The Federal Building Department has launched a new funding scheme for low- and middle-income families: they are encouraged to build houses with low-interest loans. But who is this for?
Construction costs are currently higher than ever. Even if you find a fairly cheap building site, have sufficient own capital and can keep construction costs within bounds, you must consider a €500,000 loan for a family home. Nearly half of that could be done with a new subsidy program from the Ministry of Construction. The state-owned KfW will then finance up to 240,000 euros at a low interest rate of 1.25 percent.
For the remainder, a loan is required under standard market conditions, currently at an interest rate of around four percent. The combination of interest and repayments results in a monthly fee of around 2000 EUR. That’s a lot of money for a family with one child earning a gross income of up to €60,000 per year. The family should have a net income of just over 4,000 euros per month, of which all expenses must be paid.
Banks must cooperate
But even if the example family dared to spend about half of its monthly income on paying off its construction loan, another hurdle had to be overcome: the bank had to cooperate. Funding for discounted loans comes officially from the national development bank KfW, but the transaction is handled by your own bank. She wants to evaluate the customer’s creditworthiness, that is, whether he can make monthly payments. Banks decide on KfW loans and additional loans based on their own criteria.
Finanztip editor-in-chief Hermann-Josef Tenhagen worries that many banks will turn against the family and not give them bigger loans. To actually pay for the property, he estimates, a higher household income is needed: at least €100,000.It’s a stronger foundation for real estate lending, Tenhagen said in an interview. ARD Capital Studio.
Criticism of the plan also came from the opposition in the Bundestag: “Young families cannot afford it,” said CDU MP Ulrich Lange. “This project is going to cause a lot of frustration, a lot of disappointment.”
Up to domestic new construction
A decisive point will be where the new house will be built. Building land in metropolitan areas is notoriously unaffordable for few. “Top residential areas 10 kilometers from Frankfurt am Main will not work,” said finance expert Tenhagen. Low- and moderate-income households wanting to take advantage of the new subsidy program may have to find land in rural areas.
Ideally, the family would have inherited the building site from their parents or grandparents and could keep the cost of building new buildings low, Tenhagen said. For example, craftsmen or acquaintances in the circle of friends can help. It’s an ideal picture that may apply to very few families. Ten Hagen also noted that the family will have to come to terms with life in the country. He did the math: “If you need two cars to get to your job, which is about 40 kilometers away, it can easily cost you 1,000 euros a month. Then it will be difficult to repay the loan.”
Conditions of the grant program
Maximum household income €60,000
The limit increases by EUR 10,000 for each additional child
KfW discounted loan at 1.25%
Maximum loan amount 240,000 EUR
New buildings must be climate-friendly according to the EH40 standard
“drop in the ocean”
The construction industry also believes that the target group for the new funding scheme is rather small. Central Property Council ZIA managing director Oliver Wittke said property promotions were a “small program” that didn’t even begin to address the lack of living space. ZIA calculates that only 2,500 new homes will be built in Germany due to the promotion of new home ownership.
To do this, the program’s funds must be withdrawn in full.Given that at least 400,000 apartments are missing, the plan is not a drop in the bucket, Wittke said in an interview. ARD Capital Studio. The construction industry recognizes the federal government’s efforts – but no progress has been made in solving the problem.
high efficiency standard is required
Furthermore, the Ministry of Construction only wants to promote climate-friendly new buildings. They must comply with the EH40 standard. This means that these homes may use as little as 40 percent of the energy required by older comparable buildings. These houses require particularly well-insulated walls and windows in order to lose as little energy as possible to the outside. Therefore, they are much more expensive to build than conventional houses:
Experts say an additional 300 euros per square meter. Often an investment considered by builders with big budgets. Construction Minister Klara Geywitz doubts whether the EH40 makes sense and is sustainable because of the large amounts of carbon dioxide released during the production of the insulation.
Nevertheless, EH40 has become a condition for new buildings to use a new program – it comes from Geywitz. Your department has announced that it will draw up a first brief on how the real estate promotion will begin within six weeks. It is hard to imagine that especially low- and middle-income households are able and willing to pay the highest energy efficiency standards for new buildings.