Heating law reform takes key hurdle as German govt parties agree tenant cost protection

In their long-delayed reform of Germany's rules for making heating more climate-friendly, the government parties have agreed to partly protect tenants from cost rises if landlords opt for new gas or oil boilers, news agency dpa reported in an article published by Handelsblatt. The additional costs of running a fossil fuel system would be split between landlords and tenants, the parties said. 

The conservative CDU/CSU alliance and the Social Democrats (SPD) in February presented the outline of a reform of the country’s Building Modernisation Act, commonly referred to as the “heating law.” Contrary to the law introduced by the previous government, the parties decided to scrap a ban on new fossil heating systems, even though the costs for heating with oil and gas are expected to increase substantially in the coming years due to carbon pricing and a dwindling number of gas network users making operation more expensive for remaining customers. 

The cost risks associated with carbon pricing under the European emissions trading system (ETS), gas grid fees, and biogas additions to gas networks should be split between landlords and tenants, said SPD parliamentary group leader Matthias Miersch. He added that the regulation would apply to all new and existing rental contracts when new heating systems are installed. If landlords decide to stick to fossil fuels, they have to “assume economic responsibility,” Miersch said.   

CDU parliamentary group leader Jens Spahn said the regulation would ensure “a fair balance” between landlords and tenants, as one party decides what the homes are heated with and the other determines how much heating energy is used. 

The government’s proposal also drops a requirement for at least 65 percent renewable energy in new heating systems, a key element in the heating law agreed under the previous government. Instead, the CDU/CSU and the SPD agreed that gas heating systems must operate with a growing share of bioenergy from 2029, increasing gradually until 2040. 

The agreement on tenant protection, a demand of the SPD, marks an important step towards finalising the law reform. The government argues the new law gives homeowners greater freedom of choice when deciding on investments, while critics say it will complicate the move to climate neutral heating, create uncertainty for industry, and lead to much higher costs for consumers.