Fair rents: Kassel model links rent increases to energy savings

Up to now, the so-called modernization levy has been based on the investment costs - regardless of whether the measures save energy. This can lead to a one-off sharp rise in rents, while economically sensible modernizations often fail to materialize.

As more than half of Germans live in rented accommodation, the success of energy-efficient modernizations depends largely on how landlords invest. "The current rules place an excessive burden on tenants in the short term and often prevent economically sensible modernizations," says Dr. Leo Reutter, research associate at the Department of Civil Law, Corporate and Competition Law at the University of Kassel. "With the new rule, everyone could benefit from fair costs and predictable investments."

The reform proposal uses energy demand certificates. They show how much energy a building consumes in standard operation, without taking into account the individual heating behavior of the residents. After a modernization, the new energy requirement is determined and serves as the basis for the service charge bill.

If the costs for energy consumption fall, tenants pass on some of the savings to the landlords via the service charges. If they rise as a result of inefficient measures, the latter must bear the difference. The actual energy consumption will continue to be billed as usual.

"Whoever decides on the energy efficiency of a building should also bear the economic consequences," emphasizes Reutter. "This way, it remains clear to tenants what they are paying for." The model is intended to spread rent adjustments over time, prevent high one-off payments and give landlords planning security. At the same time, it is intended to specifically promote sensible modernization and support climate targets in the building sector.

"Fair rents and effective emission reductions can only be achieved if economic efficiency and climate protection are considered together," emphasizes Reutter.

Link to publication: Policy paper, draft law

Contact:
Dr. Leo Reutter
University of Kassel
Department of Civil Law, Corporate and Competition Law
Phone 0561 804-2463
Email: leo.reutter@uni-kassel.de

What does this mean in summary?

• In future, rent increases following energy refurbishments should be based on the actual energy savings - no longer just on the investment costs.
• The model ensures fair rents, more planning security and targeted climate protection measures in the building sector.