The housing sector supports the government’s ambitious climate targets. But we know that achieving climate neutrality by 2050 in the current conditions or with a continuation of the existing policies is not feasible. To ensure that the targets for housing are implemented in a socially equitable way, we need a new long-term promise of affordable rents. Low- and middle-income households must be given financial support. Further funding is needed in addition to existing government subsidies. This is the only way of safeguarding the provision of affordable housing for broad swathes of the population.
For this reason, the GdW, the umbrella organization of the housing sector, is proposing a new funding model. This is the first comprehensive concept of its kind that will allow the tougher climate targets for housing to be met with only minimal increases in the cost of combined rent and heating and, at the same time, will guarantee affordable rents in the very long term. The organization’s proposal to the government will finally put into effect the EU’s call to link the achievement of climate targets with social goals.
We are currently facing a dilemma. As things currently stand, nurses, careworkers, police officers, and many white-collar employees can barely afford the rents in many areas of Germany. There is simply too little affordable housing available. At the same time, landlords are being called on to invest enormous amounts of money to meet society’s targets for converting housing for the elderly, providing digital services and, in particular, combating climate change. The problem of refinancing remains unresolved. This is why we need a genuine paradigm shift, so that we can combine climate action and social peace.
The idea is based on three principles for implementing the climate measures that are needed now with the guarantee of low rents for a large proportion of the population in all regions of Germany in the long term: the promise to tenants, index-linked rents, and a CO2 savings corridor. This is the only way of gaining the necessary acceptance for climate action relating to buildings that is currently lacking in many areas.
The promise to tenants
The key benchmark for funding to supplement existing government subsidies is first of all to limit the financial burden on tenants to only minimal increases in the existing cost of combined rent and heating. This means that after measures to improve the energy efficiency of a building have been taken, the tenant will have to pay a maximum of 50 cents more in rent per square meter than before, taking into account the tenant’s future savings on heating costs. Anyone resident in a building during the renovation work will remain entitled to a climate-plus apartment. When the apartments are re-let in the future, potential tenants with the right to a so-called social housing permit-plus will be given first priority, followed by all other applicants. The maximum rent for the apartments must correspond to the normal comparable rent in the area.
Climate-friendly and affordable in the long run
The precondition for providing special support for property owners who renovate their apartments, is that as well as passing on the cost reduction to the tenants, they undertake to limit rises in the existing rent to a maximum of a predefined index over a very long period. This will ensure that rents remain affordable without the need to impose further rent regulations that will bring a stop to the necessary investments in the energy transition. As a result, the housing stock right across Germany will be made future-proof in a very short time. This will quickly lead to a much wider range of energy-efficient apartments being made available that are also affordable in the long term. After five years at an annual renovation rate of 2.5 percent of the relevant housing stock of around 15 million rented apartments, up to 1.8 million older rented apartments could be made 2045-ready and index-linked for the foreseeable future.
The goal of a CO2 savings corridor safeguards affordable rents
Huge sums will need to be invested to achieve our climate targets. Therefore, we must make sure that no more money is spent than is actually necessary. We urgently need to take a new approach to making housing climate-neutral. A CO2 savings corridor must be introduced quickly both as a goal and as a control measure. To allow for innovations to be introduced, it must be possible to take action on a district scale. Housing companies need to be able to organize energy generation and energy consumption networks across sector boundaries. And the key theme must always be technology neutrality. The regulations for energy generation on a district level will have to be made as simple as heating apartments with an old oil-fired boiler used to be. The first step involves radically expanding the experimentation clause in the Buildings Energy Act. In addition, energy legislation must be aimed at paving the way for climate action in the housing sector.
This concept brings together climate action and social goals. The government must provide adequate funding for the increased climate targets to ensure social peace. In other words, we must subsidize what needs to be done. This is the only way of preventing affordable housing in Germany from being renovated out of existence in the future.