Unbelievable. Lower Construction Standards in Germany: Building Type E Aims to Make Construction More Affordable

 

“The German government wants to simplify construction and lower standards.

 

The letter “E” stands for simple (Einfach in German). The industry welcomes the government's plans but also warns that the model is not fundamentally sound.

 

Too many electrical outlets, over-engineered soundproofing: High standards make building construction in Germany complicated and expensive. The German government therefore wants to lower construction standards and thus stimulate the housing market. On Thursday in Berlin, the two SPD ministers, Verena Hubertz (Housing, Urban Development and Construction) and Stefanie Hubig (Justice and Consumer Protection), presented the first key points for Building Type E, including a model contract.

 

With the new building type, the focus will be on the essentials: compact floor plans, robust materials, and away from unnecessary features that increase construction costs, Hubertz emphasized. Pilot projects have demonstrated what is possible: "Window ventilation instead of complicated systems, less massive walls, serial construction with streamlined designs." In Hamburg, lower standards have resulted in savings of around 30 percent on construction costs. The regulations are simply too stringent in Germany.

 

High demand for new housing

 

This is not about a fixed building class, but rather about the possibility of deviating from today's very high building standards, which drive up costs and construction time. Building type E should apply to both new construction and existing buildings, according to the presented policy paper. In areas where state building regulations do not provide for specific requirements, only a simplified standard should be required, the ministries explained. A deviation from recognized engineering standards should no longer automatically lead to a defect. Consumer protection should remain guaranteed.

 

Simplified construction is another initiative of the federal government to quickly create affordable housing. In September, the number of building permits issued rose by almost 60 percent year-on-year to 24,400 apartments. However, this figure was the lowest monthly value since January 2012. Last year, 251,900 new apartments were built. Industry estimates predict a further decline this year. The Federal Institute for Research on Building, Urban Affairs and Spatial Development (BBSR) estimates the need for new construction at around 320,000 apartments per year.

 

Especially in cities, housing demand exceeds supply. Analyses of asking rents regularly show a slight increase. According to data analysts at Bulwiengesa, rents for new apartments in Germany's largest cities will rise continuously and are expected to reach an average of more than €21 per square meter by 2029. If real estate companies can build new apartments more cheaply, rents are likely to be lower.

 

Municipalities impose expensive requirements

 

However, construction costs also depend on the requirements set by municipalities, which often demand, for example, the construction of a daycare center or a certain number of parking spaces for new housing developments. Minister Hubertz has therefore already initiated a construction stimulus program, funding social housing with more than €23 billion until 2029. The government has also extended the rent control law. Another draft law, which will contribute to affordable housing through regulations on indexed rents, furnished apartments, and short-term rentals, is expected to be introduced this year.

 

Justice Minister Hubig explained that building type E is "a bit like a construction price control and a construction stimulus in one." Up to now, construction in Germany has "almost always been carried out according to the gold standard." However, good and safe housing can often be more affordable. "With the building type E contract, we want to open up a practical way to forgo high construction standards – if all contracting parties agree."

 

The construction industry praised the project with reservations: "Building Type E can become an effective instrument for making construction affordable again – provided it is implemented consistently," said Felix Pakleppa, Managing Director of the Central Association of the German Construction Industry. "We need the freedom to build cost-effectively and innovatively without getting lost in a thicket of sometimes overly ambitious standards." The German Construction Industry Federation spoke of an important turning point, but with one caveat: These important changes are only possible within the framework of a specific contractual model, and not generally for standard construction. "It must be avoided that this creates an unjustified stigma for a particular building class," said Managing Director Tim-Oliver Müller.

 

The Federal Association of Independent Real Estate and Housing Companies also praised the project. Lawyer Michael Halstenberg sees the key points as progress. "However, the simplifications are linked to the introduction of a new type of contract," said the author of an expert opinion on building type E for the association. Furthermore, details regarding the scope of application and terminology still need to be clarified. The key points are to be discussed extensively with the federal states and business associations. The goal is to have a draft law approved by the cabinet at the end of 2026, said Hubig. This would then have to be debated and passed by parliament.”