Numerous legal changes take effect in 2026 that property owners, landlords and property managers need to observe. These include changes to tenancy law, adjustments to energy-related requirements, new conditions for modernisation projects and changes to funding programmes. The German Real Estate Association IVD provides an overview.
“Many of the new rules directly affect owners and tenants of residential and commercial property,” explains Carolin Hegenbarth, Federal Managing Director of the IVD. “Owners should take the new requirements into account at an early stage, particularly in relation to tenancies and energy-related measures.”
Rent cap extended
The Bundestag has extended the rent cap until the end of 2029. Federal states that already apply it intend to continue doing so, although some designated areas have been adjusted as housing markets change. For new tenancies in these tight housing markets, rent may generally remain no more than ten percent above the local reference rent.
Index-linked rents and furnished rentals
Federal Minister of Justice Stefanie Hubig has announced plans to limit index-linked rents. Because these rents are directly tied to consumer prices, periods of high inflation can cause substantial increases. From 2026, adjustments under index-linked tenancy agreements are therefore expected to be subject to a statutory cap, although the details are still to be presented. The ministry is also planning further changes affecting index-linked and short-term tenancy agreements as well as furnished housing. Landlords should expect noticeable changes to the legal framework in these areas.
Changes affecting social housing
For publicly subsidised housing, maximum rents and flat-rate allowances for administration and maintenance increase on 1 January 2026. Owners of such properties may adjust rents within the normal statutory framework. Higher flat-rate charges must be communicated to tenants in writing and in good time.
Heating: Building Energy Act requirements take effect and the carbon price rises
From 1 July 2026 at the latest, new heating systems in major cities must operate with at least 65 percent renewable energy under the Building Energy Act. The requirement is linked to municipal heat plans. Major cities must adopt their plans by 30 June 2026, while municipalities with up to 100,000 residents have until 30 June 2028. Where a plan is adopted earlier, the requirement applies from that date.
At the same time, the running costs of oil and gas heating increase because the national carbon price rises from EUR 55 to a range of EUR 55 to EUR 65 per tonne. Landlords must continue to apply the statutory graduated model for allocating carbon costs between tenants and landlords according to the building’s energy performance. By the end of 2026, all heating and hot-water meters in apartment buildings must also be remotely readable. Once installed, tenants must receive monthly consumption information. Non-compliance may give rise to rent reduction rights.
EU emissions trading postponed until 2028
The EU emissions trading system for heating and transport will begin in 2028 rather than on 1 January 2027 as originally planned. Germany’s Fuel Emissions Trading Act continues to apply in 2026, with a price range of EUR 55 to EUR 65 per tonne of carbon dioxide. The federal government plans legislation for 2027 that would retain the same carbon price as in 2026.
Funding for heating and building efficiency expected to fall; photovoltaic support remains
Funding for new climate-friendly heating systems is generally set to continue in 2026. Because of pressure on the federal budget, however, less funding is expected to be available for new heating systems and building efficiency. Applicants may face stricter requirements or longer waiting and assessment periods. Tax incentives for photovoltaic systems will initially remain in place, allowing owners to continue benefiting from relief for smaller installations.
Construction and purchase of owner-occupied housing remain eligible for support
The 2026 federal budget includes programmes supporting home ownership. The “Young Buys Old” programme offers reduced-interest loans for existing properties in energy efficiency classes F, G and H, provided the property is upgraded to Efficiency House 85 EE standard within four and a half years. The “Home Ownership for Families” new-build programme will also continue for houses and apartments that meet climate-friendly residential building requirements.
Further legal developments expected by the end of 2026
An expert commission appointed by the Federal Minister of Justice is preparing proposals to amend tenancy law concerning excessive rents. It is also considering whether breaches of the rent cap should attract fines or whether civil-law consequences are sufficient. Results are expected only at the end of 2026, with legislation unlikely before 2027.
The EU Energy Performance of Buildings Directive must be transposed into German law by the end of May 2026. The federal government intends to combine this with reform of the Building Energy Act. The directive aims to reduce primary energy consumption across the residential building stock by at least 16 percent by 2030 and by 20 to 22 percent by 2035. It also introduces renovation requirements for non-residential buildings from 2030 and new rules on solar installations, building automation and charging infrastructure. The IVD recommends obtaining a new energy performance certificate when selling or reletting a property if the existing certificate is more than ten years old.
As parts of the gas network may be dismantled over the medium term during the transition to renewable heating, rules for an orderly phase-out are expected to be added to the Energy Industry Act in 2026. Gas consumers should follow local heat planning closely and check whether the long-term plans retain gas networks, for example for hydrogen or biogas. Where they do not, sections of the network may be dismantled over the next ten to fifteen years.
Conclusion
2026 brings both new legal requirements and changing economic conditions for owners, landlords and property managers. Tenancy law, energy requirements and funding remain particularly dynamic. The IVD recommends reviewing existing processes and contracts, adapting investment decisions and consulting specialists at an early stage.