The German federal government introduced a draft reform for the heating and building modernization law on Wednesday. During the announcement, discussions focused heavily on balancing owner freedom with robust tenant protection.
Katherina Reiche, the Federal Minister for Economic Affairs (CDU), emphasized the government’s approach, stating a focus on “common sense, freedom, and speed rather than prohibitions”. Meanwhile, Stefanie Hubig, the Federal Minister of Justice (SPD), stressed that tenant protection will remain a central pillar of the revised guidelines. According to Hubig, the new rules grant property owners greater flexibility when installing new heating systems, though this choice cannot come at the expense of tenants. She noted that if landlords opt for new fossil fuel systems, they will be required to contribute to the ongoing heating costs, ensuring that heating does not become a financial burden for renters.
The reform constitutes a major softening of previous mandates, most notably eliminating the rule that required new heating systems to operate with at least 65% renewable energy. Consequently, traditional fossil fuel boilers (gas and oil) are now permitted for installation even after 2045, despite the federal climate protection goals aiming for climate neutrality by that year.
The government plans a phased development for alternative fuels, establishing a minimum quota for biogas and synthetic fuels. This quota is set to rise from 10% in 2029 to 60% in 2040.
Financial models provided by the Fraunhofer Institute for System and Innovation Research (ISI) highlighted potential cost shifts: they calculated that under the draft rules, the extra financial burden on tenants for installing a gas boiler instead of a heat pump would be about €55 per month in 2025, potentially rising to €272 monthly by 2045.
The coalition ultimately reached a compromise where property owners must bear half of the network fees, the CO2 price, and bio-fuel costs when installing a new gas or oil boiler-though this contribution is capped at boiler types with up to 30% biogas content.
However, this compromise met mixed reactions. Environmental groups expressed concern that the established quotas would not be sufficient to ensure the government meets its CO2 sectoral targets for the building sector. Similarly, the property owner association, Haus und Grund, criticized the structure of the cost-sharing agreement agreed upon by the CDU and SPD. Conversely, the Tenant Union welcomed the newly planned cost allocation after strongly criticizing the initial draft, but maintained that further amendments are necessary to safeguard tenants from financial hardship, particularly as biogas quotas increase.