Legal background

Since German bausparkassen are credit institutions, they are subject to all rules of European banking regulations and of the German Banking Act. Hence, the European Central Bank (ECB) and the Federal Financial Supervisory Authority (BaFin) are responsible for supervising bausparkassen in Germany. Only bausparkassen are authorized to conduct the Bauspar business. Apart from the bauspar business, they may only conduct certain other businesses related to residential housing finance (“principle of speciality”). The legal foundation is the German Bausparkassen Act which came into force in 1972 and has been amended several times since then. The act regulates the organisational structure of bausparkassen and sets forth the legal framework for the bauspar business. It also regulates the minimum allocation requirements and has provisions on the implementation of a reserve fund to minimise the waiting periods at allocation. Click here for an unofficial English translation of the Bausparkassen Act (last amended on 21 December 2015).

In addition to the Bausparkassen Act, the Bausparkassen Regulation deals with technical details. It stipulates ceilings and rules for the investment of available funds and the granting of other housing loans that are not bauspar loans. The new Bausparkassen Regulation has been valid since 29 December 2015.

The German government encourages savings efforts of low- to medium income households on bauspar contracts. The Housing Savings Bonus Act regulates amount and eligibility criteria (income ceiling) of the government savings bonus paid to bauspar savers.

A brochure that explains the bauspar system in more detail as well as its legal and regulatory background is available in: