Spiking Up Property Taxes to Deter Land Speculation: CDU's Housing Policy Proposal
Increase in Land Subject to Speculation Market Costs by Stettner - Stettner proposes to escalate land investment costs
The Berlin House of Representatives' CDU faction is determined to speed up the construction of apartments on developable land. One solution they're considering is the introduction of a brand-new property tax, dubbed C, to make land speculation an unattractive proposition.
"We're not shy about combating speculation," declared the faction leader, Dirk Stettner, to the German Press Agency. "We aim to put developable land to use and generate living spaces."
Following the nationwide property tax reform that kicked off in January, Berlin has already raised the assessment value for undeveloped land (property tax B). Now, the CDU faction is mulling over whether a new property tax C, targeted at planning-ready, buildable land, would be a more potent tool to persuade owners to start construction swiftly. If they fail to do so, their wallets will feel the pinch.
No Pain, No Gain
The assessments are underway, with the faction leader hinting at a resolution being reached by year's end. "My primary objective is to find a solution this year, draw the results, and then hold talks. There's no debate over making speculation pricier—it's about how we go about it," stated Stettner.
Property tax C is on the table, but if the CDU finds a more effective, efficient, and legally sound approach with property tax B and a higher assessment value, they'll opt for that instead. The examination of a property tax C is part of the coalition agreement between the CDU and SPD.
Caught in the Crossfire, Hamburg
"Our intention is to dissuade land from idling for speculative purposes. To achieve this, we need to wield the available control tools. With the CDU, we seek to stymie speculation and make it costlier because speculation doesn't produce living spaces," noted the politician, alluding to Hamburg, where property tax C has been enforced. However, it's premature to gauge the consequences of this new tax in Hamburg.
In Berlin, a property tax C would impact around 15,000 – 20,000 plots of land, as per Stettner's estimates. A prerequisite would be the initiation of a cadastre, a registry of all undeveloped, buildable land, which would require regular updates. Exceptions would be granted, for instance, for formally buildable land where construction isn't feasible due to various reasons.
Contextual Insights:
- The new property tax reform, valid from January 1, 2025, aims at creating fairer property evaluations by standardizing valuations[2].
- Regional differences might come into play, with municipalities in high-cost cities possibly increasing tax rates, serving as a deterrent for speculative purchases due to their heightened costs[2].
- Berlin and Hamburg have a transfer tax rate of 6%, which may influence property market dynamics by factoring into the cost of acquiring and selling properties[1].
- Stricter energy efficiency standards and depreciation incentives for new constructions could spur sustainable housing development[2][3].
In the context of EC countries, a proposal from the CDU faction could potentially involve financing for vocational training programs to address the skills gap in the construction industry, thus ensuring a steady workforce for the increased apartment construction to combat land speculation.
Following the announcement of property tax reforms and the introduction of property tax C to deter speculation, business leaders and politicians in these countries could find themselves discussing the impact of these taxes on the real estate market as part of the general-news discourse.
