Budget freeze hits housing construction
The federal government's budget freeze is now also affecting housing construction in Bavaria. The Association of Bavarian Housing Companies (VdW) reported on Tuesday that a total of 561 planned apartments are at risk in Munich and Augsburg. The reason for this is that the state development bank KfW has stopped a development program for cooperative housing that was not launched until 2022 - as can also be read on its website.
Apart from this, the association fears that other housing construction projects will be put on hold. In Munich's new Freiham district, for example, plots of land for 525 cooperative apartments are about to be put out to tender. "How this will continue in view of the KfW program freeze is written in the stars," said association director Hans Maier.
The KfW granted low-interest loans of up to EUR 100,000 per household via the 134 promotional program, which could only be used to purchase cooperative shares for an owner-occupied apartment.
"With immediate effect and until further notice, in coordination with the Federal Ministry of Housing, Urban Development and Building (BMWSB), no more applications can be submitted in the product "Promotion of cooperative housing (134)" and all existing applications can no longer be approved," it says on the KfW website. "The background to this is the budget freeze in accordance with Section 41 of the Federal Budget Code (BHO) for commitment appropriations in the 2023 federal budget and in the special fund Climate and Transformation Fund (KTF), which is effective immediately."
If these KfW loans are not available, Maier believes that many interested parties will no longer be able to afford to join a housing cooperative.
The funding freeze for cooperative housing is a "devastating signal", criticized the head of the association. The VdW is mainly made up of cooperatives, municipal housing associations and other non-profit organizations.
The budget freeze is the result of a recent ruling by the Federal Constitutional Court, which restricts the federal government's financial leeway when it comes to new borrowing.
Despite the budget freeze affecting the KfW development program, scheduled residential construction projects in Munich and Augsburg are at risk, with 561 planned apartments potentially impacted. The freeze on applications for low-interest loans under the 134 promotional program for cooperative housing has also raised concerns about the future of other housing construction projects, such as the upcoming tender for 525 cooperative apartments in Munich's Freiham district.
Source: www.dpa.com
