The Ministry of Construction has stopped the climate-friendly new building funding program with immediate effect. The reason: the funds have been used up. New applications will probably only be possible again next year.
Consumers who currently want to build or buy a new climate-friendly house must initially forego the promotional loans specifically intended for this purpose. Because the funding pot for the “Climate-Friendly New Building” program is empty. As of today, no new applications can be submitted to the Kreditanstalt für Wiederaufbau (KfW) because funds have been exhausted, as the Federal Ministry of Construction announced.
46,000 climate friendly Housing units supported
The KfW program started on March 1, 2023. Both new construction and the purchase of a house that is no more than one year old are supported if it meets the so-called Efficiency House Standard 40. This means: The house may only have a maximum of 40 percent of the energy requirements of an existing, comparable building – so it must save more than half of the energy. In addition, it must not be heated with fossil systems such as oil, gas or pellet heating.
If these requirements were met, households, companies and municipalities could finance 100 percent of the eligible costs and receive a loan amount of a maximum of 100,000 euros. With a “Sustainable Building” quality seal, they were even able to obtain a loan of up to 150,000 euros – with heavily discounted interest rates. Depending on the term, there were recently effective interest rates of 0.01 to 1.17 percent. There were no restrictions with regard to the creditworthiness or income of the applicants.
By December 13th, more than 18,000 funding commitments had been made and around 46,000 climate-friendly residential units had been funded, according to the Ministry of Construction. “The demand for our new building funding exceeded our expectations. After just three months, the funding pot for climate-friendly new buildings was almost empty, so we had to increase it to almost two billion euros,” said Construction Minister Klara Geywitz (SPD).
Applications will only be submitted again with the new federal budget
According to Geywitz, new applications can only be submitted again as soon as the 2024 federal budget comes into force. Yesterday, the leaders of the traffic light coalition reached a fundamental agreement on how billions in holes in the 2024 budget should be plugged. The budget is expected to be passed in the Bundestag in January.
Together with the KfW “Home Ownership for Families” program launched on June 1, 2023, funds totaling 1.98 billion euros were available for both loans. With the successor to the expired building child benefit, the state wants to support families and single parents with small and medium incomes in building or buying their own house. A household with at least one child under the age of 18 can get a loan of between 170,000 and 270,000 euros for their new four walls.
The funding depends on your taxable annual income. For a family with one child, the limit is 90,000 euros – for each additional child there is an additional 10,000 euros. In addition, the program only applies to newly built houses that have reached efficiency house level 40 and are not heated with oil, gas or biomass. The effective annual interest rate for the home ownership program for families is even cheaper than for the new construction program. Applications can still be submitted.
Construction industry criticizes temporary funding stop
By suspending new construction funding, the federal government is proving that it has learned nothing from the mistakes of last year’s funding freeze, said Peter Hübner, President of the Main Association of the German Construction Industry. “A run for funding at the end of a year is not a success.” Instead, it shows the great uncertainty on the market. “Nobody knows what will happen next and everyone is trying to secure the last remaining pieces.”
For the Central Association of the German Construction Industry, the news about the funding stop came as a “complete surprise”. “Nothing is more damaging to an investment industry like the construction industry than unclear or constantly changing conditions,” emphasized Managing Director Felix Pakleppa. The funding chaos from last year should not be allowed to happen again. “That would be fatal for housing construction, where we urgently need investments in order to be able to keep employees,” said Pakleppa.
The construction policy spokesman for the CDU/CSU parliamentary group, Jan-Marco Luczak, spoke of the biggest housing construction crisis in Germany in decades. “But instead of taking decisive countermeasures and breaking the downward spiral, the traffic lights argue and delay important decisions in order to make construction faster and more cost-effective. Now the funding for climate-friendly new buildings is also being reversed.” This is a slap in the face to companies and private developers.