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How Germany wants to make it easier for families to own a home

Rachel Loxton
Rachel Loxton - [email protected] • 28 May, 2023 Updated Sun 28 May 2023 08:24 CEST
How Germany wants to make it easier for families to own a home
Homes being built in Stuttgart. Photo: picture alliance/dpa | Sina Schuldt

Germany is launching a new loan programme to help families get on the property ladder. Here's what you need to know.

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Although Germany is known as a country of renters - in 2021 more than half the population (50.5 percent) lived in rented accommodation, the highest share in the EU - many people are choosing to buy their own property. 

And the German government wants to make this move easier for families with children. 

In June, a new subsidy programme called Home Ownership for Families (Wohneigentum für Familien or WEF) is set to launch. It replaces the Baukindergeld system which saw families being able obtain a building permit or buy a property. Through that programme, families could receive a subsidy of €1,200 per child per year over 10 years.

The government said that in 2020 alone, 175,000 families took advantage of the Baukindergeld programme.

READ ALSO: Everything that changes in June 2023

What is the WEF?

At the beginning of the year, Housing and Urban Development and Building Minister Klara Geywitz (SPD) announced that a new property subsidy for families would launch in 2023. However, unlike Baukindergeld, the WEF subsidy is not a grant. Instead, families will receive a low-interest loan.

What will be subsidised?

The 'Home Ownership for Families' programme provides funding for the construction or initial purchase of a climate-friendly residential building. People can apply for a loan for the following costs to be subsidised in a residential unit:

  • Construction costs,
  • Costs for specialist planning, construction supervision, sustainability certification
  • Material costs for personal contributions

Families with an annual income of up to €60,000 can apply for a loan from the KfW bank. For each additional child under the age of 18 living in the household, the annual income can be €10,000 higher (so €70,000 with two children, for example).

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The government is ploughing in €350 million per year into the project. Applicants can receive a maximum loan of up to €240,000.

The loan applies to new buildings or first-time purchases that meet at least the Efficiency House 40 standard, but not to existing properties. Germany does offer some grants for renovation measures in these cases. 

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Applicants must live in the properties themselves, they must be the owner and they cannot have claimed a previous Baukindergeld subsidy.

Anyone interested in the programme should wait until it has launched and all the details are on the table before going ahead with any projects. The subsidy has to be applied for before a delivery, service or purchase contract is underway. 

READ ALSO: What to know about mortgages and fees when buying property in Germany

According to the government, the home ownership subsidy is intended to provide an incentive for the "creation of energy-efficient, high-quality residential property in new buildings".

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What are the interest rate conditions for the WEF subsidy?

The exact interest rate conditions for the programme have not been announced. However, it is known that the subsidy will be granted exclusively in the form of a low-interest subsidy loan and that there will be no direct grants or repayment subsidies. The Housing Ministry is aiming for an interest rate reduction of 2 to 4 percentage points.

The initial interest rate is expected to be announced shortly before the start of the programme.

When will the WEF subsidy start?

The programme is scheduled to start on June 1st, 2023.

How many people own a home in Germany?

According to Statista figures, in 2022 just under 29 million people lived in a house they owned in Germany, 36.9 million rented, while 4.62 million lived in shared accommodation.

READ ALSO: Ask an expert: Is now a good time to buy property in Germany?

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