Several media outlets reported this week on the increase in federal funding for urban development. In a press release dated November 18, 2025, the Federal Ministry of Housing, Urban Development, and Construction announced that Federal Minister of Construction Verena Hubertz had signed the administrative agreement on urban development funding for 2026 and 2027 and initiated the countersigning process by the federal states. The administrative agreement creates the legal basis for reliable funding in 2026 and 2027 by the federal and state governments, thus guaranteeing the necessary planning security for local authorities.
For 2026, the federal government plans to increase the funds allocated for urban development to one billion euros for the first time. This represents an increase of 210 million euros compared to 2025. By the end of the current legislative period, the federal government intends to increase this further to a total of 1.58 billion euros, thus sending a clear signal for the sustainable and future-oriented development of cities and municipalities in Germany.
In addition to increasing funding, the new administrative agreement also provides for improvements in the implementation of funding programs. These include, for example, the removal of bureaucratic hurdles and simplified, more flexible planning and reporting requirements. This should enable cities and municipalities to respond more quickly and effectively to current challenges.
“The fact that cities and municipalities will have planning security in terms of urban development funding for the next two years is a positive sign. However, targeted measures to stimulate new housing construction in Germany are at least as important. The so-called construction turbo has provided important impetus in this regard, but ultimately it depends on concrete implementation in the administrative practices of local authorities,” says Jacopo Mingazzini, CEO of The Grounds. “If the opportunities for reducing bureaucracy and accelerating construction projects at the local level are not consistently exploited, the fundamentally positive solutions at the federal level will fail to have any effect.”
