Owning an eco-house made easier for expats in Germany

  • eco-house
Published on 2023-03-31 at 13:00 by Asaël Häzaq
The government of Germany has developed this new program in association with Kreditanstalt für Wiederaufbau (KfW) bank to support homeowners concerned about the environment. Named the “Climate Friendly New Build", the credit plan grants credit facilities to owners buying or building a house. Let's have a closer look at it and how expats can benefit from it.

Germany supports eco-friendly homeowners

Known as the « climate-conscious », the eco-friendly community is growing and booming. According to them, ecology should not be restricted to a confined circle; on the contrary, it must be applied to every aspect of life. The federal government of Germany got the message. In March 2020, the Federal Ministry for Economic Affairs and Energy, in association with the KfW bank, had already launched a credit plan for eco-friendly SMEs.

This time, the ministry and the bank target a wider audience. The operation started on March 1st. The loan can reach 150 000 euros for a house and is not families-exclusive; anybody can apply, even expats. The credit plan is also accessible to district enterprises, housing cooperatives, social organizations and associations, and public institutions. But don't be confused: this i no funding but credit facilities offered by the KfW bank. The credit plan provides a reduced interest rate. The federal government points out that these reductions may reach 4% in respect of the current situation.

“Climate-Friendly New Build”: how to obtain credit facilities?

The eligibility criteria are quite strict, though. The 150 000 euros financing is only granted to houses with an energy efficiency of EH40 (Efficient House 40). Energy efficiency is the ratio between the output and input of energy conversion. High energy efficiency is, therefore, essential.

There are other restrictions. The KfW makes it clear that the plan excludes individuals who have already contracted a housing loan and need extra funds to finish their project. This program also excludes people planning to purchase new land.

Two types of loans are available: bullet loans and annuity loans. With the bullet loan, the borrowed principal is paid back at the end of the loan term. With the annuity loan, the interest payment is due during the first years. After that, the same amount is to be paid monthly.

To apply, one must consult an energy efficiency expert for approval of the house or project in accordance with the regulations. If approved, the expert remits an attestation. Only afterwards, the applicants can propose their project to their bank or financial partner; then, they can apply at the KfW to be part of the credit plan. The application must be approved foremost by the KfW for the construction to start or to purchase the new house.

In the case of construction, the finished house is to be inspected for a “certification after completion”; this document is to be remitted to your bank or financial partner. This procedure must be settled as soon as possible.

Investing in a sustainable home: opportunities for eco-expats

Expats are more and more concerned about the environment. For climate-conscious people, an eco-friendly move abroad is absolutely feasible. Environment sustainability is compatible with them, and many of these expats choose eco-friendly countries like Finland, Norway, Sweden, Luxembourg, Germany, Costa Rica, or Canada.

Initiatives developed by the federal government of Germany and the KfW bank are a real opportunity for the climate-conscious, even those more detached from environmental concerns.

Because of worldwide inflation and the housing crisis, building sustainably is undoubtedly advantageous. Although the cost is still higher than a classic house in general (20 to 30% according to the chosen options), these houses, known as “passive houses”, are highly cost-effective in the long run; they consume less energy than a traditional house. The materials are more plant-based or animal orientated rather than petrochemicals, hence more environment-conscious. This type of construction not only increases the quality of air that is breathed in the house but also the resale price.

Finally, passive houses are supported by special allocations. Countries are aware that long-term investment in eco-friendly buildings is beneficial, and expats, too. Among those who consider investing in housing in their host country, we find people concerned about green energy. Moreover, they know that it won't be difficult to sell the house later on, eventually.