Housing market in Frankfurt: investors are stepping on the brakes
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fromDennis Pfeiffer-Goldmann
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Political debates about even stricter requirements for the housing market in Frankfurt are unsettling landlords and property developers to migrate to the surrounding area
Frankfurt – The political discussion about even clearer guidelines for the housing market in Frankfurt is putting medium-sized investors and landlords on the brakes. This is shown in a survey by the owners’ association Haus & Grund among members. The debates about rent caps, rent brakes and the like have multiple negative consequences: Investors are leaving and it will be even more expensive for tenants.
The numbers are alarming: only 20 percent of private apartment owners in Frankfurt can currently imagine buying or building more rental apartments. The rest of them stopped investing. “The situation is extremely problematic,” says Jürgen H. Conzelmann, the Frankfurt chairman of Haus & Grund. He warns politicians against further interventions: “If you strangle that even more, the market will tip over.”
Housing market in Frankfurt: “If you strangle that even more, the market will tilt”
How rent prices and political debates about even stricter regulation of investments in apartments in Frankfurt are, Haus & Grund surveyed its members for the first time from mid-July to early September. The association received 1313 responses. 57 percent of all around 360,000 apartments belong to private owners, 38 percent are privately rented apartments.
The tenants often live very cheaply there, as small landlords rarely die more rigorously, emphasizes Conzelmann. This is different from housing corporations, who often exhaust the maximum allowable increases year after year. The social approach of many small landlords does not cheat politicians with their regulations, criticizes the Haus & Grund boss. “Far too much is being sheared together with the same brush.”
Frankfurt: High rents and stricter requirements – “The private landlord is scorned”
But now small landlords are also reacting: 19 percent have increased rents as a precaution due to government regulation. “It was the political discussions that made them think about rent increases in the first place,” says Conzelmann. That was shown by Haus & Grund in the need for advice. Behind this is the rent brake: Landlords have only been allowed to increase rents city-wide to a limited extent since mid-2019.
At the same time, the stricter regulation is slowing down the willingness to invest: According to the survey, 40 percent of landowners have postponed or canceled planned investments in their apartments. While something like this only “affects residents, the tense situation on the housing market threatens to worsen. 53 percent of owners do not want to invest in new apartments, a further quarter are undecided. The reasons are the fear of further regulation of the rental market and stronger local regulations such as environmental protection, parking space and design specifications. “The private landlord is scorned,” says Conzelmann. Instead of building, many owners are more likely to think of selling.
City of Frankfurt unilaterally only subsidizes social housing
For small and medium-sized private investors, the regulation makes it almost impossible to create affordable living space, warns the association chairman. Only publicly subsidized housing associations could afford that. The city unilaterally only subsidizes social housing and Hofiere large investors who built high-rise luxury apartments. “The entire lower middle class is being forgotten,” says Conzelmann. “They also need apartments that they can pay for.”
The money to invest is still there. But the investments are migrating: only 16 percent of the owners continue to invest in Frankfurt, 40 percent in the surrounding area. “This is totally new,” says Conzelmann. “In Frankfurt only the bare essentials are done now.” In the surrounding area, for example in Bad Vilbel, building permits would be issued much faster and more flexibly.
The chairman of the association therefore urges the new city government to remove restrictions. It would be easier to add storeys and loft extensions, currently they are being prevented by environmental protection rates. Politicians should not have “nonsensical discussions like those about the Günthersburghöfe” – the building area in the north end, which was once promoted by the Greens, had overturned the green base in 2019. Conzelmann said that “concrete proposals should be put on the table as to how people can get into apartments”, that is, like the north-west part of the A5. “Three to four large residential areas are possible in Frankfurt.” (Dennis Pfeiffer-Goldmann)