Estimating fair rent increases after building retrofits: A max-min fairness approach

Ahlrichs, Jakob; Rockstuhl, Sebastian

doi:10.1016/j.enpol.2022.112923

Cited by 8 publications

(11 citation statements)

References 34 publications

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“…559 BGB establishes that the landlord may increase the rent annually an eight percent of the total energy efficiency expenditure unless such an increase would burden the tenant excessively. The fairness and effectiveness of this amount was recently studied by Ahlrichs and Rockstuhl (2022), who confirmed that 'just for small retrofitting investments for buildings with a low energy efficiency standard, the fair percentage-retrofitting-fee is above 8%. The fair percentageretrofitting-fee is lower than 8% for all other cases and thereby unfair for the tenant'.…”

Section: D) Rent Increases Due To Energy Efficiency Upgradesmentioning

confidence: 92%

“…Also, Germany has several legal measures to encourage these types of work. As shown, these measures give the landlord incentives to impose modernization measures and to increase the rent, although an eight percent per year may be unfair for tenants for important investments, following Ahlrichs and Rockstuhl (2022). However, if tenants wish to carry out these works (e.g.…”

Section: F) General Comparison Of Legislative Elements Contributing T...mentioning

confidence: 99%

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Overcoming the “tenant-owner dilemma” to foster energy efficiency in residential private rented housing

Garcia-Teruel

2023

JPPEL

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Purpose The Recast Energy Efficiency Directive 2023 has defined the concept of “split incentive,” also known as “tenant-owner dilemma.” This dilemma refers to the situation where neither landlords nor tenants have incentives to invest in energy efficiency upgrades. Although the Energy Efficiency Directive calls Member States to overcome legal barriers to remove split incentives and to encourage retrofits, the list of possible measures is too vague. This paper aims to discuss tenancy law measures designed to increase the energy efficiency of residential housing and to detect which Member States have already addressed this phenomenon. Design/methodology/approach This paper analyses, from a civil legal perspective, the possible private law barriers arising from the tenant-owner dilemma when performing energy efficiency works in selected countries and proposes legal reforms in tenancy law and related policies to overcome them. To do so, this paper follows a legal-dogmatic and comparative law methodology. Findings This paper concludes that some tenancy law provisions, such as the possibility to increase the rent after energy efficiency renovations and long-term leases, may challenge the tenant-owner dilemma in private rented markets, thus promoting renovations and retrofitting for energy efficiency purposes. It also proposes other policies intended to increase parties’ willingness to undertake works. Research limitations/implications More research on the economic and legal efficiency to regulate some of the civil law measures to challenge the tenant-owner dilemma should be necessary. Practical implications The civil law measures included in this paper may help national policymakers meet the energy efficiency targets, according to what is established in the Recast Energy Efficiency Directive 2023. Originality/value Based on the economic theory of the tenant-owner dilemma, this paper investigates the elements of tenancy law that may contribute to less energy-efficient homes, proposing policies for those countries interested in addressing the energy-efficiency challenge from a private law point of view.

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Section: D) Rent Increases Due To Energy Efficiency Upgradesmentioning

confidence: 92%

Section: F) General Comparison Of Legislative Elements Contributing T...mentioning

confidence: 99%

Overcoming the “tenant-owner dilemma” to foster energy efficiency in residential private rented housing

Garcia-Teruel

2023

JPPEL

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“…Adjustment of the retrofitting fee [8,[10][11][12][13][14]] Energy-differentiated local reference rent [6,8,10] One-third model [8,[13][14][15] Energy and climate fund model [5,8] Separate surcharge on base rent [6,13] Differentiation of subsidies by landlord type [14] Obligation to renovate [14] Moreover, the literature proposes a variety of further potential approaches to address the landlord-tenant dilemma (see Table 1). The most frequently cited solutions in the literature are the following:…”

Section: Current Regulations Discussed In Literaturementioning

confidence: 99%

“…Studies from economics [8,10,11,15] and legal science [6,12,13] focus on similar relevant aspects related to the landlord-tenant dilemma. They mainly neglect a precise building performance evaluation but extensively cover the current rental law.…”

Section: Landlord-tenant Dilemma In the Literaturementioning

confidence: 99%

Landlord–Tenant Dilemma: How Does the Conflict Affect the Design of Building Energy Systems?

Kühn,

Fuchs,

Braun

et al. 2024

Energies

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To achieve climate goals, the European Union needs to increase building renovation rates. In owner-occupied buildings, energy cost savings provide financial incentives for renovation. However, 30% of all Europeans live in rented property, where conflicting stakeholder interests arise. Landlords are responsible for renovation decisions (building envelope and energy system) and the corresponding investments. Tenants face rising rents and only slightly benefit from falling energy costs. The literature calls this conflict the landlord–tenant dilemma. However, publications lack a quantification, leaving gaps in understanding its impact on technology choices and the heat transition. To address this, we incorporate the perspectives of landlords and tenants in a model-based approach for optimized technology choice (mixed-integer linear program). We compare optimal individual technology choices with the total cost optimum (including costs for landlords and tenants) for renovation decisions. Additionally, we examine how changes in the regulatory framework affect the economically driven landlord’s technology choice. Our study reveals that total costs and emissions are up to 60% and 283% higher for landlords deciding for rented houses compared to owner-occupied properties. Current approaches to solve the dilemma partly favor the development of climate-friendly energy systems. However, the renovation of the building envelope and operation costs are mostly disregarded in the decisions of landlords.

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“…This finding reveals the need for socially sustainable funding of retrofitting. Fair rent increases following building retrofits were studied in Germany (Ahlrichs and Rockstuhl, 2022). Currently building owners can charge a fixed percentage (8%) of retrofitting costs as rent increases.…”

Section: Economic Impactsmentioning

confidence: 99%

Socio-economic impacts of large-scale deep energy retrofits in Finnish apartment buildings

Hirvonen

Saari

Jokisalo

et al. 2022

Journal of Cleaner Production

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Estimating fair rent increases after building retrofits: A max-min fairness approach

Cited by 8 publications

References 34 publications

Overcoming the “tenant-owner dilemma” to foster energy efficiency in residential private rented housing

Overcoming the “tenant-owner dilemma” to foster energy efficiency in residential private rented housing

Landlord–Tenant Dilemma: How Does the Conflict Affect the Design of Building Energy Systems?

Socio-economic impacts of large-scale deep energy retrofits in Finnish apartment buildings

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