Kfw funding: this is what you need to know about the stop of many real estate subsidies

Faced with a flood of applications and "mismanagement," the new federal government has temporarily halted funding for energy-efficient buildings. Many applications from the state development bank K are no longer approved. What real estate buyers, owners and prospective builders need to know now.

With Bauwil-ligen the federal promotion for efficient buildings (BEG) was so far in great demand. For the new construction of a particularly energy-saving house or for the reorganization to the efficiency house real estate buyers and owners receive alternatively a credit with repayment subsidy or a directly disbursed subsidy, which does not have to be repaid and which reduces the credit volume. Consumers were able to save several tens of thousands of euros per residential unit.

Applications from K are no longer approved

But faced with a flood of applications and a "mismanagement" of funds, the new federal government abruptly halted funding for energy-efficient buildings. Applications from the state development bank K will no longer be approved. For many real estate buyers and owners who have calculated with the money, this is a massive annoyance. The industry is also in a frenzy: "The indignation is great about the policy of communication and the approach of the federal government, in which a green party is also involved, which wants to push the ecological construction," says Birgit Weber, construction financing consultant at Pasch and Kruszona in Krefeld.

What real estate buyers, owners and those willing to build now need to know about the funding freeze:

1. What exactly was stopped?

With the 24. January was The new construction subsidy for the Efficiency House/Efficiency Building 55 (EH55) finally and with immediate effect ceased to have any effect, announced the Federal Ministry for Economic Affairs and Climate Protection. This means that K will no longer approve repayment subsidies or directly paid subsidies for newly built houses that consume at most 55 percent of the energy of a comparable standard house. Although the subsidy would have expired at the end of the month anyway, since the federal government had only gradually tightened the conditions of the benefits for efficient buildings in November 2021. But the industry had not expected the deadline to be shortened.

In addition: With the BEG’s pots empty, funding for renovations has also been halted for the time being, as has new construction funding for efficiency class 40.

In the past, K has announced changes to subsidy programs with several weeks, if not months, of advance notice. "That K announces the funding stop at such short notice, for which I have no understanding. New construction is preceded by long-term planning. Many customers were counting on the money, which in some cases will now no longer be paid out," says construction financing advisor Weber in annoyance. "I have a client who is currently planning a new Renewable Energy Class 55 efficiency building with 14 residential units and who now has more than 360.000 euros of subsidy money missing in his calculation."

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Mirjam Mohr, Interhyp Board Member for the Direct Channel, said, "We had expected the stop of the subsidy for the K Efficiency House 55 in new construction on 1. February was expected, quite a few customers had braced for it. The fact that federal funding for efficient buildings as a whole is now being discontinued for the time being is a challenge for a great many builders and renovators. We would have liked to see some advance notice with some transition period."

User call: Are you also affected by the K funding freeze??

The new German government has temporarily halted funding for energy-efficient buildings. Applications from the state development bank K will no longer be approved. For many real estate buyers and owners who have calculated with the money, this is a massive nuisance.

Are you also concerned? Then tell your story and email us at: [email protected]

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2. Why was the opportunity to apply to the BEG stopped at such short notice?

The Ministry of Economics explains the abrupt stop simply that the approaching end of the EH55 new subsidy announced in November 2021 had led to a veritable rush for the subsidy. This extreme increase in funding applications for new EH55 buildings in January 2022 alone has meant that the €5 billion in funding available under the provisional budget has already been exhausted, he said.

In its justification, the Ministry of Economics also sharply criticizes the previous government. Secretary of State for Energy Patrick Graichen said: "We would have liked to avoid this step. However, in recent years, there has been a failure to adjust the subsidy framework and the statutory new construction standards. Instead an outdated promotion was continued, which sets wrong incentives."With the so-called efficiency house 55 a standard is promoted with tax money, which became generally accepted on the market long ago, so Graichen. "But: where climate protection is on it, climate protection must also be in it. At present, we are promoting the wrong things, and this money is then missing for climate protection measures that are actually effective, such as the so important renovation of buildings. This cannot continue."

3. When will funding for renovations and the EH40 resume?

The subsidy for renovations is reportedly to be resumed as soon as corresponding budget funds are made available. When that will be the case, is open however. The Federal Ministry of Economics announced that a decision will also be made on the future of new construction subsidies for EH40 new buildings "against the background of the available funds in the Energy and Climate Fund and the funding requirements of other programs in the federal government".

The new Federal Government wants to reorganize the promotion and the legal standards for new buildings thereby however. In the future, subsidies should be targeted to areas where CO2 savings are greatest. This is, so the Federal Ministry of Economics, in the building sector above all with reorganization measures the case. Federal Minister of Construction Klara Geywitz (SPD) promised on Wednesday a quick new regulation: "Whoever tackles such a big project as building a house needs secure framework conditions."There will be clarity as soon as possible.

4. What happens to applications received that have not yet been approved?

Applicants who have not yet received a response can only hope: The budget funds currently available were not sufficient for the applications that have not yet been decided, the Ministry of Economic Affairs explained. It is therefore unclear whether affected consumers will receive the subsidies.

For Baufinanzierungsberaterin Weber an Unding: ?Our customers are left up-to-date in total ignorance?. For the EH55, whose promotion would have expired anyway at the end of the month, many banks have the applications anyway only until 15. January adopted to have a buffer. We therefore hope that these applications will all still be paid out. However, some applications have not yet been approved, so we currently have no guarantee for our customers that they will actually receive the subsidies."

In order to avoid liquidity gaps for construction-ready projects on the part of the applicants, the German government and K are currently examining a loan program, according to their own statements. In this way, the federal government would like to offer loans to all applicants whose applications have already been received but not yet approved. "This is also to respond to any hardship cases for private builders after the subsidy ends," it says.

5. What this means for BAFA funding?

BAFA’s federal support for efficient buildings continues unchanged, the German Federal Ministry of Economics and Climate Protection announced. Since January 2021, owners and homebuyers have been able to apply to the Federal Office of Economics and Export Control (BAFA) for grant funding for individual renewable energy measures. Individual measures are those that do not achieve an efficiency house standard for a building as a whole. Proportionate costs are promoted, for example, for measures on the building envelope, the plant technology, renewable energies for heating, the connection to a renewable building or heat network and measures for heating optimization.

Once consumers have submitted all the required documents, they can expect an average of about four to six weeks before the subsidies are paid out. Those who have been waiting longer should contact BAFA.

6. How many construction projects are affected by the halt – and what does it mean for the government’s plans for climate protection and housing construction?

Of the discontinuation of the K efficiency house promotion are roughly estimated 50.000 houses and apartments affected, said Harald Simons to the "Welt". He is a board member of the Empirica Institute. For the estimate he analyzed building application figures of new building projects. "These projects must now be re-planned and re-applied for, many builders will also wait to see what follow-up measure may still come," said Simons. He expected significant delays of up to one year.

Interhyp Managing Director Mohr sees a certain political dilemma in view of the discontinuation of subsidies for new construction of the Efficient House 55 and the temporary suspension of other programs. "On the one hand, to achieve the ambitious climate targets, renovation must be even better. But that drives up the already high real estate costs even more. On the other hand, the government wants to create more affordable housing, for which 400 annually.000 Build apartments and thereby also improve private retirement provisions. Without a sophisticated promotional program, we see this goal as challenging."

7. Tens of thousands of euros gone? What other ways are there to save money when buying real estate??

One thing is certain: without the subsidies from the federal subsidy for efficient buildings, many construction and renovation measures will be more expensive for real estate buyers and owners. The banking association BdB, for example, also predicts this and expects a "significant" increase in financing costs for private residential construction. Vorstandin Mohr of the Interhyp guesses that customers should nevertheless keep calm. "The interest rates are at present still on low level, so many financings are still well feasible. If financing was affordable with K program, it usually is without – we advise not to finance something just because of the subsidy. In any case, we advise against buying real estate without having a viable financing plan."

In addition not only the federation, but also individual Lands of the Federal Republic, municipalities and municipalities offer promotion programs cut to certain groups of persons, which can possibly provide something remedy. Buyers and builders can receive various grants, but mostly low-interest loans. However, financial support varies widely, so interested parties should find out about the various options as early as possible. What’s more, there are often income-based limits on state subsidies, which are quite low. Means a large part of the subsidies are not eligible for many people.

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