In view of the rise in financing costs and high real estate prices, the path to home ownership is becoming increasingly difficult. A home loan and savings contract offers valuable support here by providing planning security. Against the backdrop of the energy transition, building society savings are particularly popular for financing home ownership. Pension provision and energy-efficient renovations are key issues here.
Current trends are clearly evident in conversations at family celebrations or get-togethers with friends. Discussions around the coffee table often revolve around heating systems, energy generation and the rising cost of living. Some even check their photovoltaic systems on their cell phones to see how much electricity they are currently producing. These systems offer the satisfaction of washing or heating with their own electricity.
Photovoltaic systems and building society savings
Financing a photovoltaic system via a home loan and savings contract is just one of the many residential use options offered by this financing instrument. Due to this diversity, building societies are also experiencing high demand in 2023 and 2024 after a record year in 2022.
A photovoltaic system is often just the last step towards a building with high energy efficiency. To achieve this, heating systems need to be replaced, facades restored and roofs insulated, among other things. All these measures can be financed through a building savings contract.
Energy transition in the building sector
The pressure for energy-efficient renovation is coming from many sides. Energy costs have risen due to geopolitical upheavals and have become difficult to calculate. At the same time, CO2 taxes were increased at the beginning of the year and will continue to rise in the coming years. With the Renewable Heating Act (Building Energy Act - GEG), which came into force on 01.01.2024, the German government wants to accelerate the energy transition in the building sector. From now on, new buildings must have heating systems that are powered by at least 65% renewable energy, while transitional solutions apply to existing buildings.
These requirements bring with them new opportunities for state subsidies. Since the beginning of the year, the new Federal Subsidy for Efficient Buildings (BEG) has been in force, which supports energy-efficient refurbishment measures such as replacing heating systems. These programs are run by the Kreditanstalt für Wiederaufbau (KfW) and the Federal Office of Economics and Export Control (BAFA). Public subsidies are becoming increasingly important, not only in the area of energy-efficient refurbishment, but also for building savings in general.
Modernization loan for immediate financing
Due to the legal situation, the energy transition and the high demand for modernization, building societies will remain an important financier in private residential construction in the long term. Anyone who needs immediate financing for refurbishment can fall back on a modernization loan. This is not only suitable for energy-related measures, but also for age-appropriate, barrier-free home conversions.
Interest rate security in private residential construction
While some are discussing the performance of their photovoltaic system and the effects of the new heating laws, others are wondering whether their dream of owning their own home is feasible. The rise in interest rates and the lack of availability of building materials and tradesmen are making it more difficult to buy a home. Many building projects are abandoned and no longer realized.
Statistical data confirms this trend: according to the Federal Statistical Office, a total of 94,100 apartments were approved in 2023, 26.6% fewer than in the previous year. These figures are the lowest since 2012. There was also a decline in the new construction segment for single-family homes (-39.1%), two-family homes (-48.3%) and multi-family homes (-25.1%). This trend continued in 2024: There were 18% fewer building permits in February 2024 than in February 2023. At the same time, property prices remain high as the decline in the construction sector concentrates demand on existing properties.
Building society savings to secure the equity base
In view of rising costs, house builders need more equity. Building society savings are an excellent way to build up equity at an early stage and offer the necessary planning security in uncertain times. Anyone who concludes a home loan and savings contract already knows their future loan interest rate. This explains the high demand for home loan and savings contracts for new projects or current financing: Those who have not speculated on permanently low interest rates now benefit from the independence of interest rates on the capital market. However, as building society loans have to be repaid relatively quickly, building society savings are not generally used for full financing.
State and company support
Politicians continue to show a willingness to relieve the tight housing market through subsidies and tax policy stimuli. As of 01.01.2024, the income limits for the employee savings allowance were more than doubled, allowing around 14 million additional employees to benefit from the allowance. Many employers pay capital-forming benefits in addition to the salary, which can be paid into a home savings contract in both the savings and repayment phases. The housing construction premium, which promotes state savings payments if the credit balance is used for residential purposes, was already adjusted in 2021.
Flexibility of building society savings
In addition to security, building society savings also offer great flexibility. The list of possible residential uses is diverse. Only when the contract is allocated does the saver decide whether to take out a building society loan or just pay out the building society balance. As no land register entry is required for loans of up to 50,000 euros, tenants can also use the building society loan. Free unscheduled repayments of an unlimited amount are possible at any time in order to repay the loan more quickly and save interest.
Conclusion
For real estate investors interested in low interest rates, building society savings offer an excellent financing option. It not only makes it possible to realize the dream of owning your own home, but also supports sustainable investments in energy-efficient building technologies. Planning security, government subsidies and flexibility of use make building society savings an attractive financing model in uncertain and cost-intensive times.
Kind Regards
Matthias Holzmann
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