From practice for practice

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Since the start of the year, there have been several changes that are keeping the real estate industry acutely busy, also in the longer term. The top 5 topics from an expert’s perspective.

(1) KfW subsidy for efficient houses

The situation remains dynamic: On January 24, 2022, the KfW subsidy programs for new buildings in the Efficiency House/Building 55 (EH/EG55) and 40 (EH/EG40) segments, as well as for energy-efficient refurbishments, were stopped with immediate effect. In the meantime, the Federal Government made funding available for efficient buildings and new applications for energy-efficient refurbishment of buildings can be submitted again as of February 22, 2022. The previous funding conditions remain unchanged. However, while the new building subsidy for the Efficiency House/Efficiency Building 40 is also to be reinstated, the EH55 subsidy for new buildings has ultimately been replaced with the new subsidy package as of January 24. The end of the subsidy came as a surprise to many of those affected. It remains to be seen whether building owners can expect reliable subsidies for efficient buildings in the future.

(2) Real Estate Tax Reform Act

After the basis for calculating property tax was declared unconstitutional by the Federal Constitutional Court in April 2018, the Property Tax Reform Act will come into force on January 1, 2025. Since property tax values are to be reassessed as of January 1, 2022, a request to submit the assessment declaration for all property owners is expected to be made by public notice at the end of March 2022. Based on these, property tax value and property tax measurement notices will then be issued, which will serve as the basis for the assessment of property tax from the calendar year 2025. Property owners must gather the necessary documentation and not lose sight of the key deadlines. If the authorities’ requests are met late or ignored, owners run the risk of penalty payments or late payment penalties.

(3) Census

In 2022, Germany will participate in an EU-wide census round and fulfill corresponding EU requirements. In addition to a population census, a building and housing census will also take place. As part of the census, owners, landlords and property managers are required to provide information on various building and housing characteristics as well as details of the housing situation by the deadline of May 15, 2022. The extent to which the information must be prepared depends on the state of digitization. One thing is certain: There will be a lot of work to do for everyone involved.

(4) Heating cost regulation

On December 1, 2021, the new Heating Costs Ordinance for buildings with jointly used heating and hot water systems came into force. The most important changes include the obligation to retrofit or replace meters that cannot be read remotely by January 1, 2027, the mandatory connection of newly installed devices from 2023 onwards to a smart meter gateway, and the landlord’s obligation, newly introduced on January 1, 2022, to inform their tenants about their energy consumption for heating and hot water on a monthly basis during the heating period. If landlords violate their obligations, tenants can reduce their share of costs by 3% under certain circumstances. The idea behind the reform is to optimize energy consumption. In fact, the new regulation comes with some costs for the time being. The Bundesrat has pushed through a review of the new ordinance by 2025 at the latest – the outcome remains open.

(5) New German government

The coalition agreement includes several program points relating to the real estate sector. In addition to the creation of living space, climate protection in the building sector is on the agenda of the governing parties. For example, solar cells on roofs are to become mandatory in new commercial buildings. The CO2 price, which must be paid in addition to heating costs, is also to be divided “fairly” between landlords and tenants. There are also plans to extend the existing rent cap until 2029 and to lower the cap from 20 to 11 percent in three years in tight housing markets. The coalition parties have also put the “closing of tax loopholes in the acquisition of real estate by corporations (share deals)” on their agenda. Illegal financing of real estate is to be combated on a sustained basis. This includes proof of taxation for commercial and private real estate buyers from abroad for any real estate acquisition in Germany and a ban on the acquisition of real estate with cash. Finally, a summonable address is to be made obligatory in the land register in the event of changes. The agenda of the traffic light coalition for the coming years is therefore not unambitious – the concrete implementation remains to be seen.

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