Finance Sustainable Buildings
Living Space Bonuses (LSBs) are a set of blended (fiscal, regulatory and information instruments) that reward space-saving living measures and facilitate housing that meets the needs of households at every moment of their lives without a considerable rent increase.
LSB: Moving Bonus is tax deduction amounting from 10 to 20% with a maximum of € 1,500 of the rent per year to individuals that move to smaller apartments and reduce the living space area per capita, which means that the tax burden is reduced by up to € 1,500 per year. The tenant could move to another unit or a lock-off unit or room (subleasing) within another household.
LSB: Exchange Bonus is tax deduction amounting from 10 to 20% with a maximum of € 1,500 of the rent per year to individuals that exchange apartments and reduce the living space area per capita and area of unused space, which means that the tax burden is reduced by up to € 1,500 per year.
In general, instruments seeking efficient use of space require an increase flexibility in building use regulations. This can happen for example through allowing for building micro-apartments, lock-off units, infills or regulating density, number of dwelling units or number of rooms per unit. A shift from ownership to usership should also be implemented.
The right to exchange apartments should be introduced in the tenancy law section of the Civil Code. This will legally allow exchanging flats between the tenants of two different flats without rise of rent (except flats where the land-lord lives in the same house with not more than two flats).
A one-stop shop (OSS) should be created. A municipal contact point should provide citizens with low-threshold access to information and moving, sublease and home exchange advice that contributes to the efficient use of buildings (e.g., financial, and legal advice, building code consultancy, support for relocation, search of smaller apartments, leasing and exchange facilities, monitoring vacancies).
Fiscal Relief for subletting: tax reduction for long-term subleasing room in the own household not for touristic leasing.
Subsidies for small flats: fiscal benefits and subsidies for developers when building small flats (average of 40 m2) if communal facilities are provided. There are bigger advantages for built to rent and/or affordable houses.
To be able to reach this target group, the action point must be local and easily accessible, which is why the municipal/regional level is particularly suitable for implementation. The national government should support this financially, though.
Main target groups: elderly people living on more than 80m2, young families or students. Older people living alone could swap their apartment, which they felt was too big, with young families without increasing rent. Students and the elderly could share apartments. So far, this has already been done voluntarily, primarily within housing associations.
Oriented for rental housing more than for ownership, this tax credit will mostly have a positive impact as it serves to improve floor area per person, the main sufficiency indicator, while adaptable building use regulations could bring more and more affordable flats on the market.
The difficulty of finding free, smaller apartments and the costs of moving (double rent payments due to time overlaps) might be additional obstacles. This instrument solves both the economic barriers and the current lack of information. It could be very appealing for couples with children. However, one fundamental problem remains: many older people do not want to give up their homes. Loans or subsidies for splitting houses could be an alternative in this case.
This measure should be the beginning of a new rental oriented Real Estate Sector, able to provide housing that meets the needs of households at every moment of their lives without considerably increasing rent.
It is more likely that wealthier population groups will benefit from this measure; however, having it in place does not harm lower-income groups. As an additional side effect, this would bring bigger apartments/houses on the market again for larger families or shared housing. Benefitting households that move to smaller dwellings can be an important signal to take up societal debate on per capita living space.
By means of these Living Space Bonus scheme, a more efficient use of living space is incentivised, and additionally, a reduction of the floor area per capita is enabled. Thus, this instrument facilitates housing sizes that meets the needs of households at every moment of their lives without a considerable rent increase.
The Interim Center ZZZ – ZwischenZeitZentrale in Bremen already acts as a Municipal Coordinator Office (MCO) and manages a database and offers legal and financial advice for temporary use of vacant buildings and brownfield sites. It has been very successful as the owners generate income again, their property is cared for and gets a new positive charisma. Unused areas, on the other hand, cause unnecessary costs, attract vandalism, and have a negative impact on the outside world. The entire district can therefore benefit from temporary uses. Vacancies, Brownfield + idea – low rent = maintenance of the property + career opportunity + revitalization
Under-occupied social housing, Germany
The city of Frankfurt am Main has already implemented a bonus program for tenants of under-occupied social housing when moving out of social housing if the current apartment is too large and the new apartment is smaller. In Frankfurt am Main, many tenants live in social housing that has become too big for them, for example, when their children have moved out. These tenants agree to move to a smaller apartment. On the other hand, several thousand families with children are waiting for a 3-, 4- or 5-room apartment, who currently must live in apartments that are far too small. This program helps tenants who are willing to move from the so-called “under-occupied” apartments.
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