Government decides on tenant relief for climate tax

Thu 26th May, 2022

The German government has initiated relief for millions of tenants in the climate tax for residential buildings. According to government representatives, the cabinet on Wednesday approved a bill under which landlords will in future have to contribute more to the costs of the carbon dioxide levy introduced in 2021. This is to apply from next year.

From the involved Federal Ministry of Economics, the Federal Ministry of Construction and the Federal Ministry of Justice it was said at noon that thereby more for the climatic protection in the heating sector and a socially fair cost distribution are done. From 2023, landlords will then bear 90 to zero percent of the costs. The more energy-efficient their house, the lower their share of the costs. This is intended as an incentive to replace old heating systems or windows. The phased model covers over 13 million homes. In the case of commercial properties, tenants and landlords will initially each bear half of the CO2 costs.

Until now, tenants have shouldered the CO2 levy alone. "The residential buildings affected currently incur carbon dioxide costs estimated at one billion euros, which are borne entirely by tenants," the bill states. The tenants' association had put the CO2 costs for a model household in an unrefurbished apartment at 130 euros for gas heating and 190 euros for oil heating in 2022.

Government sees "win-win situation"

"With the sharing of CO2 costs, we have found a solution that is socially fair and will also relieve tenants in the future. The worse a building is insulated, the older the heating system or the windows are, for example, the higher the CO2 costs for landlords and the greater the relief for tenants," Economics and Climate Protection Minister Robert Habeck is quoted as saying in a statement. Often the tenant suffers from high energy costs because of poor insulation and heating, but without being able to take good countermeasures himself, said the Green politician. Conversely, a landlord who has renovated the building well in terms of energy efficiency can also apportion the costs.

Federal Building Minister Klara Geywitz (SPD) also emphasized the "win-win situation." "The tenants win, because they don't heat the outside environment. The landlords win, because they save costs in the long run." At the same time, Geywitz made it clear in her statement that the regulation now adopted is only a temporary solution. She said it would therefore be evaluated for its effect and work on using energy performance certificates as the basis for the model. "Our goal is to have CO2-neutral heating at a certain point in time. Until we achieve that, the CO2 price will be fairly distributed."

However, Federal Justice Minister Marco Buschmann (FDP) emphasized that the legal framework must be right for this to happen. "The rules on the distribution of the CO2 price must be practicable - and they must set the right incentives. The phased model adopted today meets these targets," Buschmann said in Berlin.

In the coalition agreement, the SPD, Greens and FDP had held out the prospect of cost sharing from July 2022. The delay of half a year was justified in the coalition with the fact that the settlement periods of the heating costs would usually begin anew at the beginning of the year. The previous government of CDU/CSU and SPD had not been able to agree on cost sharing. In view of the drastic rise in energy prices caused by the war in Ukraine, the GdW's central association of the housing industry called for the CO2 levy to be suspended for a year. In view of the high energy prices, the levy could no longer have a significant incentive effect.

The German Tenants' Association welcomed the idea of a phased model for sharing CO2 costs in the rental housing sector in principle, but called for a fundamental revision and immediate exemption of tenants from CO2 costs. "Against the background of the expected additional cost payment in 2023, it is not comprehensible that the state, on the one hand, wants to relieve low-income households through flat tax rates and other subsidies, and on the other hand, makes this group, which is particularly affected by energy costs, pay additionally through the CO2 price," commented Lukas Siebenkotten, President of the German Tenants' Association, on the agreement reached by the Federal Cabinet.

The consumer protectors consider the graduated model presented by the traffic light government to be "prone to error". They fear that tenants will be left sitting on the high follow-up costs. Siebenkotten criticized: "The assumption that the CO2 price on fossil fuels will trigger impulses for energy-efficient refurbishment or investments is only true if landlords are sufficiently incentivized to do so. Therefore, it also makes no sense to involve tenants in this - whether proportionally or in full."

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