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Real estate: What new EU renovation requirements mean for homeowners

Real estate: What new EU renovation requirements mean for homeowners

Good insulation can save a lot of energy. Particularly inefficient buildings should therefore now be renovated across the EU. Homeowners can still breathe a sigh of relief.

According to an agreement between negotiators from the European Parliament and the EU states, buildings will have to become more energy efficient in the future. This should help ensure that the EU meets its climate goals. Specifically, the energy consumption of residential buildings is expected to fall on average by 16 percent by 2030 and by 20 to 22 percent by 2035, as the EU states and the parliament in Brussels announced. For non-residential buildings, the regulations require 16 percent of the least energy efficient buildings to be renovated by 2030 and 26 percent by 2033. An overview of the agreement:

Will I be forced to renovate my house?

The specific impact the requirements have on homeowners and the economy depends primarily on how Germany implements them. Contrary to what was previously feared, Berlin has significantly more leeway for this. The EU Parliament and the EU states originally wanted to introduce tougher minimum standards for buildings, similar to the EU Commission. The idea was, for example, that the 15 percent of the most inefficient buildings in a country would have to be renovated. Many viewed such requirements as forced renovations.

However, this has been moved away from at the EU level. The requirement that energy consumption in residential buildings must decrease by 16 percent by 2030 and by at least 20 percent by 2035 is an overarching goal. In other words: Even if buildings that are already well insulated are raised to an even better standard, this will help ensure that the goals are achieved. Poorly insulated houses are no longer as much of a focus as originally intended. However, a good half of the savings should be achieved by renovating buildings with the worst energy efficiency.

How expensive will the project be?

This also depends on how exactly Germany implements the requirements. Upon request, the owners’ association Haus & Grund, citing figures from the Working Group for Contemporary Building (ARGE eV) from 2022, said that the 15 percent of the most inefficient buildings in Germany correspond to around 2.3 million single- and two-family houses and 0.1 million multi-family houses. Even a partial modernization of these buildings could cost around 17 billion euros per year.

However, the economy also sees the compromise that has now been found as significantly better opportunities to renovate entire blocks of flats. If a larger number of apartments and houses are renovated at the same time, so-called economies of scale could occur, said the Main Association of the German Construction Industry. This could reduce the average cost per housing unit.

According to the EU Commission, incentives must also be offered for renovations that target vulnerable customers and buildings with the worst energy efficiency. How much money will be made available for such incentives is still unclear. In addition, according to the Commission, EU states must protect tenants from evictions that could follow, for example, disproportionate rent increases after renovation.

Are there exceptions?

Yes. According to the EU Parliament, agricultural and listed buildings can be exempt from the new regulations. The same applies to buildings that are protected because of their special architectural or historical value. Churches and other places of worship can also be exempt from the requirements. The EU Commission announced that EU states can also exempt holiday homes from their obligations, for example.

What further measures have been decided?

Oil or gas heating should no longer be used by 2040. Parliament announced that the EU states would also have to stop subsidies for heating using fossil fuels such as oil or gas from 2025. However, incentives for hybrid systems, such as a combination of fossil fuel heating and a heat pump, should still be possible.

In addition, solar systems must be gradually installed on public buildings and non-residential buildings from 2027, provided this is technically, economically and functionally feasible. In addition, from 2030 onwards, only buildings should be built that do not emit greenhouse gases from fossil fuels on site. According to the Commission, exceptions are possible.

Why is there a need for action?

The project is based on a proposal from the EU Commission. She presented this almost two years ago because, according to her, buildings are responsible for around 40 percent of energy consumption and around a third of greenhouse gas emissions in the EU. If houses are better insulated or modern heating systems are used, this can reduce energy requirements.

What’s next?

With the agreement, the plans are almost completed. Parliament and the EU states still have to formally approve the agreement. However, this is considered very likely since representatives of both parties are directly involved in the negotiations. It is very rare that additional demands are made after such an agreement. The EU states then still have to implement the directive into national law.

Questions and answers from the EU Commission on its proposed law

Source: Stern

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