Aengevelt: Framework conditions lead to a decreasing renovation rate for residential buildings.

The comprehensive winter survey on the Aengevelt Residential Investment Index (AWI) that has just been carried out shows that (too) little momentum is to be expected. Only 24% of the apartment owners surveyed forecast an increase in investments in the modernization and repair of existing apartments. With regard to purely energy-efficient renovations, the proportion that expects an increase is slightly higher at 34%, but remains clearly in the minority. Instead of accelerating the pace of renovation in order to achieve the ambitious climate targets, exactly the opposite is happening: the renovation rate is falling and falling. Aengevelt attributes the decline in restructuring momentum to several reasons:

• Section 48 of the Building Energy Act stipulates that when exterior components are renewed, very high insulation standards must be observed, which are not only (too) expensive, but often also associated with problems with the building geometry. Due to the "guillotine effect" of the (too) high requirements, renovations are not carried out at all, even if the owners were willing to carry out "light" insulation, which can reach up to 80% of the legal standards.
• The amendment to the Building Energy Act of 2023, initiated by the voted out "traffic light", which became known as the "Heating Act", has led to massive uncertainty among broad circles in the spectrum of building owners. However, as is well known, relevant renovation investments are only made if the framework conditions are adequate and reliable in the long term.
• The discussion about a renovation obligation at EU level has also contributed to the uncertainty, making many owners hesitant to make investments that could prove wrong in the near future.
• In addition, the conversion to more climate-friendly district heating is inhibited by a lack of local availability, predominantly overpriced connection costs and, as a result, too much dependence on the supplier.
• The tax regulations on maintenance costs that are still in force mean that buyers of existing properties often refrain from carrying out a comprehensive renovation because they cannot immediately claim the costs for tax purposes, but can only depreciate them over a holding period of 50 years that is far too long if they exceed the threshold of 15 percent of the acquisition costs within 3 years of purchase.
• The tightening of Section 559 of the German Civil Code has led to many owners refraining from modernisation measures because the rent can only be increased by 8 percent of the costs, with additional restrictions and capping limits.
• Even today, the majority of building owners are pensioners, including many very old people. Owners are often overwhelmed with the planning, implementation and financing of renovation investments and no longer expect to live to see the amortization of their investment. This problem will even worsen in the course of the well-known negative demographic development.