Germany plans tax incentives to build new homes for refugees

[BERLIN] Germany plans tax incentives for building apartments over the next three years, to avoid housing shortages as an influx of refugees increases demand, the Finance Ministry said in a letter seen by Reuters on Thursday.

The government expects about one million asylum seekers this year, far more than any other European country. German politicians are under pressure to accommodate and integrate the new arrivals.

Secretary of Housing Barbara Hendricks estimates that some 350,000 apartments will be needed each year, and only 245,000 were built last year. The tenant association DMB said Germany, which has roughly 40 million homes, needs 800,000 flats.

In a letter to Hendricks, seen by Reuters, Finance Minister Wolfgang Schaeuble suggested the government should let owners of new apartments write 10 per cent of their costs off their taxes.

The incentives would be limited to areas with housing shortages and applicable only if the apartment was built or bought from 2016 to 2018, Schaeuble said in the letter.

Germany's construction industry is benefiting from a spike in state spending on refugees. The latest Ifo survey showed the business climate in the sector rising to its highest level since German reunification.

The BvB federal construction industry association expects 2.5 per cent sales growth next year, a faster rise than this year, helped by a boom in new apartment building and housing demand from migrants.

Still, the industry wants more government funding for social housing and has put forward an idea to build purpose-designed houses for refugees and lower-income families.

REUTERS