High interest rates and construction costs are making the dream of owning a home a long way off for many families. The federal government wants to help. But experts find the criteria for the new funding too strict.
From June, families with low and middle incomes can get low-interest loans from the KfW development bank for the construction of a new climate-friendly house. An interest rate of 1.25 percent will be called for at the start, said Building Minister Klara Geywitz (SPD) on Wednesday in Berlin. This is significantly cheaper than the current market interest rate of around 3.5 percent for loans with a ten-year fixed interest rate.
A family with two children could save around 40,000 euros by building a particularly climate-friendly house, explained Geywitz. “The new program is a reliable support for owners and makes climate-friendly construction projects plannable and affordable.”
It is also a reaction to the recent decline in the number of new single-family homes. Because of the sharp rise in interest rates and high material costs, there was considerable uncertainty among the citizens, said Geywitz. “Of course, that upset a lot of calculations, including those made by families. And this is where this new funding comes in.”
Which families are entitled
Families with at least one minor child can receive the new funding. They may have a maximum taxable household income of 60,000 euros. With each additional child, this limit increases by 10,000 euros. According to Geywitz, three quarters of all households in Germany are entitled to claim.
Nevertheless, the income limit is the biggest point of criticism. “Anyone who wants to take advantage of this funding needs a low income and must be wealthy at the same time,” said housing market researcher Matthias Günther from the Pestel Institute of the Funke media group. Michael Neumann from the credit broker Dr. Klein criticized that only a few could afford the required standards for energy efficiency, despite the funding. Geywitz emphasized that the average income of applicants for child benefit was based on the average income, which was less than 60,000 euros.
Which homes are eligible
The prerequisite is that the family wants to live in the house themselves – and does not already own other residential property. Holiday homes and second homes are not funded.
In order for Germany to achieve its climate protection goals, the loans are only available for new buildings with a low CO2 footprint. Specifically, they must at least meet the EH40 standard. This means that the building may only use 40 percent of the energy that a standard house needs. In order to achieve a higher funding level, the even more stringent criteria for the sustainable building quality seal must be met.
How big is the grant
That depends on the climate friendliness of the house and the number of children. At the start, an interest rate of 1.25 percent applies to a loan with a term of up to 35 years and a fixed interest rate of ten years. But that can vary.
At the lower funding level, a family with one or two children can borrow a maximum of 140,000 euros at low interest. This sum increases to 190,000 euros with five children. Anyone who builds even more climate-friendly can get 190,000 euros with one or two children, and up to 240,000 euros with five children.
It is criticized that this is not enough to build a house in most areas in Germany.
How much money is in the pot
According to Geywitz, at least 350 million euros are available for this year to make the cheap loans possible. She cannot yet name a sum for the following years, as the government is still working on the federal budget for 2024.
Promotion not only for new construction
Buyers of newly built, climate-friendly residential property can also get cheap loans. The buildings must be acquired within one year of acceptance and also meet the climate and efficiency standards. But here, too, there is criticism: “With the current income limit, it is simply no longer possible in many cities to purchase a property that is subsidized,” said the Central Association of the Construction Industry. “The purchase prices are simply too high for many potential buyers.” Financing brokers are also demanding support for the rededication and increase of existing properties.
What to consider when applying
If you want to apply for a cheap loan, you have to work with an energy efficiency expert. This checks and confirms compliance with the requirements. The loan is then applied for before the start of construction at a bank, savings bank, building society or financial intermediary.
Ministry of Construction on the funding program Current interest rates for KfW programs
Source: Stern
