ESG - what real estate owners need to know

Until the year 2050 according to EU guidelines, the building stock in Europe should be almost climate-neutral. This affects 240 million buildings. Older buildings in particular continue to be energy inefficient and are responsible for a large proportion of European greenhouse gas emissions. ESG (Environmental, Social, Governance) is intended to help convert properties to meet climate requirements. What does this mean for owners?

ESG includes sustainable, social and entrepreneurial criteria. However, these do not only apply to real estate companies, project developers and investors. It can also be worthwhile for homeowners who live in their property themselves to take a few ESG criteria should be taken into account. After all, a sustainable property is often also an economical property. Social and ethical aspects, on the other hand, play more of a role when renting to commercial tenants.

Sustainable construction and legal obligation to retrofit

Not only are resources such as oil and gas not infinite, they are also becoming increasingly expensive, as is currently the case. Sooner or later, sustainable new construction and energy-efficient refurbishment will become increasingly important. The Building Energy Act (GEG) already obliges buyers of old existing properties to renovate and modernize them in an energy-efficient manner.

It makes sense to seek advice from energy, real estate and financing experts on what is technically and financially feasible and sensible. A local quality estate agent will help you find the right experts for this. They can also assess how individual measures will affect the value of your property.

Subsidies for sustainable renovations

For an energy-efficient refurbishment, the BAFA or KfW subsidies can be applied for. The lower the energy consumption of the property after renovation, the higher the subsidy. It is important to apply for the funding before you commission the tradesmen. In addition, very low-interest loans can also be taken out from the KfW Bank and state repayment subsidies can be granted.

Thinking entrepreneurially as a homeowner

The G for governance is generally more relevant to real estate entrepreneurs, project developers and investors. However, entrepreneurial thinking can also be helpful for homeowners planning to sell their property. For example, transparent communication with the potential buyer is important.

Knowingly concealing defects can have legal consequences later on. On the contrary, dealing openly with defects can be used to justify the asking price and counteract attempts by prospective buyers to negotiate the price downwards. With the right strategy, a sale price in line with the market can be achieved.

Would you like to know how a climate-neutral refurbishment affects the value of your property? Get in touch with us! We will be happy to advise you.

Notes

For reasons of better readability, the generic masculine is used in this text. Female and other gender identities are explicitly included where this is necessary for the statement.

Legal notice: This article does not constitute tax or legal advice in individual cases. Please consult a lawyer and/or tax advisor to clarify the facts of your specific individual case.

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