The Building Modernisation Act (GModG): What property owners and investors need to know now

The draft law on the GModG provides for far-reaching changes for the real estatesector. We provide an overview of the most important innovations for existing and new buildings.

Brief overview

Following the Federal Government's key issues paper of 24.02.2026 (as previously reported), the cabinet has now passed a draft law of the GModG on 13.05.2026, which is to replace the GEG and implement the EU Building Directive (EPBD) 2024/1275. The amendment also entails significant changes to the GEIG and the CO2KostAufG. The bill is currently being discussed in the Bundestag; the aim is to adopt it before the summer break. 

Modernization requirements for existing buildings 

For the first time, the draft introduces building-related renovation requirements for the energy-poorest existing non-residential buildings (NWG) (§ 40 GModG-E). The owner must take "appropriate measures" to ensure that the overall energy efficiency does not exceed certain threshold values: From 01.01.2030, the annual primary energy requirement may not exceed 3.50 times the reference building value (worst 16% of the NWG, reference year 2020); from 01.01.2033 2.95 times (worst 26%). Concrete renovation measures are not specified – the owner remains free to choose the means. Exceptions exist, among other things, in the case of technical impossibility, economic unreasonableness,planned demolition, monument protection or low energy requirements. A fiction of performance applies, for example, to NWGs that were built from 1996 onwards, aremainly heated with biomass or heat pumps or are connected to district heating.

In the case of modifications to exterior components (§ 36 GModG-E), component-related maximum U-value limits according to Annex 7 apply if more than 10% of the respective component group is affected. Alternatively, a building-wide energy assessment can be carried out in accordance with § 38 GModG-E. For changes before 01.01.2030, the annual primary energy requirement may exceed the reference building by a maximum of 50%, and from 01.01.2030 by a maximum of 60%.

For existing residential buildings, the draft does not provide for a renovation obligation comparable to the NWG according to efficiency thresholds. The previous requirements remain unchanged (§§ 36/38 GModG-E): Until 31.12.2029, theannual primary energy demand may exceed the reference building by a maximum of 50% in a building-wide assessment, and by a maximum of 60% from 01.01.2030. The previous maximum transmission heat loss value will be retained as a barrier. Forolder heating systems (installed before 01.10.2009, building ≥ 6 WE), a heating inspection and optimisation must be carried out by 30.09.2027 (§ 60b GModG-E).

Requirements for new buildings

From 01.01.2030, every new building to be constructed – whether residential or non-residential – must be constructed as a zero-emission building (§ 10 GModG-E,Art. 4 of the Amending Act). The requirements include: (i) compliance with the total energy demand according to §§ 15/18 GModG-E, (ii) structural thermal insulation according to §§ 16/19 and (iii) no CO₂ emissions from fossil fuels atthe site. For public NWGs, this standard will already apply from 01.01.2028 (§ 10a GModG-E). In the transitional phase until 2030, the previous requirements for nearly zero-energy buildings will continue to apply for the time being. Six months after entry into force, a total energy requirement must be met for new NWGs according to the new reference building approach: The previous flat-rate 0.55 factor is no longer applicable; instead, the reference building is described as a "buildable reference building" on the basis of DIN/TS 18599:2025-10. 

From 01.01.2027, new public NWG and NWG over 250 m² will be subject to a nationwide obligation to construct a solar energy system for the first time; from 01.01.2030 also for new residential buildings and covered parking spaces (§106 GModG-E). Exceptions exist in the event of technical impossibility or unreasonableness. In addition, the states have an opening clause for further requirements, so that the previous state-specific regulations for solar energy systems on and on buildings continue to apply in principle. 

New requirements for the heat supply of buildings

The central differentiating feature of the GModG compared to the previous Heating Act is the departure from the flat-rate 65% RE obligation and the deletion of §§ 71 et seq. GEG. They are replaced by §§ 42–46 GModG-E. The new approach enables the continued operation of fossil heating systems under the condition that climate-neutral fuels are successively blended. 

When replacing the heating system, the decision is again up to the owner. A conclusive catalogue of nine options includes heat pumps, solar thermal energy, biomass, gas/oil heating, hybrid solutions, direct electricity heating and district heating connection (§ 42 GModG-E).

Anyone who continues to use gas, heating oil or liquefied petroleum gas must comply with the so-called "bio" staircase and gradually add minimum proportions of climate-friendly fuels: 10% from 2029, 15% from 2030, 30% from 2035 and 60% from 2040 (Section 43 GModG-E). The future green gas/green heating oil quota will be credited to the bio-staircase; the CO₂ price is waived for the climate-friendly fuel component.

According to § 46 GModG-E, direct electricity heating may only be installed in existing residential buildings if the structural thermal insulation falls short of the requirements of §§ 16/19 by at least 30% (tenant protection). In the caseof new buildings with rental apartments, even 45% is required (§ 10 para. 4 GModG-E). Exceptions apply to owner-occupied buildings with a maximum of two apartments. 

Other new requirements

Existing NWG with heating, air conditioning or ventilation systems with a nominal output of more than 70 kW must be retrofitted with a system for buildingautomation and control (BACS) by 31.12.2029 (§ 56 GModG-E). Minimum levels of automation apply to new construction NWG.

From 01.01.2028 for new buildings over 1,000 m², and from 01.01.2030 for all newbuildings, the life-cycle greenhouse gas emissions must be determined and shown in the energy certificate (§ 88b GModG-E). In addition, energy efficiency classes will be introduced for NWG (classes A to G); the verification will be converted to DIN/TS 18599:2025-10.

Amendments to the Building Electric Mobility Infrastructure Act (GEIG)

The draft provides for a significant tightening of the equipment requirements for charging infrastructure in the GEIG. The thresholds will be lowered and the equipment quotas will be significantly increased; in addition, pre-cabling, intelligent charging and grid-serving dimensioning are anchored as mandatory components (§§ 6, 7, 10 GEIG-E).

In the case of new residential buildings with more than 3 parking spaces (previously: more than 5), at least 50% of the parking spaces must in future be equipped with pre-cabling, the remaining with pipeline infrastructure. In addition, at least one charging point must be built per building. The infrastructure must be dimensioned for simultaneous and efficient use.

In the case of new NWG buildings with more than 5 parking spaces (previously: more than 6), at least 50% must be equipped with pre-cabling and at least one charging point per 5 parking spaces (in the case of office buildings: 2 parking spaces each) must be installed. These requirements also apply in the event of a major renovation of existing NWG. For existing NWGs with more than 20 parking spaces, from 01.01.2027 there will be an obligation to set up one charging point for every 10 parking spaces or, alternatively, to equip at least 50% of the parking spaces with pipeline infrastructure. In the case of publicly accessible parking spaces, the requirements for equipping the charging infrastructure can also be fulfilled by setting up fast-charging points with a total charging capacity of at least 1.1 kW or 2.2 kW per parking space. This regulation is aimed in particular at parking spaces of supermarkets or similar and is intendedto take into account the special user behaviour.

Amendments to the Carbon Dioxide Cost Allocation Act (CO2KostAufG)

Flanking the bio-staircase, the CO2KostAufG will be supplemented: If a gas/oil/liquefied gas heating system is installed in residential tenancies, landlords and tenants will in future each bear half of the network fees for gas and CO₂ costs (from 01.01.2028) and the additional costs of biogenic fuels (from01.01.2029) – limited to a maximum of 30% fuel share (§ 5a CO2KostAufG-E). For new buildings, this applies mutatis mutandis until 31.12.2029 in accordance with§ 5b; buildings constructed from 2030 onwards must comply with the zero-emissionstandard. For NWG, the previous 50:50 split according to § 8 remains. The regulations will be evaluated in 2036 (§ 5c CO2KostAufG-E).

Voices from associations and institutions

The draft law has met with considerable criticism in the association hearing. The National Regulatory Control Council assesses the draft as "in large parts hardly understandable" and counts it as one of the "weakest projects in terms ofcraftsmanship" of recent years. The "bio-stairs" approach is not resilient due to uncertainties about the availability and economic viability of sustainable fuels. Environmental associations (DUH, BEE) criticize the lack of an end date for fossil heating systems and doubt EPBD compliance; the DUH has announced legal action. The German Tenants' Association welcomes half the cost sharing, but calls for the 30% limit to be lifted, as tenants would be left alone with excess costs from 2040.

The BWP sees the reduction from 65 to 10 percent RE share as a "completely wrongsignal" - especially with regard to energy prices and security of supply in Germany. The BDH sees the draft as a step "in the right direction", but calls for tightening of hybrid heating systems. The Federal Chamber of Engineers criticizes a too vague transformation path and a lack of coherence between law, subsidies and municipal heat planning.

Outlook

The Federal Cabinet passed the draft law on 13.05.2026. In the next step, the draft will be submitted to the Bundestag, where it will be discussed in the responsible committees. The German government is aiming for adoption before the parliamentary summer break. Originally, it was planned to come into force on 01.07.2026; after the procedure was delayed, the application deadline of the 65%RE obligation in large cities has already been postponed by four months to 01.11.2026 as a precautionary measure.

In the parliamentary procedure, further changes to the draft law – in particularwith regard to the cost impact assessment of the bio-staircase and the tenant protection regulations – cannot be ruled out. 

For portfolio holders and project developers, an early compliance check at portfolio and property level is recommended. An evaluation of the GModG is planned for 2030. We accompany the legislative process and inform you about relevant changes.

(Draft of a law  amending the Building Energy Act, amending the Building Electromobility Infrastructure Act and amending further provisions in the heating sector (Building Modernisation Act), available here)