Commercial space becomes residential space: New subsidy launched on July 1st.

Vacant offices and retail spaces are to be converted into apartments: The federal government is offering financial incentives through the "Commercial to Residential" program. Applications for the subsidy can be submitted immediately.

In Germany, hundreds of thousands of apartments are lacking, especially in cities, while thousands of office and commercial spaces stand empty. The federal government aims to tap into this vacancy with a new funding program: The application process begins on July 1st. "Commercial to Residential (GzW)". The KfW grant program (KfW grant 266) supports the conversion of non-residential buildings into apartments. For 2026, EUR 300 million planned.

What it's all about

The schedule "Commercial to Residential"  is aimed at owners and investors who Converting unused or low-potential office and commercial properties into residential space The goal is to reduce vacancy rates, create affordable housing, and simultaneously modernize existing buildings to be more energy efficient. Subsidies can then be applied for directly from KfW. 

Federal Minister for Construction Verena Hubertz (SPD) When announcing the program, he emphasized that it addresses several problems at once: "We are combating vacancy, creating urgently needed housing, and simultaneously driving forward the climate-friendly renovation and further development of our cities." Vacant buildings are to become "vibrant places again" – with apartments for singles, families, and households with different needs.

Who is funded?

The conversion of the following is being funded:

heated buildings that have not previously been used for residential purposes,

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or heated parts of such buildings

if this results in at least one new residential unit.

Eligible applicants are:

• all investors – i.e., clients commissioning the conversion – who want to convert one or more non-residential buildings (or parts of buildings) into living space.
• natural persons (private individuals, owner-occupiers),
• Legal entities under public and private law (such as municipalities, housing companies, foundations)
• Partnerships.

Owner-occupiers can also take advantage of the funding if they later live in the converted unit themselves.

What energy efficiency requirements apply?

The funding is tied to energy-efficient renovation:

✔️ As a rule, at least the standard must be met. "Efficiency House 85 Renewable Energies (EH 85 EE)" be achieved. 

✔️ The standard applies to listed buildings and building fabric of particular value. "EH Monument EE". 

✔️ In special cases, exceptions to the Renewable Energy (EE) class are possible.

The costs of the energy-efficient renovation itself are not among the eligible expenses of the program, but can be supported through other programs. 

How big is the promotion?

Funding is available for up to 30 percent of a maximum of €100.000 in eligible costs per newly constructed residential unit. This corresponds to a non-repayable grant of up to 30.000 euros per residential unit.

The funding can generally be combined with other programs – for example, with the "Federal funding for efficient buildings (BEG).

Important: The total funding may not exceed the total eligible costs. The funding itself is based on the European de minimis regulation. Therefore, the grant from this program is generally limited to €300.000 per company.

What costs are considered eligible for funding?

Eligible expenses under the program include, for example:

🟢 Structural adaptation of the existing structure to residential use, 

🟢 Floor plan changes (new room layout), 

🟢 Interior finishing (for example, walls, doors, floor construction in connection with the conversion), 

🟢 Redesign of outdoor areas for residential purposes, including de-sealing and greening. 

This does not include expenses for energy-efficient renovation – these can be addressed through other funding programs.

Important deadlines and formalities

The application must be asked before the start of the projectThe project is generally considered to begin on [date]. Conclusion of the first supply or service contract for the construction work.

Planning and consulting services Services may be commissioned and provided even before the application is submitted, as long as they are not themselves to be funded through the program.

What investors can do now

➡️ Identify potential properties (vacant, underutilized office or commercial space)

➡️ Commission feasibility studies for repurposing and energy-efficient upgrades

➡️ Check whether the energy target standards (EH 85 EE or EH Denkmal EE) are achievable

➡️ Strategically plan the combination with other funding programs (such as BEG). 

Source: Federal Ministry of Construction; KfW

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