When landlords renovate their buildings, they currently pass on most of the costs to the tenants. This jeopardizes a socially acceptable heat transition, because warm rents are rising despite energy savings. In its coalition agreement, the German government committed itself to examining a partial warm rent model. With a partial warm rent, the warm rent is fixed at a certain point in time and does not change even if the building is renovated to make it more energy efficient.

The partial warm rent is intended to provide greater incentives for energy-efficient building refurbishment and the switch to renewable heating technologies in the rented residential building stock, while at the same time guaranteeing the social compatibility of the heat transition.

This brief report examines how tenants would be affected by the introduction of a partial warm rent. The study shows that the partial warm rent can bring significant advantages for tenants compared to the current system of the modernization levy - however, this strongly depends on the specific design of the model and in particular on the reference period and the energy price level when the warm rent is determined. The intended payment transfers between households with different levels of consumption also bring their own challenges and the risk of new false incentives for landlords.

The so called one-third model, that also was examined in the report, leads to significantly lower warm rents in the event of energy-related refurbishments compared with the current model of a modernization levy of eight percent, so that noticeable additional burdens are prevented. From the tenant’s point of view, both models therefore offer advantages over the current regulatory framework.