In view of the sharp rise in real estate prices and interest rates, the number of purchases and new buildings also collapsed in Bavaria last year. The state government has responded to this: Since September 1, 2023, significantly more people than before have been entitled to reduced-price loans and grants if they want to buy or build a home.
With the income limits raised by 25 percent, a married couple with two children who together earn 109,000 euros gross per year, for example, still meets the criteria. And the limit increases with each additional person living in the household. The family in the example would still have to stretch financially and – without a huge amount of their own capital – could hardly afford living space in a metropolitan area.
The prerequisite for funding is an equity ratio of at least 20 percent. The Bavarian housing program would grant families a loan reduced by three percentage points and amounting to up to 30 percent of the total costs when building and purchasing property for the first time. Anyone who wants to purchase a house or apartment that has already been built will receive up to 40 percent and a subsidy of 10 percent of the eligible costs up to a maximum of 50,000 euros.
The program also provides a subsidy of 7,500 euros per child for all those willing to build. Housing is also supported, which is later rented out to relatives or in-laws at the local price. You can choose a fixed interest rate of ten, 15 or 30 years for the loan. After this expires, the usual market interest rates apply again. The repayment rate is 2 or – for 30 years – 2.89 percent.
According to the State Ministry of Housing, Construction and Transport, 1,272 households took advantage of the funding between September 2023 and the end of February this year. This is roughly three times the figures from the same period last year. In the Lower Franconian district of Miltenberg, for example, three residential buildings received this funding in the first three months of 2023. According to the district office, there are seven houses in the same period this year, plus three applications that are ready for approval and three in the preliminary examination.
The funding is part of the so-called Bavarian housing booster. The other pillar of the program is to promote the construction of social rental housing. A total of one billion euros was available for this state housing support in the 2023 budget year, of which 389 million euros are federal funds. The booster is to be continued annually on this scale – this is also stated in the coalition agreement between the CSU and the Free Voters. Demand remains consistently high, explains Construction Minister Christian Bernreiter (CSU) to the state newspaper. “The Housing Booster Bavaria is a success story about which we regularly receive inquiries from other federal states.”
This is even well received by the state parliament opposition. Sabine Gross, the construction policy spokeswoman for the SPD parliamentary group, rates the increase in income limits as “very good”. She also likes the more flexible interest rate options for promotional loans. “But there is still not enough living space created – and I don’t exempt the federal government from the criticism.” Despite all the announcements, the federal, state and local governments have not fulfilled their obligation to create affordable housing for everyone for many years.
Unfortunately, this is far from a trend reversal
For Gross, this must be a state goal – as was recently the case with defense. She is particularly concerned with the rental market; after all, the majority of people in Bavaria also live on rent. Funding should be massively increased and a new non-profit housing organization should be introduced. This means that residential construction companies that offer consistently low rents are exempt from tax or receive investment allowances. But the goal must also be to get more people into their own homes, because this would also relieve the pressure on the rental market. Gross could imagine giving municipalities more leeway when purchasing potential building land – for example by allowing them to take on profitable debt to create affordable housing.
The Bavarian Savings Bank Association does not yet want to evaluate the effects of the adjustment of housing subsidies. The association says it is too early for that. After a rather bad year in 2023, in which 43 percent fewer housing financing transactions were concluded at the Bavarian savings banks than in the already mixed previous year, interest increased again at the beginning of this year. But the association estimates that this probably has more to do with a general normalization of the market. The European Central Bank is expected to cut interest rates. “But there can be no talk of a trend reversal yet.”
Sparkasse President Matthias Dießl emphasizes that he thinks little of rigidly setting income limits for lending. Instead, in his view, funding is needed such as “reducing the property transfer tax or reintroducing the possibility of tax deduction for private building interest” – and a generally higher reliability of the availability of funding. Dießl criticizes the risk buffer for real estate loans that has been in effect for over a year. Since then, banks have had to deposit equity as security for every loan, which makes the loans more expensive. “Private housing construction must not be slowed down.” (Thorsten Stark)
2024-04-11 22:10:43
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