The federal government is launching a new subsidy scheme for building new climate-friendly homes. From June, low- and middle-income families can get low-interest loans from KfW. But there are also critics.
From June, low- and middle-income households can get low-interest loans from state development bank KfW to build or buy new climate-friendly homes. Construction Minister Klara Geywitz (SPD) announced today that, initially, an interest rate of 1.25% will apply to loans with maturities of up to 35 years and a fixed rate of 10 years. This is significantly lower than the current market rate of around 3.5%.
The Family Ownership Support Scheme (WEF) is the successor to the Child Allowance and aims to support property formation. Geywitz explains that a family with two children can save around 40,000 euros when building a house that is particularly suitable for the climate. “The new scheme is solid support for building owners, making climate-friendly construction projects planable and affordable.”
income limit increases with additional children
Families with at least one minor child can receive new funding. Their maximum taxable household income may be EUR 60,000. This limit increases by EUR 10,000 for each additional child. According to Geywitz, her ministry sets income limits based on the average income of child benefit applicants, which is less than 60,000 euros.
Unions believe the income limit is too low and criticize it as a loan subsidy. “Young families can’t afford it – even with middle incomes,” said Ulrich Lange, vice-chairman of the CDU/CSU parliamentary group. “Especially because it’s not real money, it’s just low-interest loans. They’re not going to replace equity, and they’re not going to help people at that point.”
Matthias Günther, a housing market researcher at the Pestel Institute, told the “Funke Mediengruppe”: “Anyone who wants to take advantage of the funds needs to be low-income and at the same time rich.” Credit broker Dr. Michael Neumann Klein criticized that despite the funds, the Only a few can afford the standards required for energy efficiency.
Possibility of receiving preferential loans up to €240,000
Another requirement of the discounted loan is that the family wants to live in the house themselves – and doesn’t have any other homes yet. Vacation homes and second homes are not funded. The level of support depends on the number of children. At the lower level of support, a family with one or two children can borrow up to €140,000 at low interest. With five children, this amount increases to 190,000 euros.
On the other hand, energy efficiency also plays a role. The loans are only available for new buildings with a low “CO2 footprint” so that Germany can meet its climate protection targets. Specifically, they must meet at least the EH40 standard. This means the building may use only 40% of the energy required by a standard house.
Anyone who builds a more climate-friendly building and thus earns a sustainable building quality seal will receive €190,000 for one or two children and up to €240,000 for five children. But critics say that’s not enough to build a house in most of Germany.
Low-interest loans are also available to buyers of newly built climate-friendly residential properties. Buildings must be purchased within one year of acceptance and must also meet climate and energy efficiency standards. But there are criticisms here too. “Because of current income constraints, buying subsidized property is simply not possible in many cities,” said the Central Building Industry Association. “The purchase price was simply too high for many potential buyers.”
Urban construction limit single family home A
If you want to apply for a low-interest loan, you must work with an energy efficiency expert. This will check and confirm that the requirements are met. Then apply for a loan at a bank, savings bank, building society or financial intermediary before opening. According to Geywitz, at least 350 million euros are available for low-interest loans this year. As the government is still working on the federal budget for 2024, she cannot yet determine the amount for the next few years.
The subsidy program is also a response to the recent decline in the number of new single-family homes being built. Geywitz said there was considerable uncertainty among citizens due to sharply rising interest rates and high material costs. “Of course, it messes up a lot of calculations, including calculations that households do. That’s where this new money comes in.”
However, single-family single-family homes have long been criticized for requiring a lot of space while being available to relatively few people. Cities like Münster therefore want to limit the construction of such buildings for reasons of climate protection and space scarcity. In other parts of Germany, there are already regulations in this regard.