The new Basel Accord (Basel II) and notably its implementation in an EU-Directive are of utmost importance for the housing sector, because investment in housing is characterised, on one hand, by very high investment and on the other, by a high proportion of borrowed capital.
EU-Directive 2006/48/EG includes exemptions for small and medium enterprises, which are of key importance to our sector. It has been possible for Member States to exclude enterprises with an annual turnover below 500 million Euros from overhead charges for the term of repayment within the internal ratings-based (IRB) approach.
This regulation is especially important for Member States with long term financing practices, such as Germany and Austria, where the financing structure of housing investments is characterised by long term loans guaranteed by residential real estate (RRE). This financing method has proved to be effective to date, in guaranteeing maximum security both for investors in terms of planning and for tenants who are shielded from rent increases which would result from increases in interest rates.
As regards the transposition of Basel II in the EU-directive, the EU-guidelines ensured that , Member States had the option to deviate from the general threshold of 500 million Euros for their total assets and respect instead a threshold of 1 billion Euros instead. This option had not been taken in Germany and Austria, but also in other European countries (Malta, Portugal and Liechtenstein)
In the framework of the consultation process for the transposition of Basel II into the EU-directive, GdW – together with its European partner organizations – had advocated for a regulation which considers adequate parameters for the significantly impacted sector of housing and real estate. Therefore, GdW and GBV are urgently advocating for the safeguarding of the general optional choice also for housing and real estate enterprises corresponding to the characteristics of a medium sized enterprise within the EU-directive 2006/48/EG.
The disadvantage which would be caused by overhead charges for long term repayment would have special negative effects for housing and real estate enterprises. Furthermore, the current financing practices have proved through past and present experiences to be low-risk.
CECODHAS fully supports its member organisations GdW (Germany) and GBV (Austria) in demanding this optional choice to be maintained for all member states.
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