
What are the benefits of the child allowance for young families?
The Baukindergeld (child benefit for home buyers) is currently a hot topic in the media. However, the discussion mainly focuses on unresolved issues surrounding its implementation. The positive effects that the child allowance for home buyers could have are becoming increasingly irrelevant. Depending on where you live, this could reduce the cost of financing your own home by up to 63 percent, as the study shows.
The CRES study was based on average income figures for families in five selected German cities (Berlin, Hamburg, Leipzig, Nuremberg, and Krefeld). Location-specific real estate prices were included in the calculation in order to identify regional relief effects. The number of children and the amount of living space required depending on the number of children were also important factors in the calculation.
The relief in relatively affordable locations such as downtown Krefeld is correspondingly much higher than in expensive locations such as the central districts of Hamburg or Berlin. In these cities, families can achieve greater relief if they are willing to accept longer commutes to the center and purchase residential property in affordable outer suburbs.
The relief also depends on the number of children in a family. Families with several children generally receive greater relief than families with only one child. Here, the burden averages between 2.2 and 7.7 percent, with this figure multiplying with each additional child. This is also due to the fact that families with several children are usually more heavily burdened financially by the purchase of a house. After all, they need more living space and therefore have to invest a larger proportion of their income in the purchase of real estate.
The study shows that many families are already benefiting greatly from the child allowance for home buyers.
However, in a statement on the study, IVD President Jürgen Michael Schick also addressed the issues that still need to be clarified with regard to the Baukindergeld. This is because the Baukindergeld subsidy of €12,000 per child only helps families who could already afford to buy their own home.
Low-income families in metropolitan areas will not be able to afford home ownership even with this level of support. Single parents in particular will therefore benefit little from the child allowance for home buyers. Only 10 percent of families here have the necessary equity to afford a property. He also criticized the time limit for submitting applications. Currently, applications can be submitted retroactively from January 1, 2018, until December 31, 2020. According to the study's calculations, this reduces the maximum reach to 600,000 applicant families. The real estate association is therefore hoping for further improvements to the draft law.
Would you like to realize your dream of owning your own home and still have questions about the Baukindergeld subsidy? Contact us now. We will be happy to advise you.
Photo: Andreas Steidlinger