Housing policy: government presents new building subsidies

With a new funding program, the federal government wants to boost the sluggish housing construction in Germany and at the same time help to meet the climate targets. Federal Building Minister Klara Geywitz (SPD) announced on Wednesday that there would only be low-interest loans for private individuals and investors building and buying particularly climate-friendly houses, but no more grants.

Geywitz said in Berlin, with a view to the sharp rise in lending rates, that one is starting where the greatest concerns are at the moment, namely the question of interest rates.

KfW is waiting for applications from March

The new funding with a volume of 750 million euros per year ties government support to high energy standards and a seal of quality for sustainable buildings. Builders and first-time buyers can submit applications to the state development bank KfW from March. The construction and housing industry criticized the funding as too low and the requirements as too high. The goal of the federal government of 400,000 apartments per year cannot be achieved by far.

“Climate-friendly building is no longer an optional decision, but a must. Anyone who builds today to save money is damaging the climate and their wallets with horrendous additional costs,” explained Geywitz on Wednesday. “We want the entire building stock to be climate-neutral by 2045.” The new KfW-subsidized interest rate reduction will help you start financing your own home or apartment building.

With the new program, the federal government is promoting the new construction and initial purchase of climate-friendly residential and non-residential buildings that meet the particularly strict EH 40 energy standard. That means they only use 40 percent of the energy that a typical home needs.

There is more money from the state for buildings that also achieve the Sustainable Building quality seal. This takes a broader view of the entire energy efficiency of buildings, from energy consumption, the environmental friendliness of building materials, the density of windows to the question of whether materials can be recycled.

Maximum funding: 150,000 euros

In concrete terms, builders and first-time buyers can receive a maximum of EUR 150,000 in subsidies per unit via the reduced-rate loans for particularly sustainable residential buildings. Climate-friendly residential buildings without a sustainability seal are funded with up to 100,000 euros per residential unit. The lower interest rate reduces the interest burden for debtors by up to four percent per year based on normal market conditions. Investors, companies, cooperatives and private individuals are eligible to apply. Municipalities and districts also receive direct grants, for example for the construction of apartments, day-care centers or schools.

In addition, Geywitz had already announced a new property promotion for families from June. Families with an annual income of up to EUR 60,000 plus EUR 10,000 per child are eligible. 350 million euros a year are available for the KfW program with low-interest loans. With an interest rate reduction, the leverage is better than with annual direct payments after the purchase, Geywitz had argued. The total volume of new construction funding is now 1.1 billion euros annually and comes from the climate and transformation fund.

According to the Energy Advisory Association GIH, only low-interest loans and no subsidy variant or repayment grants should deter many potential builders. In any case, a maximum loan amount of 100,000 euros per residential unit will not get you very far with an Efficiency House 40, said Chairman Jürgen Leppig.

Fundamentally new funding program

There had been a lot of controversy about funding for energy-efficient renovation and construction. In January of last year, the Federal Ministry of Economics prematurely ended KfW grants due to a flood of applications, as billions in additional costs threatened. The program was continued in the spring and stopped shortly thereafter because the money was quickly exhausted. As a result, the federal government announced a fundamentally new funding program.

However, new construction subsidies are now much lower than before. Last year KfW approved 16.4 billion euros for newly built residential buildings by the end of November alone. The requirements have also become stricter. In the past, new buildings with the energy standard EH-55 were also funded. In the future, the renovation of existing buildings in particular is to be subsidised, since the climate protection effect, according to the Federal Ministry of Economics, is much greater than in new buildings.

Criticism is not long in coming

Criticism of the new program came from the construction and housing industry, which sees an increasing housing shortage in view of falling orders and cancellations in housing construction. The funding amount of 750 million euros does not even begin to solve the dramatic problems, complained Andreas Mattner, President of the Central Real Estate Committee. It takes 10 billion euros to turn the tide in new construction.

The promotion is a drop in the bucket, criticized Felix Pakleppa, general manager of the construction association ZDB. Linking the subsidy to the EH40 standard plus certification would also put a double burden on potential builders.

Criticism of the new program also came from the opposition. “This means that neither the climate protection goals can be achieved nor sufficient affordable living space created,” said Caren Lay, spokeswoman for housing policy for the left in the Bundestag. A meaningful promotion of new construction must contain upper rent limits and social standards.”

Geywitz fought back. The federal government is putting a focus on social housing to combat the housing shortage. “This year alone, 2.5 billion euros will be made available to the federal states.”