Lauri Suu 6 th November 2013 Financing housing in Estonia.

Lauri Suu6th November 2013

Financing housing in Estonia

KredEx - solid foundation• Founded in 2001• Under the jurisdiction of the

Ministry of Economic Affairs and Communications

• State guarantee limit for:• Business loan guarantees € 96 mio• Export guarantees € 64 mio• Housing loan guarantees € 96 mio

• Fully accredited for using ERDF and ESF

• Member of AECM, NEFI, IUHF

• ~95% housing stock is in private ownership:– ~60% of the housing stock has been built in

1960-1990– ~30% before 1960

• ~75% population living in multi-apartment buildings

• Low quality and low energy efficiency– Average energy consumption per year in

buildings which have not been renovated 200-220 kWh/m2

• Energy used in buildings ~40%

Housing stock

Who is responsible for the condition of the building?

• Owner• Housing Associations - legal

body

• Community of apartment owners - no legal body

• In all cases all apartment owners (private persons) are responsible for decisions and payments

Measures for EE in housing• Studies about situation in buildings • Favorable loan from revolving fund• Grants (from state and municipalities):

• energy audits, project design documents 50%• renovation 15-35% (Tallinn 10%)

• Consultants to help by decision making at GA• Awareness raising campaigns• Best Practice Projects• Partners:

• Local municipalities• Estonian Union of Housing Associations• Estonian Union of Facility Managers

Holistic approach

Previous measure – grant scheme 2003-2007 state grants all over Estonia:

– For energy audits, building designs and technical expertise 50% of the costs

• Supported 3 800 buildings• Totally 1,4 million €

– For renovation, 10% of the costs• Supported 3 200 buildings• 17 million m2, totally 11 million €

– Problems:• Insufficient funding• Singel works• Grant available after payments

From renovation grants to revolving fund – why?

• Revolving character (re-usage of the funds)• Funds stay in state • Leverage effect (1/3 ERDF, 2/3 additional funds)• Support scheme (10% support) versus loan scheme

(state support is even bigger)• Loan is needed for reconstruction anyway• Opportunity also to smaller buildings • Easier to administer, lower administrative costs• End-beneficiary is used to take loan

Revolving fund

Fund € 72 mioFund € 72 mio

ERDF to fund equity€ 17,7 mio

ERDF to fund equity€ 17,7 mio

State loan 16 mioState loan 16 mio

Favorable funding to the commercial banksFavorable funding to the commercial banks

State guarantee

State guarantee

EE loan to HOA, Commercial bank takes the risk of lenders EE loan to HOA, Commercial bank takes the risk of lenders

CEB loan € 28,8 mio

KredEx funds 9,5 mio

Renovation Loan• Multi-apartment buildings: at least 3 apartments

• Main purpose - energy efficiency (at least 20% energy saving for the buildings up to 2000 m² or 30% for bigger buildings)

• Self-financing 15% (grant or own funds or loan)

• Energy audit is obligatory, renovation according to energy audit

• Supervisory is obligatory

• Loan maturity: up to 20 years

• Interest: from 2013 ~ 3,5%, before up to 4,5% fixed for 10 years, average 4%

• No collateral is needed, credit against cash flow

• Decision by buildings: at least 50% +1 one owner at general assemble, decision with simple majority

Average loan amount €/building

Grant for reconstruction• Fund for the grant from Green Investment Scheme (selling

AAU)– An Assigned Amount Unit (AAU) is a tradable 'Kyoto unit' or

'carbon credit' representing an allowance to emit greenhouse gases comprising one metric tons of carbon dioxide equivalents calculated using their Global Warming Potential

• In total 30 million € ~ 140 million € for investment• Goal is to renovate multi-apartment buildings completely,

to achieve:– energy saving from heating costs, considering all requirements for

indoor climate– Achieve higher energy class– To increase use of renewable energy

• 15% – fulfill the terms for renovation loan, – energy saving 20 or 30%, according to the size of the building– Energy label E, energy consumption < 250 kWh/m²

• 25% – roof, facade, windows (U 1,1), heating system, – energy saving at least 40%– Energy label D, energy consumption < 200 kWh/m²

• 35% – roof, facade, windows (U 1,1), heating system, ventilation system with heat recovery, – energy saving at least 50%– Energy label C, energy consumption < 150 kWh/m²

• In all the cases it is obligatory to fulfill the criteria for indoor climate!

Grant 15, 25 or 35% Do more – get more

Results Loan (€ 65 mio)

• Start 24.06.2009

• By 30.09.2013:

• 650 contracts

• Ca 21 000 apartments, 50 000 inhabitants

• Ca 1,35 mio m²

• Total € 72 mio

Grant (€ 24,2 mio)

Start 30.09.2010

Pos. decisions – ca 500 houses

– 15% € 4,2 mio 288

– 25% € 7 mio 182

– 35% € 13 mio 107

•24,2 mio € = ca 95 mio €

Finished:

•460 houses

•Ca 1,1 mio m²

•Avg 26%, 41 300 € house

•Expected saving 41%

• 635 buildings, 23 500 apartments, 54 000 inhabitants

• Ca 1 550 000 m² (6,7% from total ap. m²)• Total € 49 mio credit, € 20,8 mio grant• Investment € 87,2 mio, average € 137 000• Expected saving 39%, 75 GWh per year (1 year

production of Kuressaare Soojus)• Expected saving 20 years 1 500 GWh• 390 renovated, ca 110 in process• Changes in behavior:

– From single works to complex renovation

– Heating costs are measured by apartments

Results combined (15.04.2013)

Apartment building loan guarantee

• Who has higher risk (debtors, rural area, low market value)

• When reconstruction cost per m² is higher (complex reconstruction)

• The guarantee amount for apartment building is up to 75% of the loan amount. No collaterals needed

• Can be applied via banks

Awareness raising• Campaigns since 2006• Info days/seminars/workshops - to end

beneficiaries, builders, energy

auditors, project designers, local municipalities

• Advertisements in newspapers/magazines

• Internet (website, banners,

news, articles)• Direct mails• Leaflets/booklets• Cooperation with banks• Energy week in November (since 2010)

Golden Drum Grand Prix

Example: Sõpruse pst 202, Tallinn• 11 375 m² (162 ap. 2012-2013)

• Investment € 2 062 000, 181 €/m²

• Grant 35% € 721 600, 63 €/m²

• Credit € 1 340 000, 20 years

• Expected savings 65% ~500 MWh

- Triple windowsBrought to the frontage of facade

- Heating system

- Ventilation system

- Facade, roof

Lessons learned• Preparation took long time – 2 years• Many different partners to negotiate (international banks, local

ministries, local commercial banks) – do it parallel• Funds stay in the measure and are used several times• Economical situation in the country can change dramatically and

influence the behaviour of end-beneficiaries• Legal framework to support the measure – decision making

process, building permits, supervisory …• Combination of different measures is a key to success• Information to market participants and end-beneficiaries – it

takes couple of years for end-beneficiaries to be as active as you expect

• No actual opportunity to persuade end-beneficiaries, only raise awareness and motivate

Thank you!

Lauri Suu

KredEx

Hobujaama 4

10151 Tallinn, Estonia

Tel: +372 6674 111Fax: +372 6674 101

E-mail: [email protected]

www.kredex.ee