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Germany’s housing crisis has entered a critical phase, with high construction costs and burdensome regulations threatening to stall development. In a bid to tackle this, the government is pressing ahead with its Gebäudetyp E Act, which aims to streamline construction by cutting down on non-essential standards. But while some see it as the hero of affordable housing, others are already dusting off their law degrees. So, will this new framework cut through the red tape, or just get tangled up in it?
Gebäudetyp E, or "Building Type E," is the German government’s bold plan to reduce building costs by allowing deviations from what are known as comfort standards—rules enshrined in the building code that dictate everything from the number of sockets in a room to the ideal bathroom temperature. These are part of the DIN Standards (Deutsches Institut für Normung), which are essentially the gold standard for ensuring quality and safety in construction. While necessary, these rules have become a bureaucratic beast, adding complexity, cost, and delays to projects. The Gebäudetyp E Act aims to make certain comfort standards optional, offering developers more flexibility and potentially saving up to 10% on costs.
But the law, championed by Federal Building Minister Klara Geywitz and Federal Minister of Justice Marco Buschmann, is still in draft form and expected to take effect in 2025. That means the industry has time to either prepare for a construction revolution—or a courtroom battle.
Florian Nagler and the ‘Einfach Bauen’ concept
At the heart of the Gebäudetyp E debate is Florian Nagler, an architect who has long championed Einfach Bauen ("Build Simply"). Nagler is not shy about criticizing modern construction’s love affair with technology and rigid adherence to DIN standards, which, in his view, have led to costly, high-tech buildings that are overly complex to maintain.
“Modern, robust houses can be built with less technology and more focus on structural integrity,” says Nagler. His Einfach Bauen concept is the backbone of the Gebäudetyp E framework, advocating for buildings that prioritize simplicity without compromising on energy or safety standards. He believes we can cut costs by doing away with unnecessary technical requirements, like highly specified sound insulation or automatic sun protection systems. According to Nagler, simplicity is not a compromise—it’s a long-overdue return to sanity.
While Nagler leads the philosophical charge, Gebäudetyp E has also caught the eye of some of Germany’s major industry players. Kingstone CEO Dr. Tim Schomberg calls "supported housing one of the most successful core products in the real estate market" and believes that Gebäudetyp E could help trim down project costs, especially in segments where affordability is key.
Vonovia and Primus Valor are eyeing the potential cost savings as well. Gordon Grundler, CEO of Primus Valor, points out that "investors are increasingly recognizing the opportunities in residential real estate" and are ready to capitalize on the lower costs promised by the Act. His company has already placed €50 million into real estate funds with modernization options across Germany, suggesting that interest in leveraging the new framework is growing.
Meanwhile, Quantum has hit the ground running, recently purchasing 320 apartments in Munich. The deal, reportedly at a multiple of 32 times the annual rent, highlights the growing interest in finding creative ways to cut costs, especially in high-value markets like Munich.
Aengevelt and the legal quagmire of Gebäudetyp E
However, not everyone is popping the champagne. Aengevelt Immobilien, one of Germany’s oldest real estate firms, isn’t convinced Gebäudetyp E will be the magic wand the industry is hoping for. Dr. Wulff Aengevelt, managing partner of the firm, warns that while the law aims to reduce costs, it could actually do the opposite by creating legal uncertainty. “A system that was supposed to simplify construction could end up creating more legal headaches for builders and planners,” Aengevelt explains, dubbing the Act a "job creation programme for lawyers, surveyors, and judges."
The issue, according to Aengevelt Research, is that the Act fails to clearly define which standards can be deviated from and under what conditions. This legal ambiguity could scare off developers, who prefer to stick with the devil they know. Aengevelt predicts that many developers will steer clear of Gebäudetyp E altogether, choosing the safer, albeit more expensive, option of adhering to the full DIN standards.
For Federal Building Minister Klara Geywitz, Gebäudetyp E represents a high-stakes balancing act. On one side, she must push for a regulatory environment that speeds up construction and lowers costs—an urgent need, given the housing shortage. But on the other side, she faces the risk of legal chaos if the framework isn’t carefully implemented.
Politically, Geywitz is under intense pressure. Critics have already slammed her for suggesting that those struggling to find housing in cities should move to rural areas. Her statement, meant to highlight the empty homes in less populated areas, didn’t go over well with urban voters who don’t want to commute hours just to find affordable housing. Now, she has to prove that Gebäudetyp E can solve the urban housing crisis, without leaving developers and courts tangled in legal disputes over what counts as a “comfort” standard versus a “safety” requirement.
Economically, Geywitz must also contend with Germany's broader challenges, like inflation in construction materials and rising interest rates, which are driving up costs regardless of regulations. In short, Geywitz is walking a tightrope—simplify too much, and the courts are flooded with lawsuits; simplify too little, and developers won’t bother adopting the new framework.
Early developer response: cautious but hopeful
While the law is still in draft form, companies like Quantum, Primus Valor, and Vonovia are already positioning themselves to take advantage of the potential cost savings. However, many developers remain cautious, waiting to see if the legal kinks will be worked out before jumping in with both feet.
The real challenge for early adopters will be navigating the uncertainty around the law’s implementation. Developers are eyeing the possibility of reduced costs but are hesitant to commit without clearer guidelines. Some projects, especially in the affordable housing sector, are exploring how Gebäudetyp E might be applied, but few are willing to risk becoming guinea pigs until more legal clarity is provided.
Investors like Tilman Hickl of H2i see opportunity in Gebäudetyp E, particularly for affordable rental housing. However, they’re also wary. As Hickl puts it, "We will examine these potential savings in construction costs closely," but he remains cautious, noting that "the complexities of the legal framework" could undermine the Act’s effectiveness. For external investors unfamiliar with Germany’s legal landscape, navigating the intricate and sometimes contradictory nature of the DIN standards and comfort versus safety distinctions could be a major hurdle.
Moreover, if legal challenges begin to pile up, returns could be delayed or even diminished as developers face increased legal fees and project hold-ups. In this environment, even the promise of a 10% cost reduction might not be enough to outweigh the risks for more conservative investors.
Is Gebäudetyp E the solution Germany needs?
The Gebäudetyp E Act is undoubtedly a bold move to tackle Germany’s housing shortage. By loosening the grip of comfort standards, it has the potential to make construction cheaper and faster. However, its success hinges on whether the legal framework can be clarified and whether developers are willing to take the plunge despite the uncertainties.
While some, like Florian Nagler and Tilman Hickl, see great potential in the initiative, critics such as Aengevelt Immobilien warn that it could create more problems than it solves. As Germany continues to grapple with its housing crisis, the true impact of Gebäudetyp E remains to be seen.
What’s clear is that simplifying building regulations is only half the battle—the government must also ensure that developers, investors, and courts have the tools they need to navigate this new legal landscape.
