What the new EU renovation requirements mean for homeowners

According to an agreement reached by negotiators from the European Parliament and EU member states, buildings must become more energy efficient in future. This should help the EU to meet its climate targets. Specifically, the energy consumption of residential buildings should fall by an average of 16 percent by 2030 and 20 to 22 percent by 2035, as the EU states and the Parliament announced in Brussels on Thursday evening.

For non-residential buildings, the regulations stipulate that 16 percent of the least energy-efficient buildings must be renovated by 2030 and 26 percent by 2033.

An overview of the agreement:

Will I be forced to renovate my home?

The specific impact of the targets on homeowners and the economy depends primarily on how Germany implements them. Contrary to interim fears, however, Berlin will be given significantly more leeway. The EU Parliament and the EU member states originally wanted to introduce stricter minimum standards for buildings, similar to the EU Commission. For example, the idea was that the 15 percent most inefficient buildings in each country would have to be renovated. Many saw such requirements as mandatory refurbishments.

However, this has been abandoned at EU level. The requirement that the energy consumption of residential buildings must fall 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 upgraded to an even better standard, this will help to ensure that the targets are met. Poorly insulated buildings are therefore no longer nearly as much of a focus as originally planned. However, a good half of the savings are to be achieved by renovating buildings with the poorest energy efficiency.

How expensive will the project be?

That also depends on how exactly Germany implements the targets. The owners' association Haus & Grund, citing figures from the Arbeitsgemeinschaft für zeitgemäßes Bauen (ARGE e.V.) from 2022, stated that the 15 percent of the most inefficient buildings in Germany correspond to around 2.3 million detached and semi-detached houses and 0.1 million apartment buildings. Even a partial modernization of these buildings could cost around 17 billion euros per year. However, the industry also sees the compromise that has now been reached as offering significantly better opportunities to directly refurbish entire blocks of flats.

According to the Federation of the German Construction Industry, so-called economies of scale could be achieved if a larger number of apartments and houses are renovated at the same time. This could reduce the average costs per residential unit. According to the EU Commission, incentives must also be offered for renovations aimed at vulnerable customers and buildings with the poorest energy efficiency. It is not yet clear how much money will be made available for such incentives. In addition, according to the Commission, EU states must protect tenants from evictions that could result from disproportionate rent increases following a renovation.

Are there exceptions?

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

What other measures have been decided?

No more oil or gas heating systems are to be used by 2040. The Parliament announced that the EU states would also have to stop subsidies for heating systems 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 gradually be installed on public and non-residential buildings from 2027, provided this is technically, economically and functionally feasible. Furthermore, from 2030, only buildings that do not emit any greenhouse gases from fossil fuels on site are to be built. However, exceptions are possible according to the Commission.

Why is there a need for action?

The plan is based on a proposal from the EU Commission. It presented this almost two years ago, for example because, according to the Commission, 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 happens next?

With the agreement, the plans are as good as complete. The Parliament and the EU member states still have to formally approve the agreement. However, this is very likely as representatives of both parties are directly involved in the negotiations. It is very rare for additional demands to be made after such an agreement has been reached. The EU member states must then transpose the directive into national law.