The new Heating Act (GEG) in Germany has far-reaching implications for homeowners. While some are eagerly embracing the shift to renewable energies, many face financial and practical challenges. At the heart of the legislation is the ambitious vision that, starting next year, at least 65% of newly installed heating systems must be powered by renewable energies.
The background to the dispute
While the FDP is calling for the GEG to be reviewed for practical feasibility, the SPD and the Greens still want to focus on a rapid transition to more sustainable heating systems. This involves incentives for homeowners to replace old heating systems and switch to renewable energies. These plans have prompted many people to invest in replacing their heating systems or upgrading to more modern technologies.
This was decided for the new heating law
- From January 2024, it will be mandatory to install heating systems based on at least 65% renewable energy in new buildings within new development areas.
- Existing heating systems may continue to be operated and, as long as they are not irreparably damaged, may also be repaired
- The replacement of a heating system with a system based on at least 65% renewable energy in an existing building is subsidized by the government up to 70% of the investment costs, for example for particularly rapid conversions and people on low incomes.
- In certain cases, it is possible to be exempted from the obligation to convert to renewable energies (namely, if the targets can be achieved by other measures not specified in the GEG or if the requirements lead to unreasonable expense or constitute an unreasonable burden. Economic unprofitability does not constitute grounds for exemption).
- Cities and municipalities have until mid-2028 at the latest (large cities until mid-2026) to determine where heating networks or climate-neutral gas networks are to be expanded in the coming years.
Challenges for property owners
However, these ambitions are not without obstacles. The increasing demand for heating modernization has led to material shortages, which is driving up costs. Installation companies are overloaded and are struggling to meet demand. The limited availability of modern heating appliances is another problem. Switching to a heat pump in particular can be financially and mentally challenging, which presents many homeowners with a difficult decision.
What does this mean for the real estate market?
This political dispute has far-reaching implications for the real estate market. Uncertainty about future legislation and the challenges associated with heating modernization have already affected demand for real estate, especially older, non-modernized properties. Buyers and sellers may need to rethink their plans and adapt to changing circumstances: Property buyers who were previously determined to purchase a home may now hesitate, as the costs and difficulties associated with switching to renewable energy could impact their budgets and schedules. Similarly, sellers may find it difficult to sell their properties at their desired prices, as potential buyers are more cautious due to uncertainty about future regulations and costs.
Whether you are considering heating modernization or planning to purchase an existing property, our experts are ready to guide you through the entire process. We understand the complexity and ever-changing requirements of the real estate market, especially at a time when the Building Energy Act (GEG) is impacting the industry.
