How to Make Affordable Housing Promptly Accessible to Everyone

Professor Sebastian Siegloch, ZEW research department head and professor at the University of Mannheim, ZEW Research Associate Professor Steffen Sebastian from the University of Regensburg, and Professor Jürgen Kühling from the University of Regensburg and the German Monopolies Commission criticise: The current instruments to regulate the market – local reference rent, capping limit and rent control – aren’t socially just, as they benefit not only those in need, but also current tenants and luxury flats. The real problem isn’t housing shortage, but the heterogeneous development of demand: a high vacancy rate in rural areas contrasts with a lack of affordable housing in metropolitan areas. It is particularly difficult to find affordable housing in metropolitan areas because current tenants have no incentive to move out of their current, sometimes very spacious and cheap publicly subsidised flats.

To ensure access to affordable housing for all population groups, Kühling, Siegloch and Sebastian suggest the following measures: Reforming the local reference rent, raising rents for current tenants to the market price level and higher taxation of landlords. The additional tax revenue can then benefit those who are really in need, including medium-income households.