Germany's 2026 Heating Law: What the GModG Means for Housing Companies

Since 29 July 2026, the Building Modernisation Act (GModG) has replaced Germany's previous heating law, the Buildings Energy Act (GEG), and swapped the old 65-percent renewable-energy rule for new heating systems for a fuel quota that rises in stages. For housing companies, one question now matters most: which operator obligations in the existing building stock stay the same, and which new deadlines through 2029 and 2040 are you facing?

Most guides to the 2026 heating law are written for private owners of single-family homes. For housing companies and other owners of buildings with six or more residential units, the picture looks different: separate operator obligations and separate compliance evidence apply, and the GModG adds new thresholds for building automation on top. Public debate has barely touched on this side of the reform.

What does the 2026 heating law actually require for new heating systems now?

Since 29 July 2026, installing a new heating system falls under the GModG, not the familiar 65-percent rule from the GEG. The Bundestag passed the law on 10 July 2026, the Bundesrat approved it, and publication in the Federal Law Gazette followed on 28 July 2026, one day before the core provisions took effect, as the federal government confirms.

Until that date, newly installed heating systems had to run on at least 65 percent renewable energy, tied to how far municipal heat planning had progressed locally. That obligation, set out in Sections 71 to 71p and Section 72 GEG, has been dropped entirely under the GModG. The link to local heat planning falls away along with it for this specific requirement, which makes the legal picture noticeably simpler for portfolio owners on this particular point.

How does the new staged fuel quota work for gas and oil heating systems?

Section 43 GModG replaces the 65-percent rule with a gradually rising quota for renewable fuel content, informally called the "bio-staircase." It applies to newly installed gas, heating oil and LPG systems and sets minimum shares of 10 percent from 2029, 15 percent from 2030, 30 percent from 2035 and 60 percent from 2040.

For portfolios with older central heating systems, this comes down to a practical point: anyone replacing a boiler after 2029 has to use a rising share of biomethane or comparable renewable fuels, regardless of how far the local municipality's heat planning has progressed.

For context: The bio-staircase trades a fixed renewables quota for a fuel quota that climbs over the long term. Cost projections for the added expense, including a commissioned study by Greenpeace and the Öko-Institut, are not official figures and should feed into your own calculations with appropriate caution.

What role does municipal heat planning still play for portfolio owners?

With the 65-percent link gone, municipal heat planning has less direct bearing on any single heating replacement, but it still matters for whether a building later sits inside a district heating or hydrogen supply area. By the statutory deadline of 30 June 2026, 72 of Germany's 83 large cities with more than 100,000 residents had finished their heat planning on time, according to an analysis by the BBSR.

Nationwide, the picture is far more patchy: of roughly 10,780 municipalities, only 2,836, or 26 percent, had a finished heat plan by the same date, while another 4,419 were still working on one. In practice, that means checking the planning status of every single site municipality in your portfolio rather than relying on one nationwide figure.

What's striking is how far the plans diverge from reality on the ground: many heat plans assume an annual renovation rate of around 2 percent for residential buildings, while the actual rate across Germany sat below 1 percent in 2025. Building renovation alone will barely get portfolio owners to the planned deadlines, which gives day-to-day system operation considerably more weight.

Which operator obligations under Sections 60b and 60c GEG remain unchanged?

The GModG left the operator obligations for heating inspections and optimisation under Section 60b GEG, and for hydraulic balancing under Section 60c GEG, untouched, as the BBSR's GEG information portal confirms. They apply to buildings with six or more residential or commercial units and continue regardless of whether a property is getting a new heating system right now.

For older systems installed before 1 October 2009, the deadline for the heating inspection ends on 30 September 2027. For newer systems, the obligation kicks in one year after the system turns 15. An exemption is possible if the building already has standardised building automation under Section 56 GModG, since that automatically delivers the transparency the inspection is meant to produce. For the detailed inspection and balancing logic, including how deadlines are staggered by system age, the article on heating optimisation in existing buildings goes into more depth.

Violations of Section 60b or Section 60c carry fines under Section 108 GEG. The official legal text sets out staggered fine brackets of up to 50,000 euros for certain categories of violation, as the individual provision in federal law shows. Secondary sources vary in how they map specific violations to specific fine brackets, so it's worth checking the statutory text directly for your own documentation.

What does the GModG change for tenancy law and cost allocation?

Little changes on the tenancy-law side for most housing companies, since many are already on a decarbonisation path, according to GdW president Axel Gedaschko. Two specific changes still matter for your calculations.

First, for newly installed fossil-fuel heating systems, landlords will now carry a flat 50 percent of the additional costs for biofuel content, plus the associated CO₂ and grid-fee costs. This update to the CO₂ Cost Allocation Act applies to systems installed after 29 July 2026; existing heating systems stay on the previous tiered model, as Minol explains.

Second, for heat pumps, modernisation costs can only be passed on in full if the annual coefficient of performance, the ratio of heat produced to electricity used, reaches at least 2.5. If a system falls short, the new rule under Section 559e BGB allows only half the costs to be allocated. Anyone planning heat pumps for existing buildings should build this figure into the tender as a hard criterion, not check it only after commissioning.

GdW recommendation: The industry's leading housing association still recommends the CO₂ practice path that starts in the boiler room, with heat pumps wherever they make economic sense and district heating wherever it's available as the backbone.

Which deadlines shape the timeline through 2040?

The GModG's timeline runs from dates that have already passed to targets set for 2040:

Two open questions belong on your watch list. The EU's Energy Performance of Buildings Directive (EPBD) should have been transposed into national law by 29 May 2026 already; Germany was behind schedule until the GModG took effect, as the Öko-Zentrum NRW documents, so further adjustments to renovation and solar obligations for non-residential buildings are likely. On top of that, the Federal Constitutional Court rejected an urgent motion against the legislative process on 9 July 2026, but environmental groups have announced constitutional complaints against the law as passed, so the legal footing of the GModG itself is not yet fully settled.

Funding shifted too as of 21 July 2026: the funding cap under the federal Efficient Buildings programme dropped from 30,000 to 28,000 euros in eligible costs and keeps falling in further half-year steps. The income bonus and climate-speed bonus were restructured, and the government says the funding programme itself should continue at least through 2029.

For portfolios with many non-residential buildings: The Central Real Estate Committee (ZIA) rates the deadline of end-2029 for building automation as very ambitious. Taking stock of existing systems and integrating them takes considerably more effort than simply buying the technology. Data quality work and plausibility checks add further to that. Anyone responsible for large portfolios should plan for this lead time realistically and not wait until 2028 to start.

How do you meet the new compliance and automation obligations without renovating?

Lowering the automation threshold to 70 kilowatts under Section 56 GModG calls for a system that continuously monitors and logs consumption and provides open data interfaces for it, not a construction project. Digital operational optimisation covers that requirement without any structural work at all: a digital building twin such as the KUGU Energieplattform continuously maps heating behaviour and system parameters, giving you the data foundation for Sections 56, 60b and 60c in one system.

In concrete terms, that covers three requirements at once. Continuous monitoring through KUGU VIS makes flow temperatures and system status visible in real time, delivering the logging Section 56 requires. Automated optimisation through KUGU EOS handles the fine-tuning of heating curves and hydraulic behaviour that would otherwise need manual work under the Section 60c balancing requirement. And the continuous data history provides the evidence Section 60b requires from operators if an inspection happens, without anyone having to hunt down paperwork specifically for it.

For ESG teams, there's a further benefit: the same operating data collected for statutory documentation can be reused for reporting purposes. How operational metrics differ from pure reporting obligations is covered in detail in the article on ESG-relevant operating data. For a closer look at starting decarbonisation steps without a major renovation, the article on decarbonising the existing building stock without renovation works through the approaches in more depth.

What's really changing, and what stays the same

The tricky part of the GModG has less to do with the new fuel quota than with the pace of it: automation obligations and inspection deadlines run through 2029, while the actual renovation rate across the building stock sits below 1 percent a year. For housing companies, that means digital operations management will save money in the years ahead, and it's often the only realistic route to producing the required compliance evidence on time.

Acting now buys lead time that the tight deadline at the end of 2029 barely leaves room for if stocktaking and system integration only start in 2028. It makes sense to check your own portfolio against the 70-kilowatt threshold and the Section 60b and 60c deadlines soon. At the same time, check the planning status of your site municipalities and decide where monitoring and automation should start first.

Frequently asked questions about the 2026 heating law

Does the new staged fuel quota also apply to gas heating systems already installed?

No, the bio-staircase under Section 43 GModG applies only to newly installed gas, oil and LPG heating systems. Existing systems keep grandfathered status and continue under the previous conditions until they are replaced.

Do we still have to comply with Sections 60b and 60c GEG if no new heating system is planned?

Yes, the operator obligations for heating inspections and hydraulic balancing apply regardless of any heating replacement, as soon as a building has six or more residential or commercial units. They run on a schedule tied to system age and end for older systems from before 2009 by 30 September 2027 at the latest.

What happens if the relevant municipality hasn't finished its heat planning yet?

It no longer affects the heating replacement itself, since the 65-percent link has been dropped. For long-term site decisions, the planning status still matters, because it shows whether a building might later sit in a district heating or hydrogen supply area.

Does an existing monitoring system meet the automation requirement under Section 56 GModG?

That depends on whether the system continuously monitors and logs consumption and does so through open data interfaces, exactly as Section 56 GModG requires. Basic consumption metering without logging or interfaces usually falls short of the requirement and should be evaluated closely before the deadline check.

What fines apply for violations of the operator obligations?

Section 108 GEG sets out staggered fine brackets of up to 50,000 euros for certain categories of violation around Sections 60b and 60c. Secondary sources map individual violations to fine amounts inconsistently, so checking the official legal text directly is worthwhile if there's any doubt.