- Revitalizing Outdated Homes - Initiation of a Support Scheme
Over Two Million Old Homes Sit Vacant in Germany
A significant issue in Germany is the abundance of vacant old residential buildings, numbering around two million. One of the main reasons for this is the often lower cost of constructing new buildings compared to extensively renovating existing ones. The German government is looking to change this with a new funding program called "Buy Old, Buy Young," set to launch on Tuesday. This program specifically targets families with children who purchase an old property and commit to renovating it. However, the program's requirements are already provoking controversy ahead of its launch.
Objective of the Program
Germany's Federal Minister of Housing, Klara Geywitz (SPD), believes that young families moving into old homes would conserve resources, revitalize urban centers, and aid families in their quest for homeownership. This could involve families returning to their hometowns, renovating existing homes, and benefiting from additional renovation subsidies, according to Geywitz. This would prevent historical buildings from sitting empty in town centers while new buildings house families in surrounding areas, especially in rural and less populated regions.
Eligibility for Funding
The program aims to assist families with children and moderate to low incomes. Families with one child can have a maximum taxable household income of 90,000 euros; this limit increases by 10,000 euros for each additional child. Individuals or families already receiving child housing benefits or owning properties are not eligible.
Conditions for the Project
The family must purchase and inhabit the house or apartment themselves. The funding does not cover transforming an old house into a vacation home or rental property. This stipulation stands for five years.
Furthermore, the house must be in an energy-inefficient state. According to the energy certificate, it should fall into the worst categories F, G, or H. Around 45% of all residential buildings in Germany fall into these categories, as per the ministry.
Inside 54 months, the house must be renovated to achieve at least energy efficiency class 70 EE, which means it consumes 30% less energy than a building adhering to the minimum legal standards. At least 65% of the heating should be sourced from renewable energy resources, typically requiring a heating system replacement.
Functioning of the Funding
Families can acquire loans with favorable rates through the state-owned promotional bank KfW. At initiation, the interest rate for a 35-year loan term and a 10-year interest fixation is 1.51%.
The maximum loan amounts depend on the number of children: 100,000 euros for one child, 125,000 euros for two children, and 150,000 euros for three or more children. Loan terms ranging from 7 to 35 years and interest fixations extending up to 20 years are attainable.
Geywitz suggests that families with two children could save up to 18,000 euros through subsidized loans. Additionally, various other state subsidies can be pursued, such as for insulated facades and roofs, new windows, or an upgraded heating system.
350 Million Euros in the Fund
This year, a 350 million euro fund is available. However, the money is not distributed directly but serves to subsidize the interest rates on promotional loans, resulting in higher funded loan amounts.
Some critics argue that the program does not adequately address Germany's housing shortage and could be better utilized to support affordable housing construction.
The main criticisms revolve around the strict requirements. For instance, the state building savings banks acknowledge that even with funding, many families may struggle to gather the necessary funds for such extensive renovations. Upgrading properties with such high energy consumption within four and a half years is likely to fail due to time constraints or financial issues, they contend.
Presently, the association is advocating for an extension of the deadline in the case of low demand. They also suggest considering more energy-efficient classes for funding, making the transition to the target level more affordable and achievable for more families. Each renovation is beneficial for climate protection, and promoting the sale of as many older properties as possible would be beneficial in addressing the housing shortage.
Despite the critics' concerns about the program's strict requirements and feasibility, Federal Minister Geywitz remains optimistic, stating, "I'm not goinging to sugarcoat it; this program won't be easy for everyone." She acknowledges the challenges families will face in meeting the program's renovation deadlines and financial requirements but emphasizes the program's potential benefits in preserving historical buildings and aiding families with their housing needs.
