The Heating Act is gone — but the pressure on landlords remains

When Chancellor Friedrich Merz announced in December 2025 that the Heating Act would be abolished and replaced with a new Building Modernisation Act, the German property sector breathed a collective sigh of relief. The Gebäudeenergiegesetz had been one of the most politically toxic pieces of legislation in recent German history. Driven by former Economics Minister Robert Habeck and the ill-fated traffic light coalition, its requirement that all new heating systems use at least 65% renewable energy had provoked a firestorm of public anger, contributed to the collapse of the government and left property owners, investors and developers in prolonged planning paralysis.

That relief in December, it is now clear, was premature.

On 30th April, the CDU/SPD coalition reached the final agreement needed to clear the path for the new GModG — the Building Modernisation Act. The central provisions are genuinely more pragmatic than what they replace. But the new law is not simple, the timeline is already slipping, and the financial implications for landlords and residential investors are more significant than the headline "abolition of the Heating Act" suggests.