In 2024 the European Union approved the recast Energy Performance of Buildings Directive (EPBD), setting one of the most ambitious roadmaps in the world for housing and construction. Buildings account for around 40% of Europe’s total energy consumption and over one-third of greenhouse gas emissions. The EPBD is designed to change that, creating deadlines that will shape decisions for households, developers, and investors across the next quarter-century.
A Timeline of Change
The transition begins in 2025, when subsidies for new stand-alone fossil fuel boilers will be banned. By May 2026, every EU member state must transpose the directive into national law, introducing harmonised A–G EPC scales and long-term renovation roadmaps. From December 2026, solar installations (PV or solar thermal) will become obligatory on new public and large non-residential buildings above 250 m², wherever technically and economically feasible. From 2030, all new residential buildings must be at least solar-ready, with many member states expected to require full PV systems in practice.
By January 2028, all new public buildings must be constructed as Zero-Emission Buildings (ZEBs). Two years later, in 2030, this requirement extends to every new home and commercial property. At the same time, housing stock must achieve an average energy-use reduction of at least 16% compared to 2020, rising to 20–22% by 2035. The lowest-performing segment of homes must be targeted first. From 2028, large new buildings will be required to report their whole-life carbon performance (WLC), and from 2030 this disclosure will apply to all new buildings. Member states must also prepare national roadmaps to introduce binding Global Warming Potential (GWP) limits by 2030. By 2050, the EU building stock must reach full climate neutrality.
| Date / Period | Requirement | Who Is Affected | Impact |
|---|---|---|---|
| 2025 | Ban on subsidies for stand-alone fossil fuel boilers | All EU states | Push toward heat pumps and hybrids |
| By 29 May 2026 | Transposition of EPBD into national law | Governments | Harmonised EPCs, subsidies, renovation plans |
| 31 Dec 2026 | Solar installations mandatory on new public & non-residential >250 m² (if feasible) | Developers, public sector | PV or solar thermal as standard feature |
| 1 Jan 2028 | All new public buildings must be ZEB | State and municipal authorities | Public projects built only to ZEB standards |
| 1 Jan 2028 | Whole-life carbon reporting required for large new buildings | Developers, contractors | Life-cycle carbon transparency |
| 1 Jan 2030 | All new buildings in the EU must be ZEB | Residential & commercial | Non-ZEB construction banned |
| 1 Jan 2030 | New residential buildings must be solar-ready | Developers, housing sector | PV expected in many markets |
| 2030 | ≥16% cut in average residential energy use compared to 2020 | Housing stock | Lowest-performing homes renovated first |
| 1 Jan 2030 | GWP disclosure mandatory for all new buildings | Developers, contractors | Carbon footprint becomes standard criterion |
| 2030 | National roadmaps to introduce binding GWP limits | Governments, developers | Low-carbon materials required |
| 2033 | MEPS for non-residential: lowest 26% upgraded | Commercial real estate | Brown stock forced into renovation |
| 2035 | ≥20–22% cut in average residential energy use compared to 2020 | Housing sector | Deep retrofits unavoidable |
| 2050 | Full decarbonisation of building stock | Entire EU | Climate-neutral housing sector |
Old Homes and the Market Divide
The directive does not ban sales of older properties, but it will create a sharp divide. Energy-efficient homes with strong EPC ratings will command a premium and sell faster. Poorly insulated properties at the bottom of the EPC scale will face falling values, reduced liquidity, and tougher financing. Banks across Europe are already piloting green mortgage programmes, offering preferential terms for efficient homes or those undergoing renovation, while less efficient stock faces tighter criteria.
Market evidence shows that efficient homes are gaining a clear price premium, while inefficient stock is being discounted. These discounts are widening as regulation and bank criteria tighten.
The Cost of Compliance
Upgrading a typical home is expensive. A heat pump costs between €8,000 and €14,000. Roof insulation ranges from €40 to €60 per m², wall insulation from €115 to €290 per m², and modern double or triple-glazed windows cost between €500 and €3,600 per unit depending on size and performance. Installing a 3–5 kW solar PV system adds another €4,000–10,000. For a standard 100 m² house, a package of insulation, a heat pump, solar PV, and new windows amounts to roughly €30,000–35,000 before subsidies.
EU and national governments will provide grants and preferential green loans, particularly for low-income households and the least efficient properties. Early movers will benefit most, combining subsidies with compliance ahead of tighter rules.
Energy prices strongly affect payback. In late 2024, EU households paid on average €0.287 per kWh for electricity and €0.123 per kWh for gas. Heat pump economics improve when paired with insulation and PV. Solar systems alone typically repay investment in 6–10 years in Southern Europe, and slightly longer in Northern markets.
Expert Warnings
Analysts were already raising concerns in 2024, and those warnings remain valid in 2025. JLL forecast a structural shortage of low-carbon offices, with demand likely to exceed supply three-to-one by 2030.
“We are entering a new world where inaction leads to economic obsolescence.”
— Guy Grainger, JLL Global Head of Sustainability, 2024
JLL’s European surveys found that a majority of investors were already factoring sustainability into decisions, and many said inefficient assets were losing value. That trend has continued into 2025 as more banks adjust lending criteria.
Savills also stressed that EPC standards varied by country but that harmonisation under the EPBD was coming. Its research has highlighted that “brown discounts” are no longer theoretical — they are being seen in transactions across Europe.
Implications for Investors
The directive creates a two-speed market. Green, ZEB-ready assets will benefit from stronger liquidity, tighter yields, and cheaper financing. Brown assets will struggle unless renovated. From 2028, embodied carbon reporting is required for large new buildings, and by 2030 binding national GWP limits will reshape construction supply chains. Demand for timber, recycled steel, and low-carbon concrete is set to rise.
Institutional capital is already shifting. Residential and living-sector assets are becoming ESG-focused, with investment flows increasingly tilted towards sustainable stock. Funds are rebranding as Paris-aligned, and banks are rewriting lending models to reflect carbon performance.
Myths and Facts
- Myth: Old homes will be banned after 2026.
Fact: They can still be sold, but without upgrades their market value will fall. - Myth: Gas boilers will be ripped out immediately.
Fact: Subsidies for new fossil fuel boilers end in 2025, but national phase-out dates vary by country. - Myth: Solar remains optional.
Fact: Obligations start in 2026 for new public and large non-residential buildings, and from 2030 all new homes must at least be solar-ready.
The Bottom Line
The EPBD is more than climate policy — it is a structural reset for Europe’s housing market. By 2028 all new public buildings must be zero-emission, by 2030 the same applies to every new home, and by 2035 the housing stock must achieve deep cuts in energy use. By 2050, Europe’s buildings must be climate-neutral.
For households, this means significant upfront renovation costs but lower bills and stronger resale values later. For developers, zero-emission design is becoming mandatory. For investors, efficiency now equals liquidity and yield. And as Guy Grainger of JLL warned back in 2024 — a warning that has only become more urgent in 2025 — “inaction leads to obsolescence.”
