By autumn, German families with children can expect substantial state aid for building or buying their own home
As "Russkaya Germaniya" notes, traditionally in Germany many prefer renting to owning – the rate of German homeowners is fundamentally lower than in most European countries. One of the measures being taken by the government coalition is aimed at supporting families with children.
A new benefit is intended for them – Baukindergeld, or "children's money" for building and buying housing, the final decision on which was made the other day by the ruling parties. Thus, the conservatives and social democrats are implementing one of the important agreements of the coalition treaty.
The state will support families with minor children who buy an apartment or house or start construction of a property from January 1 of this year. The benefit is 1,200 euros per year for each child and will be paid out over ten years.
Thus, a family with two children who buy an apartment this year or plan a transaction in the next two years (presumably, an application for Baukindergeld can only be submitted for housing purchased from January 1, 2018 to December 31, 2020) can count on 24,000 euros in state aid.
Couples with a total annual income not exceeding 75,000 euros plus 15,000 for each child can receive it. It is possible that there will be no age limit for children under 18 – likely a coincidence of claims for the construction benefit with the regular child benefit, which is paid up to age 25 provided that children who have reached adulthood are receiving higher or vocational education.
During negotiations on the benefit, German Finance Minister Olaf Scholz insisted on the need to limit the area of the purchased property to 120 square meters to save budget expenditures. Ultimately, it was decided to abandon such a restriction: the residential property, like its cost, can be anything; what matters are the purchase dates, annual income, and the fact that children live in the purchased property.
Thus, in the poor regions of East Germany, where a 100-square-meter apartment costs on average between 50,000 and 80,000 euros, under the most favorable combination of conditions, the state will finance almost half of the transaction for buyer families; in western cities, where comparable housing costs about 250,000 euros, no more than 10 percent.
In autumn, the law on child benefit for construction must be approved by the Bundestag; then it will become clear where, how, and with what documents one can apply for Baukindergeld: they will apply retroactively to all purchase contracts concluded from January 1. The state plans to allocate about 2 billion euros to cover the new financial benefit.
This necessity seemed excessive to the federal finance ministry, which for the first time in the last nine years of economic growth is under social democratic control, but in the end Scholz was forced to yield to the demands of coalition partners. The doubts of the "red" members of the ruling coalition were caused not only by excessive costs but also by the question of the social justice of the new benefit: the poorest taxpayers will not be helped by an extra 100-200 euros per month to buy housing, and they will have to bear the burden of Baukindergeld along with everyone else.
The opposition also has questions about the benefit: it is not certain that the modest amount of support will become an additional incentive for future homeowners, nor is it certain that the new benefits will not push up already mind-boggling real estate prices in densely populated prosperous regions.
The German Tenants' Association (Deutscher Mieterbund) adds fuel to the fire, assuring that in cities, construction money will turn into purchase money and will not stimulate the development of new housing projects.
As of July 2018, the introduction of autumn benefits is considered decided. However, experts in financing the purchase and construction of real estate advise not to count on these extra one to two hundred euros per month when calculating and arranging mortgage loans until the text of the law on Baukindergeld is published – who knows what will happen to the government coalition by autumn. Should the ruling coalition collapse, no one can confidently answer "yes" to the question of whether the bill on "children's money" for building and buying housing, which has many ideological opponents, will be approved by the new composition of the German parliament.