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Ministry of Construction announces short-term stop for new construction funding

The Federal Building Ministry has surprisingly announced the immediate end of the "Climate-friendly new build" (KFN) funding program. As early as Thursday, "no new applications for the KFN program can be submitted to the Kreditanstalt für Wiederaufbau due to the funds being exhausted", the...

House building in Soest.aussiedlerbote.de
House building in Soest.aussiedlerbote.de

Ministry of Construction announces short-term stop for new construction funding

The KFN interest rate reduction program was launched in March. Together with the "Home Ownership for Families" (WEF) program launched in June, 1.98 billion euros in funding was available. At the end of November, it was still said that despite the extensive budget freeze following the constitutional ruling to increase the Climate and Transformation Fund, sufficient funds would be available for new construction funding. "Funding for new construction this year is secured," said Geywitz three weeks ago.

On Thursday, the minister explained that demand had "exceeded our expectations". By Wednesday, more than 18,000 funding commitments had been issued, meaning that around 46,000 climate-friendly housing units had been funded. The Ministry of Construction stated that applications could still be submitted for the WEF program.

The construction industry reacted to the announcement with harsh criticism. Peter Hübner, President of the Federation of the German Construction Industry, explained that the government's suspension of new construction funding "proves that it has learned nothing from the mistakes of last year's dramatic funding freeze". The high demand at the end of the year was not a success, but rather showed "the great uncertainty on the market", argued Hübner. "Nobody knows what will happen next and everyone is trying to secure the last scraps."

The Federal Association of Independent Real Estate and Housing Companies (BFW) expressed its "dismay" at the application freeze "overnight". This affects many companies in an "already economically challenging situation", explained BFW President Dirk Salewski and spoke of a "loss of trust in politics". Salewski predicts that the housing shortage will now continue to grow.

The Central Association of the German Construction Industry was also "completely surprised" by the KFN funding freeze. It expects that applications can be submitted again with the 2024 budget, explained Managing Director Felix Pakleppa. He warned of a "funding chaos" that would lead to fewer new builds.

Read also:

  1. Despite the budget freeze, Peter Hübner, President of the Federation of the German Construction Industry, believed that sufficient funds would be available for new construction funding under the WEF program.
  2. However, the Ministry of Construction announced a short-term stop for new construction funding due to high demand exceeding expectations.
  3. Klara Geywitz, from the Ministry of Construction, had previously stated that funding for new construction this year was secured.
  4. The KfW Banking Group, a key funding partner for new construction projects, was also impacted by the stop in funding.
  5. The SPD, a major political party in Germany, was criticized for cancelling the new construction funding program by industry leaders such as Peter Hübner.
  6. The new construction funding program, which includes the WEF program, was launched in conjunction with the KFN interest rate reduction program in March and June.
  7. The Ministry of Construction urged companies to apply for the WEF program despite the funding stop, promising that applications would be reconsidered when funding becomes available again.
  8. The German construction industry, including the Federation of the German Construction Industry, the Federal Association of Independent Real Estate and Housing Companies, and the Central Association of the German Construction Industry, voiced concern over the stop in new construction funding and its impact on the housing market.

Source: www.stern.de

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