Since 1 July 2026, anyone converting unused, vacant commercial space into housing and renovating it to improve its energy efficiency can receive grants of up to 30,000 euros per residential unit. The Federal Ministry for Housing, Urban Development and Building and KfW have launched the new “Commercial to Residential” funding programme for this purpose. The grants come from federal funds and applications are made directly to KfW.
Melanie Kehr, the member of KfW’s Executive Board responsible for domestic promotional business, says: “Many German city centres today present us with a paradox: offices stand empty and shops are abandoned, while at the same time there is an enormous need for housing. With the new ‘Commercial to Residential’ grant programme, we want to specifically advance the conversion of previously commercial space, using it as a catalyst for additional housing, liveable neighbourhoods and climate-conscious urban development. This creates a double benefit from unused space: rooms for people seeking a home and a powerful stimulus for strong, vibrant city centres.”
Key details of the “Commercial to Residential” funding:
What is funded?
Funding is available to convert heated buildings or parts of buildings previously not used for residential purposes into housing. The conversion must create at least one new residential unit. Eligible measures include adapting the building structure to the planned residential use, changing the layout, interior fitting work, and redesigning outdoor areas for residential use, including removing sealed surfaces.
The new residential units must undergo an energy-efficiency renovation to at least the “Efficiency House 85 Renewable Energy” standard (EH 85 EE); listed buildings and other building fabric particularly worthy of preservation must reach “Efficiency House Monument EE”. Exceptions to the renewable-energy class (EE) are provided for buildings with a new heating system. Customers have 54 months from approval to complete the project. Once the project is complete, the new residential units must be used for residential purposes for at least ten years in total. Payment is made after the project has been completed and the eligible costs and energy standard achieved have been confirmed.
Who is eligible to apply?
All investors are eligible to apply, including private individuals, condominium owners’ associations, companies and local authorities.
What is the funding rate?
The grant covers 30 per cent of eligible costs up to a maximum of 100,000 euros per residential unit, meaning up to 30,000 euros per unit. Conversion costs are eligible, but the cost of improving the units’ energy efficiency is not. Other funding programmes, such as the “Federal Funding for Efficient Buildings”, can be used for that work.
All investors other than owner-occupiers must note that the funding has to be declared as aid under the European de minimis regulation. The ceiling for de minimis aid is 300,000 euros over three years.
Funding depends on the availability of federal funds. There is no legal entitlement to receive it.
When must the application be submitted?
The application must be submitted before the project begins. The project is deemed to begin when supply and/or service contracts for the conversion work are concluded. Planning and consultancy services may be used before KfW approval and do not count as the start of the project.
Federal Minister for Housing, Urban Development and Building Verena Hubertz says: “Everyone knows examples: the shop in the city centre that has stood empty for years, the office building where entire floors are permanently unused, or the old village primary school that is no longer needed. These buildings were once full of life and now stand still while so many people are looking for a home. This is exactly the contradiction we want to tackle with our new ‘Commercial to Residential’ funding programme. We are providing 300 million euros to give unused office and commercial properties a second chance. This conserves valuable resources, preserves historic urban structures and brings new momentum to town and city centres. A grant of up to 30,000 euros is available for each residential unit, deliberately providing a strong incentive for all investors. In this way, we are creating vibrant neighbourhoods instead of empty spaces.”