Number of the month: 150,000 euros

From March 2023, building owners can receive grants and subsidized loans from the KfW Development Bank. The amount of funding varies depending on the type of new construction and is allocated per residential unit. The maximum funding amount is €150,000.

The new subsidies not only benefit homeowners but also the environment. This is likely to further drive up demand for heat pumps and other climate-friendly heating systems. In the first three quarters of last year alone, more than 240,000 heat pumps were produced in Germany. This is according to a recent press release (March 3, 2023) from the Federal Statistical Office . However, the high demand has also led to increased costs for tradespeople. In January 2023, the total cost of installing heating systems rose by 19 percent compared to the previous year.

With the new subsidies, home builders can avoid the increased interest rates. However, the specific conditions must be observed when applying for the subsidies. €1.1 billion will be provided by the government to support new construction projects. Homeowners who intend to live in their property themselves receive somewhat better terms than those building for the residential market. The annual interest rate varies depending on the loan term. For example, those who agree to a term between 11 and 25 years pay only 0.75 percent interest. In contrast to current construction loan interest rates, which range between three and four percent depending on the term, this results in significant savings on monthly repayment costs.

Notes

For the sake of readability, this text uses the generic masculine form. Female and other gender identities are explicitly included where relevant to the statement.

This article does not constitute tax or legal advice for any specific case. Please consult a lawyer and/or tax advisor to clarify the facts of your individual situation.

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