14 Nov 2025
A new billing model for heating costs can advance the energy transition in the building sector. Tenants, lessors, governments and the climate all benefit from the “Fair Rental Model”.
Germany is lagging far behind its climate targets. Much remains to be done in the building sector in particular. However, neither political conditions nor tenancy law in its present form create effective incentives to invest in refurbishing residential buildings. As part of a research project, LMU – in cooperation with the University of Kassel, University of Applied Sciences Zwickau (WHZ) and the Institut Wohnen und Umwelt (Institute for Housing and Environment) – has developed an innovative concept called the “Fair Rental Model”.
The Fair Rental Model brings together the interests of both tenants and lessors, as well as those of the political realm. Ultimately, the climate is the beneficiary.Bernhard Gill, LMU’s Department of Sociology
The Fair Rental Model balances the interests of landlords and tenants. | © IMAGO / Jochen Tack
“The model brings together the interests of both tenants and lessors, as well as those of the political realm. Ultimately, the climate is the beneficiary,” saysProfessor Bernhard Gill of LMU’s Department of Sociology.
Under the Fair Rental Model, the rent with heating included (referred to in German as the “partial warm rent”) does not increase after a building has been refurbished. Tenants benefit as a result. At the same time, this approach creates a more stable long-term investment incentive for lessors than the current system, which shares modernization costs based on net rental charges (excluding heating). The majority of respondents surveyed as part of the project rate the new model as attractive and fair for tenants and lessors alike. It can also help reduce conflicts. Moreover, legal assessment shows that a shift from the net rent system to a “Fair Rental Model” aligns with EU law and with the basic rights of both parties to rental agreements.
Funded by Germany’s Federal Ministry for Economic Affairs and Energy, the interdisciplinary project rests on months of temperature measurements taken across 200 households owned by municipal housing association jenawohnen. In addition, in-depth surveys were taken of around 2,000 tenants and lessors, while housing experts (including property managers, billing companies and energy consultants) were involved in the form of workshops.
For more information about the project, please visit the project website