Home buying assistance in Hessen: "A profitable initiative" or "a questionable scheme?"
In the heart of Germany, the state of Hessen has introduced a unique initiative to support first-time home buyers – the Hessengeld. This program, a project of the CDU and anchored in the coalition agreement, has been making waves since its inception.
The Hessengeld is designed to assist households with their home purchasing costs. Interestingly, 70% of the recipients have a household income below 100,000 euros, indicating that the program is primarily aimed at those who need it most.
Most recipients are on the lookout for a house or apartment near their current home. Only one in ten bought a property outside the district where they previously lived. This local focus suggests a desire for stability and familiarity among the beneficiaries.
Since September 2024, over 10,500 applications for the Hessengeld for home buyers have been approved, totaling 160 million euros. However, the government had expected 24,000 applications for the year 2025 alone, but only 14,500 have been submitted. This discrepancy has sparked discussions among political parties.
Critics, such as the Greens in the state parliament, argue that the Hessengeld is not creating incentives for new homeownership and is producing free-riding effects for planned real estate purchases. On the other hand, Finance Minister Lorz defends the Hessengeld, stating that it makes the decision to buy a house easier for people without being decisive.
The real estate transfer tax, which must be paid by Hessengeld recipients, amounts to 6% of the purchase price and is paid immediately in full. This tax, which is necessary for funding, has an "unwanted effect" of burdening the purchase, according to Lorz.
The main beneficiaries of the Hessengeld are couples and families with children. On average, 15,000 euros will be paid out per purchase in installments over ten years. For families, the average Hessengeld is slightly higher at 18,000 euros.
For each child under 18 years of age who moves in, an additional up to 5,000 euros is granted, but this amount is limited to the real estate transfer tax amount.
The construction industry has also voiced concerns, stating that the Hessengeld does not relieve broad sections of the population. Despite these criticisms, the SPD's Economy and Housing Minister Kaweh Mansoori and SPD parliamentary group's spokesman on financial policy, Marius Weiß, support the Hessengeld as a way to significantly reduce purchase costs for those wanting to buy their own home.
Interestingly, Hessen's real estate transfer tax rate of 6% is lower than that of several other German states. For instance, Berlin, Brandenburg, Bremen, Hamburg, Mecklenburg-Vorpommern, Niedersachsen, Nordrhein-Westfalen, Rheinland-Pfalz, Saarland, Sachsen, Sachsen-Anhalt, Schleswig-Holstein, and Thüringen all have higher rates. Bavaria, however, boasts a significantly lower rate of 3.5%.
As of now, eleven million euros in Hessengeld have been paid out to 7,021 recipients. Most applicants bought in Frankfurt, followed by Kassel and the Main-Kinzig district. On average, 15,000 euros are paid out per application, spread over ten years.
The Hessengeld, while not without its criticisms, continues to be a significant factor in the home-buying landscape in Hessen, providing financial support to many households and helping them realise their dream of homeownership.
Read also:
- Trade Disputes Escalate: Trump Imposes Tariffs, India Retaliates; threatened boycott ranges from McDonald's, Coca-Cola to iPhones
- Aquatech purchases Koch's Direct Lithium Extraction business, merging Li-ProTM DLE technology into the PEARLTM Technology Platform.
- Nepal's Journey: Evolution from Street Life to Political Power
- Li Auto faces scrutiny after crash test involving i8 model and a truck manufacturer sparks controversy
