Berlin. With its own housing association (WBG), the federal government wants to make a contribution to tackling the housing shortage in metropolitan areas. The corresponding plans are now taking a decisive step forward.
A joint paper from the Federal Ministry of Construction (BMWSB) and the Ministry of Finance (BMF) states: “In order to achieve the first results in 2027, the WBG’s ability to act should be established as quickly as possible.” And further: “The basis for this is now being created in the 2027 federal budget on the initiative of the BMF and BMWSB in the adjustment meeting of the Bundestag Budget Committee.” In other words: The government wants to provide money for this quickly. The paper is available to the Handelsblatt.
In March, Federal Finance Minister Lars Klingbeil and Federal Construction Minister Verena Hubertz (both SPD) campaigned for the first time in March for a federally owned company that would provide affordable housing. The coalition committee agreed on this in July. The plan was that the company should support social housing construction and the industrial ramp-up of serial construction and be particularly active in regions with a proven housing shortage.
This plan is now being confirmed. The four-page paper dated November 12th states that there is overall agreement on the need for action. “The supply of affordable housing is one of the central social and economic issues of the future.” At the same time, a location problem arises for the German economy if urgently needed skilled workers can no longer be recruited or retained due to a lack of housing.
It goes on to say that a corresponding title will be set up in the individual plan of the Federal Ministry of Construction. The federal government is planning 320 million euros for the new company in 2027. A further 600 million euros are earmarked for the following two years. The funds remain blocked until the budget committee approves. A “structured detailed concept” is required for the establishment of the company as well as “detailed implementation planning” for further expenses.
The federal government is convinced that serial, modular and systemic construction (smsB) offers a promising solution. This refers to technologies in which production is carried out with a high level of prefabrication and components or entire room modules are often manufactured in the factory and only assembled on the construction site. In this way, construction times are shortened, construction costs are reduced and planning security is increased.
However, it is said that no functioning market for SMSB has yet been established in rental housing construction. Despite appropriate technologies and specialized companies, demand is too low to trigger the necessary investments and expansion of supply: “There is no market penetration.”
The four-page paper talks about a “market disruption” that the federal government wants to eliminate. The detailed planning has not yet been completed. However, a rapid start of the WBG is planned next year. According to current ideas, the company is to be set up as a “nationally operating platform and investment company” that will enable a “large number” of additional residential construction projects through SMSB on an industrial scale where there is a need.
It is said that affordable rents should be secured through the standardization and scaling effect as well as federal financing advantages through favorable refinancing conditions. We are talking about a possible “game changer” that would give the construction and housing market new dynamics.
The background is the housing shortage that has existed for years, especially in large cities and metropolitan areas. Too few new apartments are being completed: in 2024 there were 251,900 units and in 2025 only 206,600 apartments. For 2026, the Munich Ifo Institute only expects around 185,000 completed apartments. According to current information from the Pestel Institute, there is currently a shortage of 1.35 million apartments nationwide.
In the future, the WBG should tender construction projects, commission apartments itself through developers or general contractors and hold them for the long term. In addition, every form of cooperation should be made possible, such as project partnerships with private developers, investors or municipal companies.
The paper shows that the WBG should “start as a lean company in the form of a GmbH” in which the federal government has a 51 percent stake. 49 percent are held by private or public shareholders. It is not clear from the paper who that could be. It should be possible to switch to an AG later.
It is said that federal involvement is constitutionally permissible with the focus on establishing a market for SMSB. Experts had previously warned of constitutional risks in a federal housing association because the federal government had no responsibility for housing construction.
The WBG is expected to be operational at the beginning of 2027 and is initially expected to have 30 employees. The organization will be set up in parallel with the first pilot projects. There is a “clear expectation” that the WBG will be able to show initial results in the creation of living space in 2027.
The federal government will provide equity capital of 920 million euros over the next few years, and the other shareholders will provide 900 million. A sum of 16.2 billion euros is planned as debt capital. As a federal company, WBG can benefit from more favorable refinancing conditions than a purely private company, it is said. The federal government secures 100 percent of the borrowed capital with a guarantee.
The financing and construction cost advantages are intended to ensure rent levels “that are, on average, significantly cheaper than in the previous new construction sector,” it is said. No specific information was initially provided. In metropolitan areas, rents for new buildings can reach a good 20 euros and more.
