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Cost of Heating Up in German Homes by 43% Since 2021
The Impact of Russia's Invasion of Ukraine on Energy Prices
The ongoing conflict in Ukraine has brought about some significant changes in the energy market, resulting in higher utility costs for many renters across Germany. This trend is evident in the increase of heating prices by around 43% compared to before the invasion.
The Persistence of High Warm Utility Costs
Despite a decline in energy prices, warm utility costs remain substantial in new rental contracts. The German Economic Institute's analysis reveals that heating and hot water costs have hardly lowered, while cold ancillary costs have slightly increased. With an average of €1.67 per square meter for warm utility costs and €1.78 for cold ancillary costs in September 2023, overall discounts only experienced a minor decrease to €3.45 per square meter.
The Delayed Impact of Decreasing Energy Costs
Renters may not immediately benefit from falling energy prices, as tenants' utility costs are often settled after a delay. According to the Institute, housing ancillary costs still account for approximately 25% of the total rent in the country, with contractual increases outpaced by rising net cold rents of 5%.
Regional Differences in Ancillary Costs
The impact of warm ancillary costs on the affordability of rental apartments varies considerably across Germany, with cold service charges averaging €1.50 in rural areas and being significantly higher in large cities due to various factors, including different property types and municipal charges.
Sustainable Practices and Energy Efficiency as Potential Protections
Adopting energy-efficient refurbishment and sustainable practices could help mitigate high ancillary costs in the future. Despite the slow progress in this area, real estate companies are encouraged to prioritize environmentally friendly practices and invest in renewable energy systems, as the figures suggest.
According to the CPI in Berlin, consumer prices have risen by around 19.7% between 2020 and December 2024, while net rents without heating costs have only increased by 7%. In Luxembourg, utility costs are higher for gas and electricity but lower for water compared to the EU average, although it does not directly impact the German rental market. The trend toward sustainability and renewable energy might help moderate energy costs for tenants over time as buildings become increasingly energy-independent.
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