Renovating with government funding and support: What is changing for property owners in 2023

Would you like to whip your property into shape, carry out an energy-efficient renovation, or simply modernize? Then right now you have the opportunity to benefit from various federal funding programs and reduce your investment costs. However, since this year there are some new regulations to keep in mind. But don't worry: with the right information and tips, applying for grants and loans is not only financially feasible, but also sensible and worthwhile. In this article, you will get an overview of the most important changes so that you, as a property owner, are best prepared to put your renovation plans into action.

Energy retrofitting should be made easier: Federal funding is being expanded

Regardless of whether you are planning a renovation or have already started, you might be wondering what comes next. Well, there are some changes to the federal funding for efficient buildings (BEG). As of January 1, 2023 it will be easier than ever for homeowners to finance their energy-efficient renovations with this subsidy.

As part of federal funding, homeowners receive grants and loans to finance their Modernization measures. In the future, also the Material costs subsidized for DIY work, meaning homeowners who do the work themselves can receive a government grant of up to 20 %, e.g., for insulation material. Furthermore, homeowners who comprehensively renovate their particularly energy-inefficient house receive a higher repayment grant on the loan and can secure an interest advantage in this way.

There will be further changes in the coming years as well: The Minimum efficiency and noise emission requirements for heat pumps are being tightened and the permissible particulate matter limits for biomass plants are being lowered. In addition, there is a new bonus for serial renovation.

Despite all these changes, the renovation subsidy remains very attractive and is intended to encourage homeowners to energy-efficiently renovate their homes. Renovating is not only good for the environment and a Investment in the future, but also has a positive effect on the marketability of your house. A well-planned and executed renovation can increase the value of your property, and even more so when it comes to improving the energy efficiency of your property.

Sweat equity in renovation measures can now be subsidized under certain conditions

Since the beginning of the year, the state has been taking over up to 20 percent of the eligible costs for work done by the owner on the building envelope. People who renovate themselves can now apply for grants under certain conditions. The grant only applies to material costs directly related to the renovation measure. An energy efficiency expert or a specialist company must confirm that the Work professionally carried out and the material costs were listed correctly. It is also important that the invoices must not be paid out in cash, but must bear your name and may only contain eligible items.

The subsidy for sweat equity applies to all eligible renovation measures, even for the high subsidized heating system replacement. Here, without appropriate technical knowledge, there is up to a 40 percent subsidy, although it is not advisable to replace the heating system yourself, as this should only be done by homeowners who have the relevant training and, for example, work in a heating specialist company.

Support for sustainable renovation measures: Options for individual measures and complete renovations

The Federal Government continues to support the funding of individual measures and complete renovations, as well as increased insulation measures for facades and roofs, new windows and ventilation systems, or the replacement of heating systems. These grants can amount to up to 20 percent of the costs of the measures.

When replacing a heating system, the subsidies range between 10 and 40 percent – depending on the type of old boiler and the new heating technology. For example, there is a subsidy of up to 40 percent for a geothermal heat pump if it replaces an old gas or oil heating system. Otherwise, biomass systems newly installed in subsidized efficiency houses since January 2023 may only be used if they do not exceed particulate matter emissions of 2.5 milligrams per cubic meter. This corresponds to the requirement value of the previous innovation bonus for individual measures.

Furthermore, you can Biomass heating systems, which are usually subsidized at 20 percent, will only be subsidized if they are combined, for example, with a solar thermal system or a heat pump.

Starting in January 2024, subsidized efficiency houses with air-water heat pumps apply stricter requirements for noise emissions of the outdoor unit. They must be at least five decibels lower than specified in the EU Ecodesign Regulation. As of January 1, 2026, the difference is to increase to ten decibels. Furthermore, starting in 2028, only natural refrigerants in heat pumps be used.

These new regulations ensure that efficient and environmentally friendly appliances are installed in new subsidized efficiency houses while at the same time guaranteeing maximum comfort for homeowners and residents.

Funding programs for complete renovations: Funds for sustainable building modernizations

The Federal Government offers for Complete renovations grants between 5 and 45 percent. In addition, there is a Interest rate subsidy on the order of 15 percent. One reason for the better funding is the higher worst-performing building bonus. This bonus is available for previously largely unrenovated buildings that are classified in efficiency class H in the energy performance certificate. It was raised from five to ten percentage points. A further improvement exists for residential buildings that are renovated in series.

The bonus for „series renovation“ of 15 percentage points can be additionally claimed when renovating to an Efficiency House 55 or 40. Special conditions apply, such as the use of automatically prefabricated facade and roof elements. Series renovation is particularly suitable for several identical residential buildings.

When planning, you should keep a few more things in mind. First of all, you can only combine the efficiency house subsidy with the attractive single-measure subsidy if they are clearly separated in time. Therefore, anyone who has already exhausted their single-measure subsidy for other projects can no longer easily have their heating system replacement subsidized through the single-measure subsidy.

That means anyone who starts with individual measures now and receives funding for them must first complete them and can only apply for efficiency house funding later.

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Subsidies for energy-efficient measures: BAFA and KfW are here to help

BAFA and KfW are two of the most important organizations in Germany when it comes to helping homeowners make their houses more energy-efficient. They offer a wide range of funding opportunities, from loans with repayment grants to individual measures.

Applications for grants for individual measures must be submitted by homeowners to the Federal Office for Economic Affairs and Export Control (BAFA). Applications for loans with repayment subsidies for the comprehensive renovation of an efficiency house are processed by the KfW promotional bank. The applications must before the start of the measures must be submitted, otherwise you will not receive funding.

An overview of the most important aspects of state subsidies for real estate renovations

The federal government offers a wide range of subsidies for renovations, including complete renovations. Here is the summary:

• Homeowners receive grants and loans to finance modernization measures.
• Material costs for self-implemented measures are subsidized.
• Higher repayment grant for the loan for comprehensive energy efficiency renovations of particularly poorly insulated houses.
• Minimum requirements for the efficiency and noise emissions of heat pumps are being tightened.
• Permissible particulate matter limits for biomass plants are being lowered.
• New bonus for serial renovation.
• Renovating is an investment in the future and increases the value of the property.
• The state covers up to 20 % of the eligible costs for sweat equity on the building envelope.
• Grants for material costs must be directly related to the renovation measure.
• Confirmation by an energy efficiency expert or specialist company required.
• Invoices do not have to be paid out in cash, but must include names and contain eligible items.
• Subsidy for personal labor applies to all eligible renovation measures, including heating system replacement.
• The Federal Government supports individual measures, complete renovations, and insulation measures.
• Grants can amount to up to 20 % of the costs.
• For heating system replacements, the subsidies range between 10 and 40 percent.
• Since January 2019, biomass plants have had to comply with a particulate matter emission limit of 2.5 mg/m³.
• Biomass heating systems can now only be subsidized in combination with other systems.
• Starting in January 2024, stricter requirements apply to the
• Noise emissions of air-source heat pumps.
• Starting in 2028, only natural refrigerants may be used in heat pumps.
• The federal government offers subsidies of between 5 and 45 percent for complete renovations.
• There is an interest rate subsidy of 15 percent.
• The worst-performing building bonus was increased from 5 to 10 percentage points.
• Series renovation of residential buildings can receive a 15 percentage point bonus.
• Efficiency house funding cannot be combined with individual measure funding if they are not separated in time.
• Anyone who has already exhausted the funding for individual measures can no longer use it to subsidize their heating system replacement.
• Individual measures must be completed before applying for Efficiency House funding.
• Submit applications for grants to BAFA and KfW in good time.
• Applications must be submitted before the start of the measures in order to receive funding.

Additional topics: Energy-efficient retrofitting with an individual renovation roadmap.