The proposed new Building Modernization Act (GMG) could significantly decrease the availability of rental apartments across Germany, according to several industry associations. The property owners’ association, Haus und Grund, predicts that the rental market could see a reduction of up to three million housing units.
According to Kai Warnecke, the association’s president, the pressure stems partly from millions of homes currently using gas-powered floor heating systems, where installing heat pumps is often impractical. Consequently, landlords would be forced to install new gas heaters and subsequently have to share the increased heating costs with tenants. Warnecke stated that “the cost risks with the new regulation are unpredictable” suggesting that many landlords might be advised against continuing to rent out their properties.
Michaela Engelmeier, the chairwoman of the social association SoVD, is also warning of a palpable decline in available rental units. She fears that, due to rising costs, property owners will be more inclined to sell their real estate rather than rent it out, which would further worsen the housing market situation and drive up rents. Engelmeier called this prospect “absolutely counterproductive” for around three million affected people.
In contrast, Federal Minister for the Environment, Verena Hubertz (SPD), dismissed these warnings. Her spokesperson told the newspaper that the criticism was “not comprehensible” because the draft legislation introduces necessary flexibility regarding heating choices. It remains possible for changes to occur during the parliamentary process.
The building sector is currently failing to meet the CO2 reduction targets set by the Federal Climate Protection Act and the EU Climate Protection Regulation. This led the traffic light coalition government to reform the Building Energy Act (GEG), requiring that new heating installations operate with at least 65 percent renewable energy, such as through heat pumps or solar thermal systems.
However, the CDU/CSU and SPD are pushing to replace these regulations with the new Building Modernization Law (GModG). Instead, the law proposes that new oil and gas heaters be operated with an increasing share of synthetic fuels and biogas. In these cases, the costs associated with this likely expensive blending, rising grid fees, and increasing CO2 prices for heating would be distributed between tenants and landlords. Nevertheless, experts anticipate that this so-called “bio ladder” will not be sufficient to meet the building sector’s climate goals, potentially leading to billions of euros in payments from taxpayers under the EU’s burden-sharing mechanism.
