The German government has proposed a draft bill to help boost open-ended real estate funds’ investment in renewable energy systems associated with properties.

The Zukunftsfinanzierungsgesetzlaw (Future Financing Act), if passed, would give open-ended funds the right to buy and manage properties that use renewables for systems like energy and transportation, according to the proposal.

The legislation would make it easier for the funds to invest in renewable energy systems associated with real estate in order to reduce the carbon footprint of the assets, according to the draft law.

Laws currently in place forbid open-ended real estate funds in Germany to own properties with only renewable energy systems. Open-ended funds are currently however allowed to own a portfolio that has some renewable energy systems like solar.

According to the government, real estate funds would be increasingly excluded in the future from acquiring modern or renovated buildings if they were not allowed to take over such systems that are not, or not exclusively, used to manage the properties.

In the future, roof surfaces of buildings would be used only for solar power. This shift would be mandatory for new commercial buildings and the norm for new private buildings, according to the government’s coalition agreement.

Responding to the government’s proposal, BVI, the German fund industry association, said the proposed Future Financing Act would enable German funds to actively take part in the transformation to a greener economy in the energy sector.

“Although the planned law provides for the increase in the limits for solar energy, these are not sufficient for funds to be able to exploit their potential for [investments in] solar systems”, BVI added.

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