“Habeck is ruining me” – apartment owners about heating plans

House and apartment owners, contractors and brokers are threatened with insolvency. Banks see their lending business on the ground. Interest rates rose from 0.9 to 4.6 percent in nine months. The old building substance of the houses is thus destroyed by insulation mania. Brussels wants to declare houses that are not energetically renovated by 2030 as uninhabitable. Messages that scare.

And then there was the Ministry of Economy’s pierced draft law on heating replacement. Does the sword of Damocles of expropriation hover over every condominium, every single-family house and every rented living space? Up until the middle of last year, buying a property was still considered a stable capital investment. JUNGE FREIHEIT asked affected real estate owners, but also brokers and associations, how they experience the current development.

“This heating mania makes it impossible for me to own the family home”

“Habeck is ruining me,” Marc March summarizes his current situation. “This heating mania will make it impossible for me to own the family home if he pulls through.” März is a lecturer at a Hamburg university. His house is in Stade, Lower Saxony, about an hour southwest of Hamburg.

Three apartments of 100 square meters are spread over three floors, each with its own heating and power supply, all with different technology. He lives on the ground floor himself, he has rented out the upper floors. The house was once worth 500,000 euros. Today, he estimates, it is still 350,000 euros.

“The house was built in 1901, and the roof is unsuitable for photovoltaics in terms of construction and orientation,” he says. The outer walls were filled in for insulation in the 1990s, the ceilings and floors are 105 years old and made of wood. The groundwater level is high. “There is no geothermal heat.

“Neither ecologically nor technically sensible”

Even if I put a giant system in the garden and my neighbors then sue me because of the noise, I can’t get the heat distributed through the filled walls.” Of course, März took advice. “Underfloor heating is out of the question. According to the heating engineers, the installation is not technically possible in any meaningful way.”

Stade is a small town. Economically stable and blessed with ample living space. March let the 100 square meter apartments for 750 and 800 euros cold. “More can hardly be achieved on this market, despite the renovated old building with fitted kitchen, stucco ceilings and parking lot,” he says. He estimates the potential for rent increases after the conversion to be maybe 50 euros per floor and month, i.e. 1,200 euros per year gross.

“Without interest, taxes and inflation, I have an amortization period of 70 years for a measure that makes neither ecological nor technical sense, and certainly not one that makes economic sense. And we have not yet reached the point of increasing electricity demand and its price.”

A black hole

Irrespective of this, he estimates the renovation costs for the entire house at between 80,000 and 100,000 euros. “The only option I have would be to take out a loan, but I don’t have the money and would eventually have to sell the house.” March is sure he wouldn’t buy a house in these times.

“Owners of existing properties are investing in a black hole,” says Silke Schröder, a real estate agent from Berlin. Through her company primobilia, she works for both private and business customers. She considers the current political decisions to be a program that “makes the formation of property impossible”.

By the summer of 2022, demand in the real estate market exceeded supply. That has changed. The real estate market has not yet collapsed, but according to Schröder a significant decline is noticeable. This resulted in price reductions. “We are currently talking about a price reduction of up to 20 percent in certain locations and regions.”

Hundreds of salespeople fired

In the middle of last year, with the increase in interest rates in 2022, construction interest rates more than quadrupled, and the real estate market came to an emergency stop. But why did many brokers and financiers remain so optimistic? Because many contracts that were scheduled in the first half of the year were only concluded in the second half of the year.

So it was old business that had been acquired before the first interest rate hike and had an after-effect. Now the club strikes. Companies with good controlling noticed this early on. Industry leader McMakler, for example, had laid off hundreds of salespeople last year.

But not only the potential buyer has become cautious, the banks are also becoming more reluctant to lend. There is a lack of planning security for the loan. “Project developers have canceled their projects because no profit is expected,” says Schröder. It is now becoming very difficult for property owners who will need follow-up financing in the coming weeks and months. A lot of financing had been sewn on edge over the years.

“Energetic renovation compulsion”

There are currently nine energy efficiency classes in Germany. They range from A+ to H and describe the energy requirements of a house. It depends on the heating system, the size, insulation and use of the house. “75 percent of households in Germany are heated with gas and oil,” says Schröder. Gas heating systems were subsidized until January 24, 2021 for new buildings and until July 28, 2022 for renovations. These subsidies were canceled with the revision of the Federal Subsidy for Efficient Buildings (BEG).

An energetic renovation with a heat pump, new windows, facades and roof insulation, underfloor heating and solar panels on the roof were not priced in. “With this energetic refurbishment obligation, costs of 1,200 to 1,500 euros per square meter quickly add up,” says Schröder.

A stair joke of history

For a 100 square meter house, this amounts to 120,000 to 150,000 euros. “Five or ten years ago, nobody expected follow-up costs of this magnitude.” And so when the loans expire, more properties will end up on the supply market – they have simply become unaffordable for their owners.”

It may sound like a joke in this story that the EU Parliament voted in favor of a ban on certain heat pumps at the end of March. These are models that use per- and polyfluorinated alkyl compounds. Although these so-called F-gases do not damage the ozone layer, they emit large amounts of greenhouse gases, reports Merkur.

Legal uncertainty and planlessness

Such a heat pump is already installed in every second new build detached and semi-detached house. Should the ban take effect, owners would either have to replace their device or the refrigerant. It is this legal uncertainty on the part of the end consumer, whether owner or tenant, and the lack of a legislative plan that is unsettling the market.

“The current inflation, as we have it at the moment, is basically a creeping expropriation,” says Michael von Hauff. He is president of the real estate management department at FIABCI, the international umbrella organization for real estate management based in Paris and managing director of a company for real estate management consulting, publisher of the specialist book “The Great Administrator’s Handbook”.

New laws and regulations

According to Statista, 31.2 percent of the 36.9 million inhabited apartments in Germany in 2018 were owned and rented by private individuals. “However, the impression is created today that renting out apartments should be made intolerable,” he says.

“The sometimes grotesque increase in property tax, the ban on installing oil and gas heating systems planned by Habeck, the failed attempt to cap rents in Berlin and the constant stream of new laws and regulations that are being enacted that individual owners cannot cope with without legal support can.”

“This set of laws is just insane”

Apart from Habeck’s ban on installing oil and gas heating systems, he mentions the ever new laws and regulations that are being passed. “There is, for example, the Natural Gas Heat Emergency Aid Act (EWSG), the Fuel Emissions Trading Act (BEHG), the Renewable Energy Sources Act (EEG 2023) or the Ordinance on Short-Term Energy Supply Securing Measures (EnSikuMaV).

“This amount of legislation is just crazy,” says von Hauff, and you can hear this mixture of contempt, indignation and irony in his voice. “This is how owners are pushed in the direction of sale. The owner should sell it cheaply to the state or inherit it straight away.”

Something was up

Christina Rautenberg is a trained nurse, is married and does not want to bequeath the apartment she bought in 1999 to the state. 150 square meters of attic space on an old cigar factory is what she calls her property, where she and her husband live. “The apartment is sensational, it was our retirement plan,” she says. “Late last year rumors began that something was up. But you think wait and see. And then you think about what you could do.”

Rautenberg’s neighbors have underfloor heating, it’s the only one that heats with gas. “The European Union doesn’t want heat pumps, so people are considering heating with briquettes again, but we don’t have a basement.” Rautenberg is debt-free.

“Conversions certainly cost a lot of money, up to 100,000 euros. I don’t want any more debt. And who is going to give me a loan, I am 56 years old?” Rautenberg is critical of a partial sale of real estate, such as that which the internationally active broker Engel & Völkers aggressively advertises on the Internet. “Just like Stiftung Warentest and BaFin,” she says. “That’s a milkmaid’s bill.”

Speculative and involves considerable risk

In a consumer notification, the Federal Financial Supervisory Authority (BaFin) warns: “A partial sale of real estate is rarely the best solution for house or apartment owners,” reports Thorsten Pötzsch, BaFin’s Executive Director of Securities Supervision and Asset Management. A partial sale is risky and could be expensive.

“From a consumer protection point of view, I can only warn against blindly trusting the ubiquitous advertising promises for partial real estate sales,” says Pötzsch. BaFin lists the reasons as follows: A partial sale is speculative and involves considerable risks. The usage fee to be paid to the co-owner of the property is significant. In the event of payment difficulties, “there may be a risk of moving out against your will”.

The same could potentially happen if the company that bought the real estate portion went bankrupt. What’s more, the running costs of the property are often borne in full by the previous owner – even though there is a co-owner.

Sell ​​with loss of value

“So we will have to sell our apartment at a loss in value, my thoughts are clearly going abroad,” says the nurse. Von Hoff, on the other hand, advises: “Wait and see. Only do as much as is absolutely necessary. Which authority should come and check the renovations – and by the time they come, there may be a new government.”

Haus & Grund, the association for the protection of property owners, describes the Building Energy Act (GEG) as “ambitious”, which is to come into force on January 1, 2024 and is intended to ban the installation of gas and oil heating systems in existing properties.

“For most properties, the GEG offers neither technology-open nor affordable solutions and thus leads to a financial overload for many private owners,” says Haus & Grund President Kai Warnecke. The hardship regulation had failed. The age of the owner, but not his financial circumstances, would justify a release from the obligation to replace the heaters.

JF 17/23

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