Saxony significantly increases funding for housing construction

Around an additional 73 million euros in 2024

The Free State of Saxony is providing significantly more funding for housing construction this year: a total of around 73 million euros more funds can be made available for the construction of social housing and the creation of residential property. Thomas Schmidt, Saxon State Minister for Regional Development, announced this today (28 February 2024). ‘The increased funding will help to ensure that more can be built again. Above all, it also benefits the construction industry and the building trade. The industry found itself in a very difficult situation last year because construction activity increasingly ground to a halt due to high costs, high interest rates and high standards,’ said the Minister. ‘A remedy is needed here. After all, if companies give up or cut back on staff, the construction industry will permanently lose capacity, which we will urgently need in the coming years.’ The state government is providing 105 million euros for property development this year - around 26 million euros more than was approved in 2023. The funding will be used on the one hand via the Family Housing Directive (RL Familienwohnen), through which the Free State supports families with very low-interest loans (less than one per cent) and a 25-year fixed interest rate for the construction or purchase of residential property, depending on the number of children. On the other hand, the Rural Home Ownership Subsidy Programme (RL WLR) will be offered again from April. In rural areas, i.e. outside of Chemnitz, Dresden and Leipzig, households without children can also receive support for the construction or purchase of residential property, as well as for the renovation or extension of existing residential property. Funding is also provided in this guideline through very long-term loans with very favourable interest rates. This year, almost 187 million euros have been made available for the creation of housing with tied occupancy, so-called social housing - an increase of 47 million euros compared to the funds approved in the previous year. The guideline for tied rental housing (RL gMW) supports the construction of new social housing in the two cities of Leipzig and Dresden. The affordable rental housing guideline (RL pMW) is also available throughout Saxony. With its help, existing housing can be refurbished and then also rented out as social housing. The prerequisite for both guidelines is that the flats are subsequently only rented out to people who are in possession of a certificate of eligibility for housing. ‘In addition to increasing the funds that we are making available for the construction and renovation of housing, we have already taken a whole series of measures in the past year to support the construction industry in its difficult crisis,’ said the Minister. ‘For example, we sought close dialogue with the construction and property industry and the skilled trades at an early stage. On Saxony's initiative, the demands of the ‘Dresden Declaration’ became the subject of the Construction Ministers' Conference, which addressed a whole catalogue of demands to the federal government.’ Saxony itself has done its homework, continued Minister of State Schmidt: ‘We have tackled points that we can implement without the federal government. For example, the Saxon state parliament amended the building regulations in January. In future, it will make it possible to extend attic storeys without a permit, simplify the obligation to create parking spaces and enable building type E, which allows for simpler and therefore more cost-effective construction. Last year, improvements were also made to subsidies. For example, the subsidy rates of the RL gMW were adjusted to the increased construction costs and increased by around 20 per cent. In the case of modernisation funding (RL pMW), the maximum funding amounts were increased in view of the rise in construction prices. In addition, a climate component was introduced with particularly attractive conditions for refurbishments that achieve the ‘Efficiency House 85’ standard. This subsidy has also been extended to the cities of Dresden and Leipzig, where it was not previously offered. An attractive interest rate for loans, coupled with subsidies, have resulted in the subsidy programme being very well received. The subsidy conditions for the property subsidy programme (RL Familienwohnen) were already improved in 2022. The total permissible expenditure was raised from 300,000 euros to 425,000 euros. Despite rising interest rates on the capital market, the very favourable interest rate of 0.75 percent has so far been maintained for the entire term of 25 years. Source: Media Service Saxony

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