19. 6. 2024: AGF expert discussion on the new non-profit housing sector

On 19 June 2024, the AGF held an expert meeting on the topic “New non-profit housing and its potential for families”. The external experts Jan Kuhnert (KUB Kommunal- und Unternehmensberatung, Hanover) and Dr Reinhard Aehnelt (Institute for Urban Research and Structural Policy, Berlin) discussed the topic with the AGF member organisations.

The aim of the expert discussion was to gain a better understanding of the concept for a “new non-profit housing” and to discuss its potential for improving the situation of families that are disadvantaged in the housing market. In addition, the current draft law of the federal government was analysed and contrasted with other concepts for “non-profit housing”.

Jan Kuhnert: Concept for a new form of non-profit housing

Jan Kuhnert presented the main features of his 2022 “Concept for a new non-profit housing association”, which he had created for the German Tenants’ Association. His considerations are based on the current housing market situation, with the well-known problems of a lack of housing in urban areas, access problems for discriminated groups in the housing market and too high rental costs for households with low household incomes. A well-designed new system of non-profit housing could be an important building block in the fight against the current housing market problems, especially because of the declining stock of affordable social housing.
His concept aims to create a larger housing market segment with permanently socially bound living space while current programmes only secure social bound housing for low-income households for a limited period of 20-30 years only.

The concept by Jan Kuhnert and the German Tenants’ Association includes two interrelated funding elements: tax exemptions and investment grants / subsidies. In order to maintain mixed socio-spatial structures, a graduated funding system is included as well. The target groups are defined on the basis of three income groups, focussing on those groups having the lowest incomes. However, households with medium incomes should benefit from the funding instruments as well, but to a lesser extent.
The tax relief and investment grants that are forseen in the concept are socially graded. The apartments that would be rented to households in the lowest income group could expect a tax rate of 0% and a construction grant of 20% of the costs. Apartments foreseen for the middle group, would be supported by a tax rate of 25% and a subsidy of 15% , and for the third income group (which extends to households with middle incomes), a tax rate of 50% and a subsidy of 10% are foreseen. In return, the non-profit housing companies would have to guarantee existing rents that are permanently at least 20% below the local comparative rent (OVM).

As socially bound apartments are needed in more relaxed rental markets, too, the concept also foresees respective tax incentives for those markts. However, the financial support of new buildings should be limited to areas with tight housing markets.

Jan Kuhnert compared his concept with the new current draft law on the “support of non-profit housing”, which was adopted by the federal cabinet on 5 June 2024 and aim to implement a corresponding announcement in the coalition agreement. He assumend that the planned amendment to the Tax Code will not have the needed market. He criticised the fact that the government draft is limited to an amendment to the tax code and thus to the means of tax exemption, and that the important second pillar, which is a strong investment programme for the construction of permanently socially bound apartments – is completely missing.

Reinhard Aehnelt: A critical look at the potential of the new concept of non-profit housing

Reinhard Aehnelt presented some critical thoughts on current concepts of “new non-profit housing” and obstacles to its implementation. He emphasised the need to clearly define “non-profit housing”. In his view, non-profit housing must withdraw a critical mass of housing from the speculative housing market. This housing must be made available in particular to those groups that have access problems. It should also contribute to the further development of inclusive forms of housing.

He questioned whether the new non-profit housing could take on the role of a market corrective. A high proportion of socially-linked apartments on the market, of at least 20 to 40 per cent, would be necessary to have a dampening effect on high rental costs and rent increases. Aehnelt described the great uncertainty whether municipal housing companies, cooperatives, foundations, housing groups and community projects currently have any interest in being recognised as potential sponsors under the new non-profit housing model. It is also unclear whether the non-profit housing model should apply nationwide, in large cities or only in areas with tight housing markets. Additionally it seems unclear whether funding should be discontinued in these regions once the regional housing market has eased, or whether it should be provided on a permanent basis.
He saw a risk of misdirected funding in the implementation of the new non-profit housing policy. The funding instruments would require effective control of the companies. This would have to be implemented by tax offices, the establishment of an auditing association or a federal authority, state authority audits, municipal reporting obligations and the involvement of tenant advisory boards, which would be very costly and at the same time counteract the goals of reducing bureaucracy.

Instead of relying too heavily on a single instrument of housing policy, he highlighted that a mix of measures is needed to improve the housing market situation for disadvantaged family forms. This might include, among other, cooperation agreements with housing construction companies, the agreement of occupancy rights with municipal and private housing construction companies, flexible temporary ties in favour of disadvantaged groups, municipal allocation procedures oriented towards the common good, the establishment of municipal foundations and land funds, in addition to the promotion of housing construction oriented towards the common good.


In the discussion, the AGF associations expressed the impression that the needed concepts for a new non-profit housing policy went significantly further than the current government draft. These concepts aim to ensure a sustainable and inclusive supply of housing and to integrate social and family-oriented criteria into the allocation of housing. It was pointed out that it was not clear that there had been an appropriate participation process for the current draft law to better address the needs of the groups concerned.

A key criticism on the federal government’s draft was the lack of an investment programme that could provide the needed impetus for the construction of new social housing. The participants agreed that without sufficient investment incentives, the goals of the new non-profit housing sector would be difficult to achieve. A comprehensive investment programme would not only promote new construction, but could also support the renovation and family-friendly modernisation of existing housing estates.

In the discussion, it was also feared that the expansion of the group of those who are entitled to the tax relief could lead to competition between poor and middle-class households, if there is no corresponding graduation of the tax benefits. Housing companies could be induced to favour middle-class households even more than before, as they would be considered less risky for landlords than low-income houselholds. This “cherry picking” could further reduce both the social mix and the housing supply for households in real need.

In order to take the particular needs of families into account to a greater extent in the current draft, it was proposed that the conditions for having a non-profit status according to German Tax code (§53 AO) could be expanded to include family forms that are particularly disadvantaged. This coud help to better take into account single parents, large families and migrant families and to increase their chances of finding suitable housing.
Such an extension could reduce discrimination against specific family forms on the housing market and promote equal opportunities.

Another demand on the current draft law was to define a minimum amount of rent reduction compared to the average rent that shold be a condition to claim the proposed tax relief. Besdides a clear definition, tt was suggested that it should be legally enshrined to ensure transparency and fairness.

The participants also suggested that the housing ministry should initiate studies to better quantify the problem of discrimination in the housing market for single parents, large families and migrant families. Such studies could help to determine the extent of discrimination and disadvantage and to develop targeted measures to counteract it. This could increase pressure at the municipal level to increasingly take into account the criterion of family forms to a greater extent when allocating apartments and planning floor plans. The National Discrimination and Racism Monitor of the DeZIM could soon provide new data on housing market discrimination against migrant families.

The discussion made it clear that more comprehensive and targeted measures are needed to achieve the goals of the new non-profit housing sector that society hopes for. In particular, greater involvement of civil society in the development of measures, a robust investment programme and consideration of particularly disadvantaged family forms can help to ensure a fair and inclusive supply of housing.