The Federal Ministry of Justice and Consumer Protection has presented the long-awaited ministerial draft bill introducing so-called Building Type E. The legislative proposal is intended to establish the legal foundations to noticeably simplify new construction in Germany and reduce costs. In the assessment of the German Property Federation (ZIA), however, the draft in its current form misses the central objective of establishing cost-effective construction as the new standard in the market.
Adherence to existing standards through opt-in rule
At the heart of the industry association's criticism is the opt-in arrangement embedded in the draft. Anyone wishing to deviate in future from existing, often cost-intensive execution standards and build more simply must agree this separately and expressly in text form. General law on contracts for work and services, as well as its strict benchmark for the required quality of a building, therefore remains the legal baseline for every construction project.
From the perspective of the property sector, this model reverses the necessary logic of reform. Instead of legally defining a cost-optimised baseline standard from which contracting parties can deviate upwards if required, the existing high standard remains the legal norm. The parties involved must actively opt downwards, which in practice is likely to cause considerable legal uncertainty and slow down the targeted cost reductions.
- —Unaltered retention of existing law on contracts for work and services as the statutory benchmark
- —Requirement for a separate agreement in text form for simpler specifications
- —Continuation of the existing high construction standard as the reference baseline rather than an exception
ZIA calls for a genuine new normal instead of a special option
ZIA Chief Executive Aygül Özkan emphasised that the decisive step towards affordable housing had not been achieved with this draft. She noted that the industry had wanted a new normal, but was now merely receiving a special option. Anyone relying on Building Type E to make building in Germany fundamentally cheaper would not achieve the desired goal with the proposed regulation alone.
The leading real estate association announced that it would now examine the ministry's draft bill in detail. As the legislative process progresses, the association intends to lobby vigorously for improvements to ensure that the simple and economical planning and construction of buildings is anchored in construction contract law in a genuinely practical manner.
