Shall I buy or keep renting? House or flat? Will interest rates stay low? Should I plan for a renovation budget or is the property fine as it is? Shall we go for eco-friendly painting? What if I lose my job? How can I get solar panels in town? Will this place become the nest I dream of for my family and myself?
Buying a home is an exciting and overwhelming experience full of endless possibilities and reined in only by budget. When I decided to leave the 16th-century flat I was renting in the centre of Turin, I didn’t just want to run away from the noisy bars and restaurants downstairs; I wanted space for my new-born to play as she grows up. I wanted to live in a quieter neighbourhood while still walking everywhere. I wanted big windows, but to feel cosy at home in the winter and summer (which almost always means heatwaves in Northern Italy). I wanted a place with character that matched my eco-conscious mindset. Most importantly, as a first-time buyer, I wanted to know that I wouldn’t regret my purchase in a few years.
Locked doors – barriers to entry in the housing market
The struggles I encountered are not unusual. The difficulties–such as accessing finance and incentives, red tapes, lack of perceived return on investment, and mistrust towards contractors–prevent many from engaging in year-long retrofitting works. Tenants in the private market may be reluctant to request anything of their landlords for fear that their rent will increase. EU building stock is old – about 85% of Europe’s building units were constructed over twenty years ago. Still, almost all of them will be standing in 2050. Three-quarters of EU buildings are consuming too much energy, but only 1% is renovated at the most sustainable performance standard each year.
When we know that buildings (residential and non-residential) are responsible for about 40% of the EU’s total energy consumption and one-third of its greenhouse gas emissions, it’s no wonder that the EU has made building renovation one of the cornerstones of its Green Deal strategy, which aims to reduce emissions by 55% by 2030 in response to the Paris Agreement.
With this objective in mind, the European Commission (EC) presented its “Renovation Wave” strategy in October 2020. Renovation policies are a way to respond to social emergencies. According to the EC, in 2018, 30.3 million people (6.8%) living in private households across the EU couldn’t keep up with utility bills. 34 million Europeans couldn’t heat their home correctly (one of the primary indicators of energy poverty). Housing quality impacts poverty, health, learning and employment, and thus the overall capacity of society to be resilient. COVID-19 outbreaks have made the issue even more relevant as we must spend more time at home. Citizens Advice, the leading consumer advocate in the UK, found that in September 2020 2.8 million people were already behind on their energy bills due to coronavirus. The situation is likely to worsen with falling temperatures and additional lockdowns.
Social impact is not only measured in terms of poverty alleviation. The European Commission sees building renovation as a central tenet of their economic recovery plan, with the sector expected to create of 160,000 new jobs over the next 10 years. This type of employment, often low-skilled, is even more necessary as it can meet the needs of local populations. The International Energy Agency has calculated that 12 to 18 jobs are created for every million euros invested in energy efficiency and building renovation!
The EU recognises the need for an innovative renovation strategy
Renovate Europe, a political campaign advocating for energy efficiency in housing, estimates that the European Union has made €1,851 billion available for energy-focused renovation of buildings. This includes direct EU funding, private investment, research and innovation. The EC has calculated that additional €275 billion of investment in building renovation will be needed annually to achieve the EU’s goals. The financial toolbox looks well equipped, but the overall Renovation Wave will only take off if banks and insurance companies proactively offer advantageous conditions to their clients. Policymakers would also need to provide guarantees on investments to landlords, to address the split incentives with their tenants.
However, the policies implemented so far in Member States, which have mainly focused on financial and fiscal incentives, have demonstrated that they are not sufficient to meet the renovation needs. Depending on the country, the level of building renovation varies from 0.4 to 1.2% each year, and on average, less than 1% of the national building stock is renovated each year – meagre when compared to European potential. The EU will not only have to encourage the emergence of information platforms and one-stop-shops for potential renovation, but also create trust in the overall renovation market. In addition to one-stop-shops (i.e. reliable, transparent and accessible advisory platforms) households need personalised and tailor-made information. Certain countries are already putting these kinds of initiatives together.
For instance, in France, the Government and the Energy Agency have created the Faire website, providing information on energy retrofitting. This platform guides households through the process and helps them find certified professionals to perform the work. Networks such as Eco-Habitat in Northern France go even further, reaching out directly to the most vulnerable households through social workers and Caritas volunteers. Creating trust, support and engagement requires a paradigm shift in the way real estate and construction professionals are working: construction companies need to be certified, condominium administrators need to be trained to the minimum requirements, and overall, properties that do not fill the minimum performance requirements should not be put on the market.
Renovation for the future & the ‘European Bauhaus’
In recent years, the EU has enabled citizens to check the energy performance of their homes and household appliances, thanks to energy performance certificates. Over the last 20 years, on average, energy efficiency has increased by 1.8% per year. The most energy-intensive appliances have tended to disappear, and the rating system is currently being updated to encourage manufacturers to offer better products. The EC is, therefore, applying the same logic to buildings and will introduce mandatory minimum energy performance standards for existing buildings in 2021 as part of the revision of Energy Efficiency and Energy Performance of Buildings Directives.
These directives already required that all new buildings would be nearly zero-energy (NZEB) by 2021 (public buildings from 2019 and other buildings from 2021).
With the Renovation Wave, the EC is putting energy efficiency and the digital economy, two core EU principles, at the service of affordability, decarbonisation, circularity, and better health. A “European Bauhaus” will push for pioneering forms of architecture.
The idea of the European Bauhaus, inspired by the 1920s architectural movement, is to propose a new form of collaboration between the disciplines involved in the building and housing sectors. Technology, sciences and art will be working together to make sustainability more attractive through better design.
So, what about the purchase I made? Instead of the city centre, I went for a slightly off-centre neighbourhood, where old power plants are being converted into modern lofts. I moved into an ex-rubber factory entirely retrofitted and now equipped with a heat pump, thus indirectly participating in the renovation wave myself. Hopefully, I’m the first of many beneficiaries of the new European Bauhaus.