First Parliament Reading of Rental Reform Act – Energy-Efficient Renovation

On Thursday the German Bundestag (Parliament) debated a Rental Reform Act (ref. no. 17/10485), which contains provisions to facilitate energy-efficient renovations and contracting agreements.

With 24 million apartments in Germany being rented, more than half of the 40 million apartments in total are rental apartments. Increasing energy-efficiency in this part of the building sector that in total consumes roughly 40% of the final energy in Germany has been one of the energy policy goals of the government since the Energy Concept of 2010.

The government therefore submitted the draft Rental Reform Act to Parliament. The Act intends to amend and supplement the rental provisions in the German Civil Code (BGB). It excludes the reduction of the rent due to inconveniences during the energy-efficient renovation in the first three months of the renovation, unless the apartmentment is uninhabitable.

Following energy-efficient renovation, landlords shall be entitled to raise the rent by up to 11% of the costs relating to the renovation. This, however, is merely a clarification and re-wording, as the currently applicable Section 559 para. 1 BGB already allows raising rents if a modernisation leads to lasting savings of energy and water.

The draft Act also includes a provision which allows landlords to pass on contracting costs for heat supply by third parties to tenants (new Section 556c). The costs must, however, not exceed the previous costs charged.

The opposition mainly criticised that the bill would lead to higher rents at a time were energy costs were already a burden to low-income households.

Following the first reading, the Rental Reform Act was referred to the competent parliament committees named in the minutes for further debate and review.

Source: Bundestag

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