Rising interest rates and construction costs with an acute housing shortage – the situation on the German real estate market is serious, and not just recently. Builders are all the more impatient to wait for the government subsidies for the new building that have been promised. The old KfW funding programs for the new building were stopped in January and February 2022 because the demand was too great for the scarce funds in the pots.

New programs were originally announced for January 2023. Now it should finally start in March. The new KfW program runs under the title “Climate-friendly new building”. Federal Building Minister Klara Geywitz (SPD) presented the necessary new guidelines on January 25 in Berlin. A total of 1.1 billion. euros are earmarked for the new new construction subsidy, of which 350 million euros are to flow into the private subsidy of climate-friendly homes. The remaining 750 million euros are intended for commercial applicants, such as housing groups or cooperatives.

But is that enough? The industry is skeptical. Andreas Mattner, President of the Central Real Estate Committee (ZIA), criticizes the fact that the subsidies do not even begin to solve the drastic problems on the housing market: “The consequences of further delays in a large surcharge later cost a lot more money,” says Mattner. The ZIA expressly agrees with the minister when she points out that amounts in the billions alone do not help, says Mattner. “Only: Without the financial base, things often don’t even get started at the moment.” Because the lack of external financing alone is a “housing killer”.

Drastic increases in construction costs have reduced investors’ scope for action “often to zero when it comes to creating affordable, climate-friendly living space,” says the ZIA President. From the point of view of the ZIA, ten billion euros would be needed to turn the tide in new construction. The ZIA is more hopeful in view of the political pressure towards serial and modular construction. According to the association, there is “real potential for acceleration” in this change.

Tim-Oliver Müller, as general manager of the German Construction Industry Association (HDB), also expressed his concerns to the “Handelsblatt”: “The amount of funding is so low that the administrative effort is probably not even worth it.” He accuses the federal government of letting its citizens down. “Affordable living without subsidies does not exist – especially not in times of crisis and in such an over-regulated market as housing construction,” Müller told the newspaper.

The Federal Association of German Housing and Real Estate Companies (GdW) is similarly critical of the renewed KfW funding: “With this funding, we will not be able to build 400,000 apartments in 2024 either.” The federal government had laid down the goal of 400,000 apartments per year in the coalition agreement. According to the GdW, the volume and the exclusive focus on the so-called Efficiency House 40 standard are “not suitable for making a difference in the face of skyrocketing prices in affordable housing construction”.

The funding is indeed subject to strict conditions. Applicants from the industry only get money from the 750 million program if the buildings constructed with it fall below certain limits for greenhouse gas emissions and show the “EH40” energy standard for new buildings. That means they are only allowed to use 40 percent of the energy of a standard home. In addition, heaters based on fossil energy or biomass are prohibited. In addition, new buildings should also receive a seal of quality for sustainable construction. The energy efficiency is considered on balance, i.e. not only the energy consumption, but also the environmental friendliness of the building materials, the condition of the windows and whether the materials used are recyclable.

Builders can get a maximum of 150,000 euros per apartment through low-interest loans. Residential buildings that do not receive a sustainability seal are funded with a maximum of 100,000 euros per unit. Only municipalities and districts receive direct grants, for example for the construction of apartments, day-care centers or schools.

In a speech in the Bundestag, Minister Geywitz defended the fact that the funding is linked to sustainability criteria: “Anyone who tries to fight one crisis, the crisis in construction, with another crisis, namely the ecological crisis, is playing a prank.” , she said in the current hour of the Bundestag on February 8th. The construction costs that could perhaps be saved today through lower standards would be reflected in the ancillary costs of the next 40 to 50 years. “You don’t build houses for five years, you don’t build houses for ten years. If our goal is for Europe to become a climate-friendly, CO2-neutral continent, then we can’t use taxes to promote low ecological standards in new construction today,” said Geywitz.

This article first appeared on Capital.