The German federal cabinet has approved a draft law, referred to as the Building Type E Act, aimed at streamlining the rules for residential building construction in the country.

This initiative intends to modify construction contract law and enhance housing development. It aims to address the high costs associated with building in Germany, which contribute to the ongoing housing shortage.

The proposed legislation allows for more flexibility in construction practices by enabling deviations from nonbinding standards. The focus is on promoting straightforward and cost-effective building methods rather than defining specific building types.

The law is expected to simplify planning and construction processes, eliminate unnecessary standards while maintaining safety, and promote efficient material use, ultimately lowering costs for both new and existing projects.

Germany's Federal Minister of Justice Marco Buschmann said: "Building in Germany is too expensive."

He identified this as a significant factor contributing to the domestic housing shortage in many urban areas. The proposed reforms aim to empower building owners to select housing standards that align with their preferences and budgets.

The Federal Ministry of Justice anticipates that the planned reform could lead to potential savings exceeding €8bn ($8.5bn) annually.