Sales strategy: German Buildings Energy Act pricing in and cushioning
- The Germans Building Energy Act (GEG) increases energy requirements from 2024 – with deadlines from 2026 To 2045.
- Energy performance certificate & consultation will be mandatory, insulation & replacement may be necessary.
- Refurbishment is unavoidable in the long term, investment costs reduce the sales price.
- Conditions are complex, exceptions numerous, subsidy programs available.
- Only professionals can use factors strategically and achieve the best possible prices.
Germans Building Energy Act: meaning, purpose and background
With all due respect – and despite general outrage: the amended Germans Building Energy Act is nothing new in principle. Rather, it puts into concrete terms the path that has long been taken in dealing with the climate crisis. This goes back to the Kyoto Protocol of 1997, which is binding under international law, and takes not only transport but also real estate into the future – until 2045, when the entire German building stock is to be climate-neutral.
Specifications already apply, for example permitted CO2 equivalent quantities. However, the German building sector has already exceeded its maximum permitted emissions several times, most recently in 2022. And it accounts for around a third of total national emissions. Forced action therefore seems unavoidable and the economic burden unavoidable. Both are true.
But for owners, the effects are nowhere near as dramatic as some people think. As trusted customers, we will take you along for the ride!
Germans Building Energy Act revision and implementation goals: Time is relative
What we are facing on the horizon is a slow-moving vehicle: The Building Energy Act dates back to 2020 and defines requirements for saving resources. Following its 2nd amendment, the rules will become stricter from 2024, but not immediately, but gradually. Refurbishment deadlines vary greatly depending on the state of the building – in the time frame from 2026 to 2045. Immediate action is limited to a few measures such as the energy performance certificate. But sellers must have this ready immediately!
An obligation to install ecological heating systems only effectively applies after the completion of communal heating planning (in large cities from 2026, in smaller communities from 2028) – and only when systems are completely replaced. New buildings, on the other hand, must immediately comply with the 55 efficiency house standard from 2024. Among other things, they must then be heated with at least 65% renewable energy.
Implications for sellers: it is becoming more difficult
If you want to sell your property now, you should know what short, medium and long-term investments potential buyers will have to make. This is because refurbishment measures can often be avoided and even more often postponed. In the long term, however, they are unavoidable.
Sellers should be prepared for the fact that achievable property prices will suffer as a result. However, it is possible to counteract these fictitious losses – with good arguments, for example. After all, there is always something to renovate. The question is: in what form, at what time and at what cost? The answer: knowledge is selling power. An art that we as real estate experts have mastered for you. The most important points in one paragraph:
Renovation obligations when buying: insulation more important than heating
From 2024, new owners will be obliged to take advantage of free energy advice, for example from the consumer advice center. Their experts can quickly assess insulation and heating. Because after the purchase – and only then – the following minimum requirements must be met:
1. INSULATION TO THE ROOF
The top storey ceiling or the roof should only allow a certain amount of heat to pass through. Specifically: the heat transfer coefficient (U-value) must not exceed 0.24 W/m²K.
2. INSULATION OF WATER PIPES
Hot water pipes in unheated areas must be covered with the prescribed insulation.
3. REPLACEMENT OF 30-YEAR-OLD HEATING SYSTEMS
If oil or gas heating systems are installed that are more than 30 years old, they must be replaced unless they are already low-temperature or condensing boilers.
New owners have 2 years to carry out all three measures. The following also applies to them:
A. NEW HEATING, NEW OBLIGATIONS: If a heating system is replaced, it must be able to be operated with at least 65 % renewable energy. Theoretically. However, as this obligation is linked to municipal heating planning, a normal gas or oil heating system can initially be used or borrowed. From 2029, this must then initially be supplied with 15% renewable fuel. From 2045 even 100%. To draw attention to these special features, the German government has introduced a new obligation to provide advice.
B. THOSE WHO RENOVATE MUST ACT SUSTAINABLY: If more than 10 % of the facade is to be renovated, it must be completely insulated during the renovation.
More decisive: energy transition and CO2 price development
Existing fossil fuel heating systems may therefore continue to be installed, theoretically operated until 2045 (see 15% biogas obligation from 2029, see Section 71 (9) GEG) and repaired again and again. However, German law could be corrected in future by EU directives. These prescribe successive energy-efficient refurbishments – from 2030.
So far, so complicated. However, the impact of energy price trends is likely to be much greater than the comparatively soft legal regulations. And well-informed buyers know this:
Rising CO2 prices are making the use of fossil fuels increasingly unprofitable – and energy-efficient refurbishment increasingly sensible and even cheaper in the long term. Politics regulates the market. The market regulates the rest. It is a process that has been going on for a long time, but is now becoming more present in people’s minds as a result of the Germans Building Energy Act. And that also has an impact on prices.
Reasoning: deadlines and subsidy programs
Buyers now expect hefty discounts – especially for unrenovated existing buildings. However, these expectations can be reasonably corrected, and rightly so. Three arguments:
1. due to the exemptions and generous transition periods, necessary measures are being postponed well into the future. Many heating systems can theoretically continue to run for another 20 years.
2. much more important: a reference to the government’s subsidy programs. Energy-efficient refurbishment is strongly supported by the state. In principle, the Federal Republic of Germany covers 30% of the costs of a heat pump, possibly more. And all owner-occupiers who switch to renewable energies before the municipal heating plan is completed receive an additional 20% speed bonus. Overall, the subsidies are capped at 70 % of the costs and a maximum of 21,000 euros.
3. to round off: those who renovate benefit – in the daily use of the property. What initially costs money saves a lot in the long term, precisely because the emission of greenhouse gases is becoming increasingly expensive.
Sales strategy: Realism with a sharp focus
Be realistic, but not too lenient! Of course, banks also take the reduction in proceeds into account when granting loans, which puts buyers under additional pressure. It may therefore even make sense to restructure the property yourself before selling. But why bother? Strong market strategists price in future investments – as discreetly as possible, however. And they counteract this: by putting the measures into perspective plus offsetting lavish subsidies.
Waiting to sell, on the other hand, is generally not worthwhile, as the future of energy efficiency, with its legally prescribed and increasingly economically sensible measures, is inexorably approaching.
Check your property carefully! Correct misconceptions in the minds of the other side! Good arguments are hard cash – and your basis is the deepest possible knowledge, but also a certain negotiating skill.
Making the best of the situation – with professional partners
Tough times call for tough professionalism. It’s the substance that counts: Our ambitious experts get the most out of every single property – out of intrinsic interest. Well-informed, first-class in marketing and expert at the negotiating table.
Let us support you: We value your property free of charge. We give you realistic sales prospects. And we are personally committed to achieving the best prices. A passion for selling. Put your trust in our successful service!
David Borck Immobiliengesellschaft
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