New regulation will see CO2 tax shared between tenants and landlords

New regulation will see CO2 tax shared between tenants and landlords

Tenants in Germany have to pay a CO2 tax on heating, but the federal government wants to introduce regulations that will force landlords to share the cost.

German government targets landlords with CO2 tax

Since 2021, households in Germany have had to pay a CO2 tax on heating, with one ton of carbon dioxide costing 30 euros. Couple this with the rising cost of living and energy and it is clear to see that the last few years have been hard on the wallets of people living in Germany. However, the federal government is moving to try and relieve renters of such intense financial burden by introducing a regulation that would see landlords share the CO2 tax with tenants.

The regulation has been brought in on the grounds that tenants only have limited control over their energy consumption, since this is also tied to other factors like how modern and efficient the heating system is and how well insulated the building is - factors that are dependent on the landlord. Accordingly, the federal economics and construction ministries have apparently developed a model which determines the share landlords and tenants will have to pay for their CO2 emissions.

The share of tax that landlords would be obliged to pay is dependent on how climate-friendly the building is. Buildings would be divided into seven levels, and the levels sorted by the annual amount of CO2 per square metre:

Annual CO2 emissions per square metre Landlord's share (percent) Tenant's share (percent)
Less than 5kg 0 100
5kg to 15kg 10 90
15kg to 20kg 20 80
20kg to 30kg 40 60
30kg to 40kg  60 40
40kg to 45kg  80 20
Over 45kg 90 10

Traffic light coalition secure new regulation

The idea to have tenants and landlords split the cost of CO2 emissions was actually agreed by Germany’s previous government, after a long campaign by the SPD. Discussions of a similar tiered system eventually gave way to a simple 50:50 split. However, the regulation was eventually dismissed at the behest of the CDU / CSU Union, which argued that splitting costs in half was unfair towards landlords, since they have no control over tenants’ consumption.

Despite the current government deciding on the new regulation, there is still some dispute over when it should come into effect. Federal Minister for Economic Affairs Robert Habeck has already announced that the regulation will come into force towards the middle of the year. In fact, the government’s coalition agreement even states that tenants should be relieved of the CO2 tax by June 1. However, if this cannot be achieved then “the increased costs due to the CO2 price will be shared equally between landlord and tenant from June 1, 2022."

Right now, it is expected that a draft bill will be drawn up by March 16.

Criticisms of the German CO2 tax bill

The new regulation has proved polarising. The housing policy spokesman for the CDU / CSU parliamentary group, Marco Luczak, considers the bill - particularly the seven levels of CO2 emissions - too complicated. "In the end, we need a low-bureaucracy and practical regulation," he said. Christian Noll, managing director at German Industry Initiative for Energy Efficiency (DENEFF), also criticised the new CO2 classes, although he welcomed the idea of relief for tenants, and agreed that tenants living in less efficient buildings should be entitled to more financial relief.

The German Tenants' Association, on the other hand, criticised the fact that tenants living in completely unrenovated buildings are not fully exempted from the CO2 tax. It also pointed out that landlords can pass on 100 percent of their energy-related refurbishment costs to their tenants via the modernisation levy. This means, according to director Melanie Weber-Moritz, that tenants pay for the refurbishment of their apartments, as well as a significant amount towards the CO2 costs.

William Nehra


William Nehra

William studied a masters in Classics at the University of Amsterdam. He is a big fan of Ancient History and football, particularly his beloved Watford FC.

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