Brussels, 02/12/2004 (Agence Europe) - The European Commission has authorised the German aid scheme which provides a temporary exoneration from property transfer taxes for housing companies in cases of housing block developments in the new Länder. However, it has decided to open a formal investigation into certain aspects of the regime in the labour market catchment area of Berlin.
The tax on property transfer acts as a brake on the restructuring of the housing market in the new German Länder, where nine such developments were registered between 2000 and 2003, and where housing companies do not have a solid financial basis, the Commission notes. On these markets and against a backdrop of mass immigration and low birth rates, these companies must, for example, contend with high inoccupation rates (14.2% in 2002) and non-payment of rent, representing some 920 million EUR a year. Other challenges to be faced are the costs needed to adapt the housing estate and to demolish part of it (under the "Stadtumbau Ost" scheme).
The Commission notes that five Länder (Brandenburg, Mecklembourg Pomerania, Saxony, Saxon-Anhalt and Thuringia) may benefit from the scheme as regions with standards of living far below the average and with a serious unemployment situation (article 87.3a). The employment catchment area in Berlin, on the other hand, qualifies in order to help the development of certain activities (article 87.3-c). For the first five, the Commission has authorised the aid regime, especially because it will only cause very slight competition distortions and for a limited period of time. For Berlin, the Commission is concerned at the higher total earmarked for the projected aid, despite the fact that the inoccupation and depopulation rates are lower than in the other areas, and has opened a formal investigation.