Tenants in Germany grapple with skyrocketing heating bills that are 43% higher than before the Russian invasion of Ukraine, a staggering increase reported by the German Economic Institute (IW). The institute's analysis of rental contract advertisements found that while hot ancillary costs have dipped by 4% to an average of €1.67 per square meter, cold ancillary costs have surged 3% to €1.78 per square meter. This has pushed the total average discount down slightly to €3.45 per square meter.
Since the beginning of the war in Ukraine, energy prices have significantly dropped on the stock market. However, tenants are yet to see any significant relief. According to IW real estate expert Michael Voigtländer, last year saw a sharp rise in heating bills, but the energy price decrease has yet to be reflected in long-term contracts for tenants.
Ista, an energy service provider, anticipates a substantial increase in heating costs this heating period for numerous tenant households. Despite a slight decrease in heating costs compared to the previous year, they still remain elevated. In 2021/2022, down payments for warm utility costs remained stable at an average of €1.17 per square meter. However, the current figures for the third quarter of 2023 indicate that warm utility costs remain alarmingly high.
The increase in heating costs continues to account for a substantial percentage of the total rent, despite a slight decline to 25% at the end of 2023. The authors assert that warm ancillary costs significantly impact the affordability of rental apartments, particularly in regions with low rents.
Vast regional differences exist in ancillary costs across Germany. Cold utility costs in rural areas are significantly cheaper, averaging €1.50 per square meter, due to factors such as real estate types and lower property tax rates. Conversely, large cities and the city states have higher ancillary costs.
Energy-efficient refurbishment is an essential strategy to combat high ancillary costs but progress remains slow. Frank Wojtalewicz, CEO of Deutsche Invest Immobilien AG, advocates for the prioritization of socially responsible energy-efficient refurbishment in both public discourse and legislative agendas.
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