What do banks do with the energy certificate? – Roles, risk and terms

Lea Foster

Energieeffizienz-Expertin, Content-Managerin

Property owners and professionals know the energy certificate mainly as a mandatory document for property sales. That banks request it too is now standard – but what do lenders actually do with it? Whether it is just filed for compliance or used as the basis for pricing and collateral: the answer depends on the role the bank is in. This article links the bank’s different roles with the functions of the energy certificate and shows what you should watch for so nothing delays financing.

Why banks require the energy certificate

Documentation and regulation

Banks face growing documentation and regulatory duties. EU requirements (European Green Deal), sustainability reporting and supervisory expectations mean the energy certificate is often part of the file – sometimes simply to meet requirements, sometimes to assess risk and sustainability (BaFin, EU Taxonomy). For owners and agents that means: a valid, properly issued certificate speeds up processing and avoids follow-up questions – often it is simply the ticket for the actual credit review to start.

Risk and value stability

A building’s energy performance affects operating costs, refurbishment risk and long-term value stability. Poor efficiency classes (e.g. F, G, H) are treated as risky (“Brown Assets”) in regulation and by many institutions (EU Taxonomy, industry practice). Under the loan-to-value rules (BelWertV) only long-term value-stable properties may be fully counted as collateral; weak energy performance can lead to valuation haircuts and higher equity requirements (BelWertV §§ 16, 18). In short: going into financing with a strong certificate puts you in a better position.

The bank’s roles – and the energy certificate’s function

Banks act in different roles – and in each role the energy certificate can have a different function: sometimes pure documentation, sometimes the main basis for pricing and collateral. The following four perspectives show where the certificate comes in.

As lender: credit decision and terms

In its role as lender the bank uses the energy certificate to assess creditworthiness and financing risk. Efficiency class and key figures feed into interest, maturity and funding eligibility. Good classes (e.g. A, B) can mean better terms or green incentives; poor classes can mean higher rates, more equity or rejection. For example, some institutions offer interest discounts for efficiency class A or B (“green mortgages”); for class H others require more equity or a refurbishment plan. Details are in the article How the energy certificate affects your loan conditions.

As collateral valuer: security and loan-to-value

As collateral valuer the bank values the property as security. The energy certificate provides information on building quality and value stability. Buildings with poor energy performance can lead to lower collateral values and thus more equity from the borrower (BelWertV, value stability). So for the bank it is not only “loan yes or no” but also how much of the property counts as security.

As advisor and in risk management

In advice the certificate helps assess refurbishment needs and investment decisions. In internal risk management banks use the data for portfolio steering, climate risk and sustainability reporting (e.g. Green Asset Ratio, EU Taxonomy) (BaFin).

As broker or seller

When the bank or an affiliated institution acts as seller or broker, the energy certificate is part of transparency towards buyers and fulfils the statutory disclosure requirement under the GEG.

What the energy certificate gives the bank

Regardless of role: the certificate provides standardised key figures that banks use for risk, value and sustainability. Three aspects stand out.

Current energy performance and building quality

The certificate documents current energy performance (consumption or demand, efficiency class, key figures) and gives a quick overview of building quality. That is the basis for risk and value assessment.

Sustainability, value stability and market appeal

Banks care about sustainability and value stability over the life of the loan and the property’s market appeal – now and in future. A good energy certificate signals lower operating costs and lower refurbishment risk.

Resilience to energy costs and CO2 targets

Higher energy efficiency means less exposure to energy price swings and supports positioning in the context of CO2 targets in the building sector and regulatory requirements. So banks look not only at today but at the resilience of the property over the financing period.

Modernization recommendations – why they matter for banks

This is about the future of the building – and thus risk from the bank’s perspective.

The Building Energy Act (GEG) requires the energy certificate to include cost-effective modernization recommendations on page 4 (§ 84 GEG). The issuer must carry out an on-site visit or evaluate suitable images (§ 84 GEG, BBSR GEG portal – modernization recommendations). Implementation is not mandatory – but for banks the recommendations are often at least as important as the efficiency class: they show refurbishment potential, future value and the scope to reduce risk through planned measures. Knowing the recommendations and optionally responding with a refurbishment plan can strengthen your position in negotiations.

What banks check on the energy certificate

For the certificate to do its job it must be legally and formally correct. Three points to keep in mind.

Signature, date, issuer

Banks expect a certificate signed by the issuer and correctly dated. Under § 85 GEG it must include the issuer’s name, address, professional title, issue date and signature. The certificate is valid for ten years (§ 85 GEG).

Trustworthy issuer address and GEG compliance

A serious, verifiable issuer address and a valid registration number (§ 98 GEG) add credibility. Issuers must meet the requirements of § 88 GEG (qualified training, further education or experience) (§§ 88, 98 GEG, BBSR – Issuers).

Special cases: mixed-use buildings, thermal insulation rules

For mixed-use buildings (residential and commercial) the GEG generally requires two energy certificates – one for the residential part, one for the commercial part. Only under strict conditions (§ 106 GEG, e.g. ancillary use under 10% of area, residential-like use) is one certificate enough (§ 106 GEG, BBSR – Mixed-use buildings). When exactly one or two certificates are needed is explained in the article Energy certificate for mixed-use buildings. Some banks or valuers also check compliance with thermal insulation rules (e.g. WSchV 77) or correct assignment of certificates to residential and non-residential parts.

Credit terms and the energy certificate – the link

The link between certificate and financing is direct: the energy certificate directly affects credit terms. Better efficiency classes can mean lower rates or higher loan-to-value; poor classes can mean higher rates, more equity or rejection. The exact mechanisms – including modernization, funding for worst-performing buildings and green incentives – are covered in the article How the energy certificate affects your loan conditions.

Conclusion and recommendations

Main message: Banks use the energy certificate in different roles – as lender (terms, decision), as collateral valuer (security, value), as advisor and in risk management, and sometimes as broker or seller. In each role the certificate has a different function: from mere documentation to the main basis for pricing and collateral. The modernization recommendations on page 4 are at least as important as the efficiency class for many institutions – they show whether and how risk and value can improve.

For you: Before any financing discussion it pays to check: Is the energy certificate current (max. 10 years old), signed and correctly dated, and does it come from a reputable issuer with a verifiable address and registration number? Do you know the recommendations on page 4 – they can make the difference in negotiations and for better terms. For full details on how the certificate affects rates, equity and funding, see the article How the energy certificate affects your loan conditions.