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Energy-efficient building: KfW funding freeze hits many construction projects

Energy-efficient building: KfW funding freeze hits many construction projects

Status: 01/26/2022 12:42 PM

The discontinuation of KfW’s Efficiency House funding continues to make waves. According to estimates, about 50,000 apartments and houses will be directly affected by the decision of the German Development Bank.

after Early termination of subsidies announced by the State Development Bank KfW There are criticisms of energy-saving buildings. Against this background, the Federal Government stresses the need to launch a follow-up program quickly.

It is already becoming clear that the decision will affect tens of thousands of construction projects. “Nearly 50,000 homes and apartments” have been affected, said Harald Simmons, president of the Emperica Institute “The World”. Simons assumes that nearly half of the 100,000 construction projects in the relevant timeframe from the end of November to about May would have benefited from funding.

“Many builders will wait and see”

“Now these projects must be re-planned and re-applied, and many builders will also wait to see what follow-up action may come,” Simmons told the newspaper. Significant delays of up to a year are expected. “I find it inconceivable that the new federal government would simply take advantage of commitments made regarding the duration of funding programmes. This should not happen in an organized country.”

The BdB Association of Banks now expects a significant increase in financing costs for private housing construction, among other things due to the subsidy freeze. “I can’t give you an accurate prediction of how financing real estate for private clients will become more expensive. But it will become more expensive and that will be noticeable,” Christian Osig, Managing Director of the Bahrain Development Bank, said in a video link. In addition to several other measures, “the Federal Ministry of Economic Affairs and Climate’s decision to discontinue this financing program for energy-efficient construction” also has an impact on clients’ financing costs, according to Usage.

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Criticism from opposition groups and consumer protection

The new president of the Christian Democratic Union, Frederick Mers, also made clear criticism. He complained that “many of those affected cannot build now and must instead bear the costs of planning and preparation.” In light of the actual rise in prices for construction and materials, this is a slap in the face, added Dorothy Barr, deputy chair of the CDU/CSU Parliamentary Group.

“KfW funding cuts in general are detrimental to climate protection and consumers,” said Thomas Engelke, head of the energy and construction team at the Federal Federation of Consumer Organizations (VZBV). The fact that the federal government argues that new buildings according to the KfW EH55 efficiency standard no longer contribute to climate protection is valid. He criticized “the higher EH40 standard and full power renewals are also affected by the discontinuation”.

The previous government in the pill

The Green Party defended the decision, citing the failures of the previous government. “Every support needs a budget basis,” said the Green Party’s environmental policy spokesman in the Bundestag, Stefan Wenzel, with the aim of exhausting budget funds. Former Economy Minister Peter Altmaier (CDU) did not create this, Wenzel told Handelsblatt.

“We must not leave home builders in the rain,” explained Daniel Fust, a spokesman for construction and housing policy for coalition partner FDP. Many people were planning their homes or renovations “on the edge of the cliff”. “If the KfW money is lost now, it will be scarce for many.”

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Some can hope for new regulations

Federal Construction Secretary Clara Jewetz (SPD) has promised a quick new law. “Anyone dealing with a big project like building a house needs safe frame conditions,” the politician told Bild newspaper. The government is already working on a new financing concept. “There will be clarity on funding opportunities as soon as possible.”

According to the Economy Ministry, KfW funding for energy-related renovations will resume “as soon as the appropriate funds are made available in the budget”. In the case of new buildings EH40, there must be a rapid retrofit, which is worked on “under high pressure”.

In order to intercept cases of hardship, the Ministry of Economic Affairs and the German Development Bank are examining a loan program aimed at providing low-interest loans to applicants whose applications have been rejected. This is intended to prevent a liquidity gap in projects ready for construction.