Building modernisation: Impact of the EPBD on the property market

The real estate market is one of the main consumers of energy, accounting for about 40% of global CO₂ emissions[1]. According to the latest statistics, 85% of buildings in the EU were constructed before 2000 and 75% of them have low energy efficiency[2]. It is therefore a particularly significant sector that requires urgent action to reduce its negative impact on the environment.

Directive 2024/1275 of the EU Parliament and of the Council of 24 April 2024 on the energy performance of buildings (EPBD – Energy Performance of Buildings Directive) is a key element of the European Green Deal, as part of the ‘’Renovation Wave‘’ initiative contained therein. This initiative aims to accelerate the pace of energy renovation of buildings across the European Union. It responds to the growing challenge of climate change and aims to significantly reduce emissions and improve the energy efficiency of buildings.

Key points of the EPBD

The EPBD is designed to accelerate the retrofitting of existing buildings and introduce standards for new construction to ensure higher energy efficiency. This includes:

• upgrading heating and cooling systems and improving thermal insulation;
• increasing the use of solar energy;
• introducing building automation systems that optimise energy use in real time;
• installing electric vehicle charge points and appropriate cabling in new and retrofitted buildings with more than five parking spaces.

Zero-emission buildings

The EPBD introduces the concept of zero-emission buildings, which are characterised by very high energy performance and no on-site CO₂ emissions. They produce zero or minimal amounts of operational greenhouse gas (GHG) emissions. In addition, the document sets out the timeframe in which the new requirements will take effect:

• from 1 January 2028 – new public buildings must be zero-emission;
• from 1 January 2030 – all new buildings must be zero-emission.

There are also requirements to disclose Global Warming Potential (GWP) and the degree of solar energy use.

Existing buildings will have to be retrofitted to meet Minimum Energy Performance Standards (MEPS). Retrofits should follow National Renovation Plans, which covers financial and technical support for their owners.

The Directive introduces tools to monitor progress and classify buildings in terms of energy performance in a systematic way. It recommends the use of renovation passports and energy performance certificates, which are to comply with a standard developed by a member state.

Building renovation passports

The renovation passports are a support tool, containing an individual renovation plan for each building. By indicating the different stages of renovation, the possibilities for subsidies and the expected energy and environmental benefits, these passports document a systematic approach to renovation. The targets set in the passport should be consistent with the minimum energy performance standards adopted by a member state and included in the National Renovation Plan. They will be issued by qualified or certified experts after an on-site inspection.

Energy performance certificates

A requirement is introduced to classify buildings on a scale of A to G, where A means zero-emission buildings and G means the least efficient. In addition, an A+ category is established for buildings that exceed the class requirements.

Energy performance certificates are valid for a maximum of 10 years.

The EPBD will contribute to an increase in the modernisation of buildings and higher standards for new constructions. In the long term, lower operating costs, greater energy self-, and an increase in property values can be expected. Energy efficiency improvements may attract new tenants and buyers who prefer more environmentally friendly solutions.

In addition, the EPBD provides standardisation of documents, and technical and financial support for property owners. This is intended to make the process of adapting to the new requirements more efficient and achievable for a larger group.

[1] Directive (EU) 2024/1275 of the European Parliament and of the Council of 24 April 2024 on the energy performance of buildings

[2] Energy Performance of Buildings Directive