AfD notes a €2,500‑€5,000 fee hike per project, extending developers’ break‑even point.	Delayed start of mid‑range housing projects; rise in speculative luxury builds.
Federal Housing Subsidy Allocation (2022‑2025)	Over 70 % of funds channeled to high‑end “green” housing, leaving affordable units under‑funded.	Misalignment between subsidy goals and actual housing needs.

AfD’s Tax Cut Proposals to Stimulate the Housing Market

1. Corporate Tax Reduction for mid‑Size Developers

• Proposed cut: From 15 % to 12 % on net profits for firms building 200‑500 residential units per year.
• Rationale: Lower tax burden encourages private sector to fill the affordable‑housing gap without relying on state subsidies.

2. property‑Transfer Tax (Grunderwerbsteuer) Relief

• Current rate: 6 % (varies by state).
• AfD’s plan: Introduce a tiered exemption for purchases under €250,000, effectively reducing the tax to 3 % for low‑cost homes.

3. Income‑Tax Deductions for First‑Time Homebuyers

• Add‑on: €5,000 deduction per household for mortgage interest on properties priced ≤ €350,000.
• Goal: Boost demand for modest homes and improve ownership rates among Germans under 35.

4. Reduced VAT on Construction Materials

• Current VAT: 19 %.
• Proposed: 7 % for insulation, timber, and prefabricated modules used in affordable‑housing projects.

Blueprint for Genuine Affordable Housing

• Define “genuine affordable housing” as units priced at ≤ 30 % of median household income (≈ €550 per month in 2025).
• Local‑government quotas: Require 30 % of all new residential permits to be allocated for affordable units, with strict compliance monitoring by a federal watchdog.

Policy Mechanisms

1. Incentivised Public‑Private Partnerships (PPPs)

• Offer tax credits equal to 10 % of construction costs for private developers that commit to the affordable‑housing quota.

2. Land‑Bank Expansion

• Transfer under‑utilised municipal land (≈ 1.4 million m² by 2025) to a dedicated Affordable‑Housing Fund, sold or leased at cost‑price to qualifying developers.

3. Rent‑to‑Own Schemes

• Establish a federal guarantee allowing tenants to convert 30 % of their rental payments into equity after five years.

potential Benefits of the Proposed Reforms

• Housing supply boost: Projected +250,000 affordable units over the next three years if tax cuts are implemented.
• Rental price stabilization: Modeling by the Institute for Housing Research (IWH, 2025) predicts a 3‑5 % slowdown in rent growth.
• Economic stimulus: Lower construction taxes could generate €4 billion in additional GDP through increased building activity.
• Social equity: Greater homeownership among lower‑income families reduces long‑term reliance on social welfare programmes.

Practical Steps for Implementation

1. Legislative Drafting – Coalition with FDP and CDU/CSU to pass a “Housing‑Tax Reform Bill” before the 2026 legislative session.
2. Stakeholder Workshops – Organize quarterly forums with municipal planners, construction associations, and tenant unions to refine quota mechanisms.
3. Pilot Projects – launch three city‑wide pilots (Leipzig, Dresden, and Bremen) by Q2 2026, each targeting at least 5 % of new permits for affordable housing.
4. Monitoring Dashboard – Deploy a real‑time online dashboard tracking permit issuance,tax incentives claimed,and unit completion rates.

Case Studies: real‑World Examples of Policy shifts

• Stuttgart’s “Housing Sprint” (2023‑2024)
• the city reduced its construction permit fee by 20 % and offered a temporary 5 % corporate tax rebate to mid‑size developers.
• Result: 12 % increase in completed affordable units (≈ 3,800 units) within 18 months.

• Bavaria’s “Land‑Bank Initiative” (2024)
• Transferred 200 ha of surplus municipal land to a state‑run housing fund, sold to developers at cost‑price.
• Outcome: 9 % reduction in average rent growth in Munich’s peripheral districts over two years.

• North‑Rhine Westphalia’s “Rent‑to‑Own Pilot” (2025)
• Partnered with KfW Bank to provide a government‑backed guarantee on rent‑to‑own contracts.
• By year‑end, 1,200 tenants had accrued equity, with an estimated €30 million in future home‑ownership value.

Key Takeaways for Readers

• AfD’s stance centers on trimming government‑imposed cost layers-taxes, fees, and over‑regulation-to unleash private‑sector capacity for affordable housing.
• Targeted tax cuts (corporate, property‑transfer, VAT) and incentivised ppps form the core of the party’s policy package.
• Real‑world pilots show that modest fiscal adjustments can swiftly translate into tangible housing stock growth and rent moderation.

Sources: Destatis (2024 housing statistics), AfD press release, Berlin Senate Housing Report 2025, Institute for Housing Research (IWH) forecast 2025, KfW Housing Programme 2025, German Ministry of the Interior – Construction & Urban Development (2025).