The construction industry has nothing to do: Why no more renovations are taking place in Germany

Almost 35 percent of all final energy is consumed in buildings. The building sector is therefore crucial for the energy transition. But the rate of energy-saving renovations is on the decline.

Anyone who is serious about saving energy and protecting the climate cannot ignore one sector: almost 35 percent of our total final energy is consumed in buildings. When heating, when showering, when washing up. The following applies: Where a lot is consumed, a lot can also be saved. Strict energy regulations already apply to new buildings, and the energy-efficient renovation of older houses is encouraged.

The fact, however, is that the renovation rate is on the decline: in 2022, according to the Federal Association for Energy-Efficient Building Envelopes (BuVEG), it was still at 0.88 percent. Last year it fell to 0.7 percent. It is expected to fall further in the first six months of this year.

The association had already warned politicians about this development in an incendiary letter last summer – unfortunately without success, as BuVEG boss Jan Peter Hinrichs explained in an interview with ntv.de. “There was a big construction summit where many things were put on display. But after the Federal Constitutional Court’s budget ruling, the government had other concerns and simply canceled a large part of the 14-point plan. Unfortunately, this also included improving renovation funding. That The result can be seen in the numbers: There are hardly any applications for energy-saving renovations, but they could have compensated for the sharp decline in new construction. I firmly believe that we will have serious problems throughout the building in the summer.

Costs, interest, inflation

Germany wants to ensure that all buildings use as little energy as possible by 2050. Specifically, greenhouse gas emissions are to be reduced by 66 percent by 2030 compared to 1990. The current pace is far too slow for this: Germany would need another 100 years to renovate the entire existing 21 million buildings. The 15 to 16 million single and two-family homes are a particular big challenge.

In many cases, the problem is, unsurprisingly, the cost. A complete energy renovation can quickly cost tens of thousands of euros. An additional burden for homeowners are high interest rates and expensive building materials.

The fact that the traffic light did not increase its funding might have been bearable two years ago. At that time, new construction was booming and the construction industry had little room for energy-saving renovations. Now that new construction has also collapsed due to interest rates and inflation, many companies are suddenly left high and dry. In addition to climate protection, the economy also suffers – and the value of the property, as Hinrichs explains: “If there is no renovation, you will see a blatant devaluation of real estate.” According to him, there can be a 20 to 30 percent loss in value, especially in rural areas. The days when you could only buy a house or apartment based on location are over, says Hinrichs.

The problem is that in many cases the falling property value is no incentive at all to engage in energy-efficient renovation. The vast majority of homeowners want to live in their houses and not sell them. In many cases, the value only becomes crucial when the house or apartment is to be inherited, says Hinrichs.

Deduct measures from taxes

The BuVEG boss therefore continues to advocate for additional funding that is so good and simple that renovation seems to make sense even if the home is not to be sold. Hinrichs suggests that individual measures can be easily deducted from taxes. In some cases this already works. The tax office only wants to see an invoice and a certificate from the construction company that all measures were carried out in accordance with the legal requirements. This also applies to materials that you have purchased yourself and made available to the company.

So far, however, only 20 percent or a maximum of 40,000 euros can be claimed from the tax office over a period of three years. Too little, says Hinrichs.

After all, the federal government also seems to have noticed that the low renovation rate is a problem. The Ministry of Finance would like to improve funding. However, no increase is planned. According to Table.Media, the ministry of FDP boss Christian Lindner only wants to update minimum technical requirements for energy measures such as the installation of digital systems to optimize operations and consumption, the renewal of heating systems or summer thermal protection. “The measures aim to better coordinate various funding goals and increase the steering effect,” it says. Is that enough to reverse the decline in the renovation rate?