Germany’s property market is shaped not only by decisions made in Berlin but also, and just as importantly, by decisions made at EU level — even though the EU Parliament’s decisions are, in practice, carried out through the European Commission and, ultimately, through each individual member state. Each country can amend and adapt a decision to fit its own thinking, and since every EU country tends to have its own view, reaching a common position takes time. The same pattern repeats inside Germany: almost every decision affecting the German property market needs to be negotiated between the three parties in the governing coalition. What follows, then, is a description of direction and discussion rather than a finished, final rule — this is an area where the details keep moving.
Existing Buildings Face the Bigger Changes
Environmental requirements for German property have grown steadily stricter for years. Energy efficiency and sustainability have become very important for both new and existing property, and current standards for new construction are already high, driven by climate conditions and by rising gas and oil costs. New buildings already come with the certificates needed to prove they meet current requirements, so new construction is not the focus of most of the coming rule changes.
Existing property is where the real impact falls — which matters to anyone investing in an existing or resale property. The underlying framework rests on two laws: the “Klimaschutzgesetz” (Climate Protection Act) and the “Gebäudesanierungsprogramm” (Building Renovation Programme). The focus is on insulating existing buildings and cutting the use of oil and gas, in favor of cleaner alternatives such as district heating, heat pumps or wood pellets. These alternatives cost more than gas or oil heating, so government financial support is intended to help — though this will take time, since Germany does not yet have enough companies able to carry out the work quickly.
There is no blanket ban on installing new oil heating. A 65%-renewable requirement for new heating installations under the 2024 GEG was itself replaced on 29 July 2026 by the Gebäudemodernisierungsgesetz (GModG), which instead phases in rising shares of biogenic fuel (10% from 2029, rising to 60% by 2040). In Hamburg and Baden-Württemberg, solar panel installation is now mandatory for new residential buildings (since 2023/2022 respectively) and for major roof renovations (since 2024/2023). Panels are typically required on the roof and are expected to help save energy for water heating.
A CO2 tax is also planned as part of the new rules: the more energy-efficient a building, the lower the tax; a less energy-efficient building pays more. Every building will need a special energy-performance certificate, and owners are obliged to obtain one. The tax itself is intended to be split evenly between owner and tenant. Tenants, for their part, have a right to more information about a building’s energy efficiency, and an owner or property manager must explain the building’s actual energy standard to tenants in detail.
The EU-Wide Target: National Renovation Trajectories, Not a Fixed Energy Class
The final 2024 EU Energy Performance of Buildings Directive sets no binding per-building energy-class requirement for residential property. Instead, EU member states must set national renovation trajectories cutting the average primary energy use of the whole residential stock by at least 16% by 2030 and 20-22% by 2035, focused on the worst-performing roughly 43% of buildings. Because the EU Parliament cannot decide how these renovation trajectories are enforced in each country, that is left to the European Commission and to each member state to design, implement and police, including what penalties an owner faces for non-compliance. This leaves the European Commission and member states with a genuinely difficult job: creating enough workable guidance to make these renovation trajectories achievable, while avoiding a situation where owners who cannot afford the required improvements are forced out of their own homes.
The effect on existing homes is larger than on new buildings. New construction can meet the new targets more easily, though at a higher cost, which in turn feeds into the sale price. For existing buildings, meeting the new limits can be very expensive, and in some cases may not be achievable at all.
A Proposal to Ban New Gas and Oil Heating
To help buildings meet these climate targets, the German government also floated a heating-specific proposal: In 2023, Germany’s Ministry of Economic Affairs proposed banning the installation of new gas and oil heating systems from 2024, allowing only heat pumps or other higher-efficiency systems instead. That 2023 proposal became the 2024 GEG’s 65%-renewable requirement for new heating installations, which was itself replaced on 29 July 2026 by the GModG’s gradually rising biogenic-fuel-share schedule – there is no outright ban on gas or oil heating. Beyond doubts about how effective a ban like this would actually be, it also posed a significant financial problem for many owners. At the time this proposal was reported, it was not yet known whether the government would offer any support to owners affected by such a ban.
What This Means for Investors
These were, at the time, still live discussions and directions rather than settled votes; nothing was going to be decided within a month of either article being written. What can be said is that residential and commercial property investment was clearly getting extra attention in Germany because of this. While Germany still has a shortage of living space overall, investors need to calculate carefully, factoring in likely new regulatory costs before committing. Existing owners, and especially their professional advisers, have good reason to stay closely engaged with how these rules develop.
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