IW: Warm utility costs 43 percent higher than before the war in Ukraine

Consumers - IW: Warm utility costs 43 percent higher than before the war in Ukraine

According to a study, there is hardly any relief for tenants in terms of ancillary costs following the rise in energy prices. Cold utility costs have continued to rise in the current year, while heating costs have only fallen slightly compared to the crisis year 2022, according to an analysis published by the German Economic Institute (IW).

The study examined advertisements for new rental contracts. The discounts for warm utility costs were almost half as high as before the war in Ukraine, it said.

According to the study, tenants paid an average of EUR 1.67 per square meter of living space for warm utility costs - heating and hot water - in September 2023. This was four percent less than a year earlier (EUR 1.74). In addition, there were the cold ancillary costs, including for waste disposal and cleaning work. They amounted to EUR 1.78 per square meter, three percent more than in 2022 (EUR 1.72). Overall, the total ancillary costs therefore fell slightly to EUR 3.45 per square meter.

Further increase threatened by end of energy price brakes

Up until the winter of 2021/2022 before the start of the war in Ukraine, down payments for warm utility costs had remained stable at an average of EUR 1.17 per square meter of living space, according to the study. "Current figures from the third quarter of 2023 show that warm utility costs are still around 43 percent higher than before the winter of 2021/2022." Due to the expiry of the state energy price brakes, many households are threatened with an increase in warm utility costs at the beginning of 2024, especially if tenants are unable to conclude a new energy supply contract themselves.

"Last year, we saw a sharp rise in warm utility costs, but not much has changed since then," said IW real estate expert Michael Voigtländer. Although energy has already become significantly cheaper on the stock market, this is only slowly being reflected in tenants' long-term supply contracts.

According to the IW, ancillary housing costs continue to account for a high proportion of the total rent. While the national average was a record 27% last year, it was still 25% at the end of 2023. The decline can be explained by the sharp rise in net cold rents of five percent.

For the study, IW was commissioned by Deutsche Invest Immobilien AG to examine warm and cold ancillary costs for rental apartments in 400 cities and districts in Germany for the fourth time. Almost 1.93 million advertisements were analyzed between January 2018 and September 2023.

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1. The energy crisis, triggered by the war in Ukraine, has led to a significant increase in energy prices, affecting both gas and heating costs in Germany.
2. Despite the ongoing energy crisis, rental prices in Cologne have remained relatively stable, but tenants are facing higher incidental costs due to the rise in energy prices.
3. According to the Institute of the German Economy (IW), ancillary housing costs, including warm utility costs, account for a significant portion of the total rent in Germany.
4. In response to the energy price increase, many households have switched to alternative energy sources, such as solar panels, to reduce their reliance on gas and lower their energy costs.
5. As the energy price brakes expire, many consumers in Germany are bracing for an increase in their energy bills, particularly for warm utility costs, which are still 43% higher than before the war in Ukraine.
6. The IW real estate expert, Michael Voigtländer, noted that while energy prices have fallen on the stock market, there has been little relief for tenants in the form of lower utility costs.
7. In an effort to mitigate the impact of the energy crisis on consumers, some German cities have implemented measures to support low-income households and provide financial assistance for energy bills.

Source: www.stern.de