The Heating Law Is History: Why the GMG Is Coming
The Building Energy Act (GEG) – colloquially known as Germany’s “heating law” – has provoked more heated debate, uncertainty, and political conflict since its passage in September 2023 than virtually any other piece of legislation in recent decades. On February 24, 2026, the federal government published key points for a new Building Modernization Act (Gebäudemodernisierungsgesetz, GMG) that will fundamentally reform and replace the controversial heating provisions of the GEG.
For property owners, homeowner associations (HOAs, known in Germany as WEGs), and property managers, the implications are significant: the previous 65% renewables mandate for heating replacements is being dropped, a new “Bio-Staircase” with phased requirements starting in 2029 will take its place, and BEG subsidies will continue. In this article, we explain all the key changes, assess their real-world impact, and outline what HOA managers and property owners in the Rhine-Main region need to do now.
As a professional HOA management company in the Rhine-Main region, we guide homeowner communities through complex modernization projects and advise on subsidies, resolution procedures, and implementation planning.
Looking Back: The GEG and the 65% Rule
The amended Building Energy Act entered into force on January 1, 2024. Its centerpiece was Section 71 GEG: every newly installed heating system was henceforth required to generate at least 65% of its heat from renewable sources. In practice, this meant that property owners replacing their heating system were largely limited to a heat pump, a district heating connection, or a biomass boiler – installing a new gas or oil boiler was only permissible under significant restrictions and conditions.
Implementation was tied to municipal heat planning: cities with more than 100,000 inhabitants were required to present a heat plan by June 30, 2026; smaller municipalities by June 30, 2028. The full obligation would only kick in once the heat plan was published, with transitional periods applying in the meantime.
Criticism was intense from the outset:
Key Points of the GMG (February 24, 2026)
The current federal government – a coalition of CDU/CSU and SPD – agreed in its autumn 2025 coalition agreement to fundamentally reform the heating law. On February 24, 2026, the Federal Ministry for Economic Affairs and Climate Action (BMWK) published the key points for the Building Modernization Act (GMG). The central principles:
A ministerial draft is expected by Easter 2026. Parliamentary proceedings are to follow promptly, with the earliest realistic date for the GMG entering into force being early 2027.
The Most Important Changes at a Glance
65% Renewables Mandate Dropped
The single most consequential change in the GMG: the immediate 65% renewables mandate for heating replacements under Section 71 GEG will be abolished outright. Property owners will no longer be required to install a heating system that draws at least 65% of its heat from renewable sources when replacing their existing system.
In concrete terms: installing a new gas boiler, oil boiler, or other fossil heating system will once again be permissible without restriction – subject, however, to the requirement that gradually increasing bio-fuel shares must be met from 2029 onward (see next section). The obligation to switch entirely to renewable energy is being eliminated.
For property owners who were unsettled by the GEG requirements, the GMG brings considerable relief and significantly broader room for maneuver.
The “Bio-Staircase”: Gradual Increase from 2029
Instead of the immediate 65% mandate, the GMG introduces a gradually rising requirement for the bio-fuel share of heating fuel – the so-called “Bio-Staircase” (Bio-Treppe). This applies to newly installed fossil heating systems and sets out the following roadmap:
| Year | Minimum Bio Share | Example Compliance |
|---|---|---|
| 2029 | 10% | Biomethane blending via gas supply contract |
| 2033 | 30% | Hybrid system (gas + heat pump) or higher blending rate |
| 2036 | 45% | Substantially increased bio share or technology switch |
| 2040 | 60% | Biomass, high bio share, or fully renewable system |
The Bio-Staircase offers key advantages over the previous instant 65% mandate:
Municipal Heat Planning Decoupled
Another pivotal change: municipal heat planning is being decoupled from heating replacements. Previously, the GEG’s 65% mandate was tied to the existence of a municipal heat plan. In practice, this led to a paradoxical situation: property owners who wanted to replace their heating had to wait for the local heat plan – which in many municipalities had not yet been produced.
Under the GMG: owners can replace or modernize their heating system at any time, regardless of whether their municipality has already published a heat plan. The deadlines for municipal heat planning remain unchanged:
Going forward, the heat plan serves as a guide for orientation – indicating which heat sources and infrastructure will prospectively be available in a given area. However, under the GMG it no longer has any legally binding effect on individual heating replacement decisions.
Technology Neutrality Strengthened
The GMG explicitly embraces the principle of technology neutrality. This means the federal government does not prescribe any specific heating technology. All of the following options are, in principle, permissible under the GMG:
This technology neutrality was a central demand of the CDU/CSU in the coalition agreement and represents a departure from the de facto heat pump mandate of the previous GEG.
What Applies During the Transition?
Current GEG Rules Until GMG Takes Effect
Until the GMG enters into force – expected no earlier than early 2027 – the existing GEG continues to apply without change. All current obligations, deadlines, and transitional provisions of the GEG remain in effect for the time being. Property owners installing a new heating system right now must comply with the applicable GEG requirements.
> Important: The GMG currently exists only as a key points paper. As long as the legislation has not been published in the Federal Law Gazette, only the existing GEG applies. Owners and property managers should therefore not make premature decisions based on the GMG key points, but should continue to fulfill their current obligations under the GEG.
Transition Periods for Heating Emergencies
For the most common real-world scenario – the breakdown of an existing heating system (heating emergency) – the following transition periods apply under the current GEG:
This five-year rule is particularly relevant for HOAs, as the failure of a central heating system often demands urgent action while a proper resolution at an owners’ meeting takes time to arrange.
Grandfathering for Existing Systems
Existing heating systems enjoy grandfathering protection: neither the GEG nor the future GMG requires owners to replace a functioning heating system prematurely. The obligations only apply when a new system is installed – whether due to a breakdown, a modernization project, or a voluntary upgrade. However, heating systems that are more than 30 years old and fail to meet certain efficiency standards remain subject to the mandatory replacement requirement under Section 72 GEG.
Federal Subsidies (BEG): What Stays, What Changes?
The Federal Funding for Efficient Buildings (BEG) program is the German government’s flagship subsidy scheme for energy-efficient building renovations and heating replacements. In the GMG key points, the federal government expressly confirmed that BEG funding will continue until at least 2029.
Current Rates at a Glance
| Measure | Base Rate | Bonuses | Max. Subsidy |
|---|---|---|---|
| Heating replacement (heat pump, district heating, biomass) | 30% | +20% speed bonus + 20% income bonus | 70% |
| Insulation (facade, roof, basement ceiling) | 15% | +5% iSFP bonus | 20% |
| Windows and doors | 15% | +5% iSFP bonus | 20% |
Explanation of the bonuses:
The maximum subsidy amount for heating replacements is EUR 30,000 per residential unit (for owner-occupied property). Special rules with higher subsidy limits apply to HOA communities.
Application Process and Deadlines
Applications are submitted via KfW (for heating replacements) or BAFA (for individual measures on the building envelope). Important: the application must be submitted before work begins. Retroactive funding is only possible in exceptional cases (e.g. emergency heating breakdowns).
Special rules on application eligibility apply to HOA communities: as a rule, the property management company submits the subsidy application on behalf of the HOA. A resolution by the owners’ meeting must underpin the application.
For further information, see our articles on financing energy renovations in HOAs and the heating cost surge and its impact on property owners.
HOAs (WEG) and Heating Replacement: The Special Challenge
Replacing the heating system in a homeowner association poses a unique challenge because the decision cannot be made by an individual owner – it must be resolved and financed by the community of apartment owners as a whole. The GMG does not alter the underlying condominium law framework; decision-making continues to be governed by the Condominium Act (WEG).
Decision-Making Under Section 20 WEG
Since the WEG reform of 2020, structural alterations – including the replacement of a heating system – can generally be approved by a simple majority (majority of votes cast) under Section 20(1) WEG. This provision has significantly simplified the decision-making process for modernization measures.
However, heating projects regularly raise the cost allocation question: who bears the modernization costs? As a general rule, all owners participate in the costs in proportion to their co-ownership share. For particularly cost-intensive measures, however, an individual owner may argue that the costs are disproportionate and cannot reasonably be imposed on them.
Ongoing Projects: Review or Continue?
For HOAs that already have ongoing heating projects – meaning resolutions have been passed, planning has been commissioned, or subsidy applications have been filed – the question now arises: continue as planned or reassess?
The answer depends on the individual circumstances:
Financing Options
Financing a heating replacement in an HOA community typically involves one or more of the following mechanisms:
Detailed information on financing can be found in our article on energy renovation in existing HOA buildings.
What Heating Options Do Owners Have Now?
The GMG opens up a wide range of heating options for property owners. Below, we assess the most important technologies with a focus on HOA communities and existing buildings in the Rhine-Main region.
Heat Pumps
The heat pump remains the most climate-friendly heating technology even under the GMG and benefits from the highest BEG subsidy (up to 70%). Air-to-water heat pumps in particular have undergone significant technical improvements in recent years and are now suitable for existing buildings with radiators (flow temperatures up to 55 °C).
Advantages: Highest subsidy rates, low operating costs, future-proof, no Bio-Staircase requirement.
Disadvantages: High upfront investment, structural requirements (installation space, noise protection), potentially reduced efficiency in unrenovated older buildings.
District Heating
In metropolitan areas like the Rhine-Main region, a district heating connection is an attractive option where a district heating network is available or expansion is planned. Municipal heat planning provides information on which areas will have access to district heating in the future.
Advantages: No on-site boiler required, low maintenance effort, generous subsidy, future-proof.
Disadvantages: Availability depends on local infrastructure, long-term contractual commitment, connection charges.
Hybrid Systems
Hybrid heating systems – typically a combination of a gas condensing boiler and a heat pump – are a particularly attractive option under the GMG. They already satisfy the Bio-Staircase from the point of installation and offer high supply security: when the heat pump loses efficiency during extreme cold spells, the gas boiler takes over.
Advantages: Lower investment cost than a standalone heat pump, high supply security, Bio-Staircase easily met, good subsidy rates.
Disadvantages: Two systems with corresponding maintenance requirements, still partially fossil.
Pellet and Biomass Boilers
Pellet boilers and other biomass systems use renewable raw materials and fully satisfy the GMG requirements (100% renewable). They are particularly suitable for buildings where a heat pump would not be economically viable.
Advantages: 100% renewable, generous subsidy, suitable even for poorly insulated buildings, no Bio-Staircase requirement.
Disadvantages: Significant storage space required for pellets, particulate emissions, volatile pellet prices, regular ash disposal.
Hydrogen-Ready Gas Boilers: A Critical Assessment
Some manufacturers market so-called “hydrogen-ready” gas boilers as a future-proof solution: systems that currently run on natural gas but can technically be converted to 100% hydrogen. The federal government has included this technology as a permissible option in the GMG key points.
However, considerable caution is warranted: the availability of green hydrogen for residential heating is not assured in most regions of Germany for the foreseeable future. The overwhelming consensus among energy experts and industry associations is that hydrogen will primarily be deployed in industry and heavy transport, and will remain too expensive and inefficient for decentralized residential heating. Property owners who choose a hydrogen-ready gas boiler bear the risk that hydrogen may never become available in their area.
> Practical tip: Wait for your municipality’s heat plan before committing to a specific heating technology. The heat plan indicates which energy sources and infrastructure will be available in your area going forward – and helps protect against costly wrong turns.
Municipal Heat Planning in the Rhine-Main Region
Municipal heat planning continues to play an important role under the GMG – albeit as a guide for orientation, not as a legal prerequisite. For property owners in the Rhine-Main region, the current status of heat planning in the area’s largest cities is of particular relevance.
Frankfurt: Mainova District Heating Expansion
The City of Frankfurt am Main is working on its municipal heat plan, which is due by June 2026. The local energy utility Mainova has announced a major expansion of its district heating network: new district heating connections are to be made available particularly in the districts of Bockenheim, Sachsenhausen, and the Europaviertel. The Fraunhofer IFAM is supporting the city in preparing its heat plan and is investigating, among other things, the potential of large-scale heat pumps and waste heat from data centers across the Frankfurt metropolitan area.
Wiesbaden: Geothermal Potential
Wiesbaden benefits from significant geothermal potential thanks to its geological setting. The city is examining the use of thermal springs and deep geothermal energy for building heating as part of its heat planning process. The findings are to feed into the municipal heat plan, which is also due by June 2026.
Darmstadt: Heat Plan Already Presented
The City of Darmstadt presented its municipal heat plan in January 2026, making it one of the frontrunners in Hesse. The plan envisions a substantial expansion of district heating, particularly in the area around TU Darmstadt and in the residential districts of Bessungen and Eberstadt. In addition, neighborhood-level concepts with decentralized heat pump solutions are being pursued.
Mainz: Deadline June 2026
Mainz, as a large city, is also required to submit a municipal heat plan by June 2026. The city is collaborating with Mainzer Stadtwerke AG on a concept that combines district heating, geothermal energy, and decentralized solutions. Property owners in Mainz are well advised to await the publication of the heat plan before making far-reaching investment decisions.
Practical Recommendations: What HOA Managers Should Do Now
The GMG key points give HOA managers an opportunity to strategically reassess heating projects and proactively inform owners. We recommend the following five steps:
Conclusion: More Flexibility, but No All-Clear
The Building Modernization Act (GMG) brings tangible relief for property owners and HOA communities: the controversial 65% renewables mandate is being scrapped, the Bio-Staircase offers a predictable and socially equitable transition path, and BEG subsidies continue. Technology neutrality gives owners the freedom to choose the best solution for their building.
At the same time: heating remains firmly on the agenda. The Bio-Staircase ensures that fossil heating systems will have to transition to renewable fuels over time. The graduated increase in bio-fuel shares means that anyone installing a new fossil boiler today must secure a substantial bio-fuel component by 2040. Moreover, the current subsidy landscape makes it financially attractive to switch to renewable heating systems now – owners who take advantage of the subsidies can recoup up to 70% of their investment costs.
For HOA communities, it is advisable to use the remaining time before the GMG enters into force to carry out a thorough system audit, inform owners, and where appropriate commission an energy consultation. Those who plan wisely today will be best positioned to benefit from the expanded options the GMG provides tomorrow.
As an HOA management company, we support homeowner communities across the Rhine-Main region throughout the entire process – from initial audits through resolution procedures to implementation and subsidy administration. Contact us for individual advice on your heating project.
*As of: March 2026. This article is intended for general informational purposes and does not constitute individual legal, tax, or energy advice.*
