German lawmakers approved a controversial ban on fossil-fuel boilers in new homes, with a watered-down bill set to eradicate only about three quarters of the harmful emissions it initially targeted.

From next year, home owners installing heating systems in new properties on new estates will have to make sure that they run on at least 65% renewable energy. But owners of existing properties will have until 2028 at the latest, giving them time to take local district heating plans into account. Gas boilers are still allowed if they are convertible to hydrogen.

Like many of its European peers, Germany has …