Obligation to Remediate (GEG)

Retrofit Obligation (GEG) - The retrofit obligation under the Building Energy Act (GEG) requires owners, under certain conditions, to carry out energy-efficiency retrofits on their buildings. This obligation becomes particularly relevant when there is a change in ownership, i.e., when purchasing an existing property.

What retrofit obligations does the GEG stipulate?

Sections 47 and 71 of the Building Energy Act define several specific retrofitting obligations that apply to owners of residential buildings. An overview of the most important obligations:

Replacement of old heating systems: Oil and gas heating systems with constant-temperature boilers that are more than 30 years old must be replaced. This applies to boilers installed before 1994 that do not operate as low-temperature or condensing boilers. The replacement requirement applies regardless of a change in ownership-however, there is an important exception for owner-occupied single-family and two-family homes (see below).

Insulation of the top floor ceiling: The top floor ceiling above unheated attic spaces must have a minimum level of thermal insulation. If the ceiling is not insulated and the room above it is not heated, insulation with a U-value of no more than 0.24 W/(m²·K) must be retrofitted. Alternatively, the roof itself can be insulated accordingly.

Insulation of hot water and heating pipes: Uninsulated heat distribution and hot water pipes in unheated spaces such as basements or attics must be insulated. This measure is relatively cost-effective and often pays for itself within a few years due to reduced heat loss.

Exceptions and Hardship Provisions

A significant exception applies to owner-occupied single-family and two-family homes: Anyone who has continuously lived in their home since February 1, 2002, is initially exempt from the retrofitting requirements. However, this exemption ends with a change of ownership-the new owner must fulfill the requirements within two years of the transfer of ownership.

In addition, the GEG provides for a hardship provision. If the required measures represent an unreasonable burden or are not economically justifiable, an exemption may be requested. This is reviewed on a case-by-case basis and requires a clear justification-for example, in the case of historic buildings where exterior insulation is not possible, or in the case of very old and small residential buildings where the renovation costs are disproportionate to the value of the building.

New Heating Regulations Starting in 2024: What Owners Need to Know

The 2024 GEG Amendment (the so-called “Heating Act”) introduced additional requirements. When installing a new heating system, it must use a minimum share of renewable energy starting on specific effective dates. For existing buildings, a phased transition period applies, which depends on the municipality’s heating plan: As soon as the municipality adopts a heating plan, the new requirements apply to new heating systems in existing buildings.

In practice, this means for buyers of an existing property with an old gas or oil heating system: They should check whether and when the municipality will present a heating plan and factor in that a heat pump, a pellet heating system, or a district heating connection may be required the next time the heating system is replaced. The cost of a heat pump ranges from €15,000 to €35,000 depending on the condition of the building, but is significantly reduced by KfW and BAFA subsidies.

Costs and Tax Treatment of GEG Renovation Requirements

The typical costs of the statutory retrofitting requirements can be estimated as follows: Attic insulation (top floor ceiling): €15-40/m², approx. €1,500-4,000 for a 100 m² house; Pipe insulation in the basement: €500-2,000; heating system replacement (constant-temperature boiler to condensing boiler or heat pump): €10,000-35,000. For rental properties, these renovation costs can be claimed for tax purposes as income-related expenses or through depreciation (AfA). A modernization surcharge on tenants pursuant to Section 559 of the German Civil Code (BGB) is also possible for mandatory GEG measures.

Practical Tip for Nuremberg and Franconia

When purchasing an existing property in the Nuremberg metropolitan region, the GEG retrofitting obligations must be included in the calculation. Many buildings from the 1950s to the 1980s in Nuremberg, Fürth, Erlangen, and Schwabach still have old constant-temperature boilers and uninsulated floor slabs. We recommend consulting an energy consultant before the purchase to determine the specific renovation needs and associated costs.

In the region, the Bavarian Consumer Advice Center and the North Bavarian Energy Agency offer subsidized energy consultations, which provide a good starting point. Investments in energy-efficient renovations are also financially supported by subsidy programs from KfW and BAFA-though the eligibility criteria change regularly and should be carefully reviewed before applying.

Frequently Asked Questions

When does the renovation obligation apply when buying a house?

The retrofitting obligations under the GEG take effect upon a change of ownership. The new owner generally has two years from the date of entry in the land register to implement the required measures. This applies in particular to replacing the heating system, insulating the top floor ceiling, and insulating pipes. Failure to comply may result in fines of up to 50,000 euros.

Do I have to replace my functioning oil-fired heating system immediately?

Not necessarily. The replacement requirement applies only to constant-temperature boilers that are more than 30 years old. Low-temperature and condensing boilers may continue to be operated. Furthermore, the replacement requirement does not apply as long as a single-family or two-family home is occupied by the owner themselves. However, if there is a change in ownership, the new owner must replace the boiler within two years.

What subsidies are available to help meet the renovation requirement?

Various subsidy programs are available for energy-efficiency renovation measures. KfW supports boiler replacement through the “Heating Subsidy for Private Individuals” program with grants of up to 70 percent of eligible costs. The BAFA subsidizes individual measures on the building envelope, such as roof insulation, by up to 20 percent. Additionally, energy-efficient renovation costs are tax-deductible-up to 20 percent of the expenses spread over three years.

What are the consequences of failing to comply with renovation obligations?

Anyone who fails to meet the GEG retrofitting obligations within the prescribed deadlines risks an administrative offense under Section 108 GEG, punishable by a fine of up to €50,000. The building inspection authorities of the municipalities and districts are responsible for enforcement. In practice, inspections are often conducted on an ad hoc basis-e.g., following a chimney sweep report or when a building permit is issued for renovation work. We recommend proactively fulfilling these obligations and documenting the measures with invoices and certificates.

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