It is still unclear when house builders can expect the “Hessengeld” financial injection from the state for the first time. It is now clear that the funding applies retroactively to March 1st. However, those receiving funding have to wait a few years for the full amount.
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Key points for Hessengeld presented
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The announced “Hessengeld” to support citizens when purchasing their first four walls is to be granted retroactively from March 1, 2024. The state government announced this after an external cabinet meeting in a new development area in Wiesbaden. Nobody has to postpone the purchase of a home or property because it is unclear from when the funding will apply.
The “Hessengeld” is to be paid for the first owner-occupied home with 10,000 euros for up to two buyers and 5,000 euros per child under 18 years of age. The country wants to relieve its citizens of the additional purchasing costs. However, they don’t get the money in one chunk: According to the announcements, the funding will be granted up to the amount of the real estate transfer tax actually paid and will be paid out in ten equal installments annually.
Lorz estimates: relevant for more than 20,000 real estate purchases
“The goal of owning a home must remain achievable and feasible for many people in Hesse,” emphasized Prime Minister Boris Rhein (CDU). As the cabinet confirmed on Monday, Hessengeld can be applied for from this autumn onwards for all purchases made from March 1, 2024. The aim is to pay out the first amounts in 2024. The SPD as a coalition partner spoke of “exemplary support nationwide”.
The state government currently assumes that around 23,000 property purchases per year could be relevant for the subsidy. Finance Minister Alexander Lorz (CDU) recently referred to the German real estate market report from the expert committees: According to this, there were around 35,000 purchases of homes and condominiums in Hesse in 2022. Around two thirds of this could have been “a first purchase relevant to the Hessengeld”.
Just a drop in the ocean?
According to previous information, the Green group understands the desire of many people to live in their own four walls. But the “Hessengeld” is a “very expensive project with a very limited effect” for the urgently needed creation of living space that is affordable for everyone. It should be debated whether the money would be better invested in other funding programs.
The Hessengeld is a step in the right direction, but it is not enough, said the AfD parliamentary group in the state parliament. They are calling for the abolition of the property transfer tax on owner-occupied living space.
The FDP opposition welcomes the project in view of the low home ownership rate in Hesse, but warns against overly complicated “funding bureaucracy”. In addition, the Hessengeld should only be one of many measures to make building affordable again.
Real Estate Owners Association: Piecemeal payouts are a problem
The Hesse-Thuringia Construction Industry Association welcomed the “Hessengeld”, but described it as just a step in the “extremely difficult situation” in housing construction. Above all, construction costs would have to fall. This could be achieved if “unnecessarily high and ever-new requirements were not placed on residential buildings”, especially for energy efficiency. In addition, the property transfer tax should fall to zero.
The property owners association “Haus & Grund” called the decision a “step in the right direction”. “A setback for many buyers will be the fact that they will initially have to make significant advance payments over a period of ten years due to the payment of the Hessengeld,” he said. The property transfer tax is due immediately upon purchase, but is usually not co-financed by the credit bank.
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