A clear concept for climate action

Almost 90 % of people in Germany consider climate action to be important or very important. A vast majority are also in favour of energy-related building upgrades to help protect our climate. Yet tenants’ approval is tied up with a very big “but”: they don’t want rents to rise significantly as a result. Homeowners and landlords also have reservations about the energy-related refurbishment required.

These include high investment costs, as energy-related upgrades to existing buildings are expensive. Homeowners and private landlords often don’t have the capital required. Landlords incur additional costs through delays to building work caused by objections from tenants or lengthy planning approval processes.

To return to tenants, they fear energy-related upgrades as they worry they will no longer be able to afford their own homes as a result of rising rent costs. This conflict between climate action and higher rent is clear from the figures. According to a survey, 87 % of respondents did not want to spend any more than EUR 50 extra per month to live in an energy-efficient home that helps meet climate targets.

However, Germany will only reach its climate targets by 2050 if the rate of refurbishment in Germany rises to 2.5 % from the current level of 1 %. Just as a reminder: around one-third of CO2 emissions are produced by the housing sector.

Resolving this conflict requires a refurbishment offensive that’s socially responsible. We have set out a concept that seeks to use income from national emissions trading.

  • 89 %

    of people in Germany think climate action is important or very important

  • 57 %

    are in favour of energy-related refurbishment for climate action

  • 79 %

    see costs for tenants as the biggest barrier to energy-related refurbishment

  • 87 %

    don’t want to spend more than EUR 50 extra per month.

Source: survey carried out by market research institute Kantar TNS on behalf of Deutsche Wohnen, 2020

The concept: fair and simple

Currently, when a residential building is refurbished, the landlord initially covers all costs. They can then allocate the modernisation costs involved in the total investment to the rent up to a maximum of 8 %. This amount, known as the modernisation levy, should be partly covered by the Energy and Climate Fund [Energie- und Klimafonds – EKF] in future.

The EKF was created by the German federal government with the aim of funding measures to improve energy efficiency and promote action to protect the climate and environment. It is funded by the sale of carbon dioxide emissions certificates as part of European emissions trading. Its income will rise again in 2021 due to national CO2 pricing in the transport and housing sector. The EKF is used to pay for measures that drive climate action and the energy transition forward. However, it has so far been used almost exclusively for transport projects. These include the reduction of VAT on train journeys or increasing commuter allowances, for instance. We propose using this income to make the housing sector in Germany virtually climate-neutral.

A gradual approach with clear benefits

The basis for this is a gradual model that protects tenants from sudden rent rises. Accordingly, in the first year following modernisation, the EKF would cover the full modernisation levy. This support would taper off over a period of 15 years. At the same time, tenants save on heating costs from the outset. This has the positive effect of seeing rent costs actually fall in the first few years after modernisation.

Our proposal has many advantages. The Deutsche Wohnen model

  • helps the rate of refurbishment skyrocket
  • returns money from CO₂ pricing to citizens
  • effectively staves off rises in energy costs
  • ensures first and foremost that we meet our climate targets

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