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Construction site near Hanover: Criticism of the key figures of the funding program

Photo: Julian Stratenschulte / dpa

Families with low and medium incomes will be able to obtain low-interest loans from the development bank KfW for the construction of a new climate-friendly house from June. At the start, an interest rate of 1.25 percent will be called, said Construction Minister Klara Geywitz (SPD) on Wednesday in Berlin. This is significantly cheaper than the market interest rates of currently around 3.5 percent for loans with a ten-year fixed interest rate.

A family with two children could save around 40,000 euros when building a particularly climate-friendly house, Geywitz explained. "The new program is a reliable support for owners and thus 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 has been considerable uncertainty among citizens, Geywitz said. "Of course, this threw a lot of calculations from families overboard. And this is where this new funding comes in.«

Which families are eligible?

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 eligible.

Nevertheless, the income limit is the biggest point of criticism. "If you want to take advantage of this subsidy, you need a low income and at the same time you have to be wealthy," said housing market researcher Matthias Günther from the Pestel Institute of the Funke Media Group. Michael Neumann of the credit intermediary Dr. Klein criticized that only a few could afford the required standards for energy efficiency despite subsidies. Geywitz emphasized that the average income of the applicants for the Baukindergeld, which was less than 60,000 euros, was oriented.

Which houses are eligible?

The prerequisite is that the family wants to live in the house themselves – and does not already have other residential property. Holiday homes and second homes are not subsidised.

In order for Germany to achieve its climate protection targets, the loans are only available for new buildings with a low CO2 footprint. Specifically, they must meet at least the EH40 standard. This means that the building may only consume 40 percent of the energy required by a standard house. In order to achieve a higher funding level, the even stricter criteria for the Sustainable Building Quality Seal must be met.

How much is the funding?

This depends on the climate friendliness of the house and the number of children. At the start, an interest rate of 35.1 percent applies to a loan with a term of up to 25 years and a ten-year fixed interest rate. However, this can fluctuate.

In the lower funding level, a family with one or two children can borrow a maximum of 140,000 euros at low interest. This sum rises to 190,000 euros for five children. If you build in an even more climate-friendly way, you can get 190,000 euros with one or two children, and up to 240,000 euros with five children.

It is criticized that the sums for the construction of a house in the vast majority of areas in Germany are not sufficient.

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 could not yet name a sum for the following years, as the government is still working on the federal budget for 2024.

Are only construction projects funded?

Cheap loans can also be obtained by buyers of climate-friendly residential property that has already been completed. The buildings must be purchased within one year of acceptance of the building and must 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 acquire a property that is subsidized," said the Central Association of the Construction Industry. "The purchase prices are simply too high for many potential builders." Financial intermediaries are also calling for support for the rededication and extension of existing properties.

What do you have 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 a financial intermediary.