Tenants vs. Owners — Who Benefits from Renovation?
Why energy renovation can be a win for both sides — and how subsidies and cost allocation work together.
The Landlord-Tenant Dilemma
The classic problem of energy renovation: the landlord bears the investment costs, but the tenant saves through lower heating bills. So why should an owner renovate if they hardly benefit?
The good news: legislators have created instruments that benefit both sides. With the right combination of subsidies, modernization surcharges, and CO₂ cost sharing, renovation becomes attractive for everyone.
💡 Fact: According to dena, around 54% of Germany's building stock consists of rental apartments. Without renovating rental properties, climate targets are unreachable.
Modernization Surcharge per §559 BGB
The most important instrument for landlords: after an energy-efficient modernization, costs can be partially passed on to tenants.
- Transferable8% of modernization costs per year added to annual rent
- Cap limitMaximum €2/m² within 6 years (for rents below €7/m²) or €3/m² (for rents from €7/m²)
- Deduct subsidiesReceived subsidies must be deducted from the transferable costs
- AnnouncementTenants must be informed in writing 3 months before work begins
⚠️ Important: Pure maintenance measures (e.g., repairing a damaged roof) cannot be transferred. Only the energy improvement portion counts.
Subsidies for Landlords
Landlords have access to the same BEG subsidy programs as owner-occupiers — with one important exception:
BEG Individual Measures (BAFA)
15% base subsidy + 5% iSFP bonus for insulation, windows, ventilation. Also applies to rental properties.
KfW Supplementary Loan
Low-interest loan up to €120,000 per residential unit. Also available for landlords.
Heating Replacement (KfW 458)
Base subsidy of 30% applies. But: Climate Speed Bonus (16%) and Income Bonus (up to 40%) are only for owner-occupiers. Efficiency Bonus (5%) also applies to landlords.
Calculation Example: Facade Insulation Multi-Family House
A multi-family house with 4 units (75 m² each), built 1972, uninsulated facade:
- Facade insulation cost60.000 €
- BEG grant (20%)−12.000 €
- Transferable costs48.000 €
- 8% surcharge / year3.840 €
- Per apartment / month80 €
- Heating savings / apartment60–90 € / month
💡 Result: The rent increase of €80/month is nearly offset by heating savings of €60–90. The renovation is thus approximately warm-rent neutral.
Benefits for Tenants
Lower Heating Costs
After facade insulation, heating energy consumption drops by 25–40%. With rising energy prices, the savings grow every year.
Better Living Comfort
No more cold walls, more even room temperatures, less drafts. Noise insulation also improves.
Mold Protection
Thermal bridges are eliminated, surface temperatures rise — the mold risk drops significantly.
Value Stability
Renovated apartments are future-proof and retain their market value — an advantage also when moving.
Benefits for Owners & Landlords
Property Value Increase
A better energy certificate increases market value by 5–15%. This pays off at the latest when selling.
Lower Vacancy Risk
Tenants prefer energy-efficient apartments. Renovated properties can be rented faster and at higher prices.
Partial Refinancing via Surcharge
Refinance 8% of costs per year through rent — after deducting subsidies, the investment pays for itself in 10–15 years.
Reduce CO₂ Costs
Since 2023, landlords must bear up to 95% of the CO₂ levy depending on building efficiency. Renovation drastically reduces this share.
CO₂ Cost Sharing Since 2023
Since January 1, 2023, the CO₂ Cost Sharing Act applies. The CO₂ levy on heating oil and gas is split between landlord and tenant using a tiered model — depending on the building's energy performance.
- Very good (< 12 kg CO₂/m²/a)Tenant: 100% — Landlord: 0%
- Good (12–17 kg)Tenant: 90% — Landlord: 10%
- Medium (17–32 kg)Tenant: 70–50% — Landlord: 30–50%
- Poor (32–52 kg)Tenant: 40–20% — Landlord: 60–80%
- Very poor (> 52 kg)Tenant: 5% — Landlord: 95%
💡 Consequence: For an unrenovated old building with high consumption (> 52 kg CO₂/m²/a), the landlord bears 95% of CO₂ costs — a growing cost factor with rising CO₂ prices. Renovation reduces CO₂ emissions and shifts the split in the landlord's favor.
Planning Renovation as a Landlord?
We calculate the optimal combination of subsidies, surcharges, and tax benefits for you — so the renovation pays off for everyone.
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