Shared real estate agent commission and extended child benefit for home construction

This year also sees several new regulations and laws in the real estate sector. An important change for potential homebuyers is the shared real estate agent commission, which came into effect throughout Germany on December 23, 2020. Good to know for families: The application deadline for the government's child benefit for home construction has been extended by three months to March 31, 2021.

Anyone looking to buy an apartment or house will save thousands of euros in the new year. Based on a draft law from the German Federal Government dated May 14, 2020, real estate agent fees have no longer been borne solely by the buyer since December 23, 2020. If the seller engages the agent, they must now pay at least 50 percent of the commission. This commission can amount to up to 7.14 percent, depending on the federal state. For example, on a purchase price of around €400,000, a 3.5 percent reduction translates to savings of over €14,000.

With the new, nationwide regulation, the German government intends to reduce ancillary purchase costs for private homebuyers, thereby further facilitating investment in residential property – especially in times of low interest rates. These ancillary costs, which include real estate agent commissions, property taxes, and fees for land registry entries and notaries, can account for a significant portion of the purchase price, ranging from 9 to 16 percent depending on the federal state.

Until now, in the German states of Berlin, Brandenburg, Bremen, Hamburg, Hesse, and parts of Lower Saxony, the buyer alone was responsible for paying the real estate agent's commission. However, even in other states, the buyer often had to pay the entire commission – not least because demand for real estate has significantly exceeded supply in recent years.

Beyond the issue of costs, the new law obligates the real estate agent to advise both parties, i.e., buyer and seller, and to mediate neutrally between them. Furthermore, the brokerage agreement must now be in writing; a verbal agreement is no longer sufficient.

Child benefit for home construction is intended to support families

The child benefit for home construction is intended to enable families with children under 18 to buy or build their own home. Families with a gross annual income of no more than €75,000 are eligible, plus an allowance of €15,000 per child. For each child, the family can receive a subsidy of €12,000 annually for ten years.

Due to the coronavirus pandemic, many applicants were unable to meet the original deadline of December 31, 2020, for signing a purchase agreement, obtaining a building permit, or beginning construction on a project not requiring a permit. Therefore, the application deadline has been extended by three months to March 31, 2021. Families who signed their purchase agreement or received a building permit on or after January 1, 2018 (for new buildings, the date of the building permit applies) can also apply retroactively for funding.

The application deadline for the actual funding remains unchanged at December 31, 2023. The application must be submitted online via the KfW grant portal within six months of moving into the funded property.

The government's housing subsidy for families with children primarily benefits young families with low to middle incomes. Approximately 86 percent of applications are submitted by families with one or two children, and about two-thirds of these families have young children up to the age of six. The average gross income for 60 percent of these families is less than €40,000 per year, well below the required income threshold.

Further information is available at www.bmi.bund.de and www.kfw.de/Baukindergeld .

Sources: bmi.bund.de, kfw.de, interhyp.de, verbraucherzentrale.de, seguras.de, focus.de.