Investing in a more energy efficient future

Challenging times for Hungarian cooperatives

Budapest, 6 May 2016 | Published in Economy, Social

At a time when housing cooperatives in Hungary are planning to invest in a more energy efficient future of their stock, they are missing a key tool.

Invited by our Hungarian Member, LOSZ (National Federation of Housing Cooperatives Hungary), Marten Lilja, Board Member of Housing Europe and Edit Lakatos, our Policy Assistant, participated in the international conference on development of energy efficient modernization in the end of April. The scope of the event was to exchange around the question of energy efficient refurbishments in condominium residences and in buildings owned by housing associations.

The Hungarian housing stock today includes 4,3 million units that range from slum-like, multi-storey houses of housing associations to condominium residences (about 1,1 million units) and family houses and a small part is low-rental houses. LOSZ interest is related to the 1,1 million condominium residences and housing stock of housing associations.

The energy modernization relates to 25-28 % of the 1,1 million housing stock. There is still a huge need for energy efficient investments and modernization. The energy efficient modernization of Hungarian housing stock is lagging behind due to the insufficient state support, i.e. lack of Funds for reconstruction and the negligible amount of existing Funds. The government supports the renovations only with a so called special interest subsidy credit, which practically means a supported low-interest loan, and different saving scheme systems, therefore housing associations are in a rather difficult position.

Participants at the conference agreed that reducing energy costs would lead to real savings of the maintenance costs of households in the long run, therefore the speakers tried to give recommendations on how to improve the situation and how to accelerate the housing stock modernization.

EU funding: a missed opportunity?

The biggest potentially available grant system that could improve the effectiveness and efficiency of the sector would have been provided by the Environment and Energy efficiency Operational Programme (KEHOP). Having had broad priorities, the OP would have given opportunity to finance Hungarian housing associations, members of LOSZ.

Just before the launch of calls for residential buildings, the OP was modified by the Government on 27 April that chose not to allocate money to the residential building sector, therefore the opportunity for housing associations and cooperatives to benefit from EU grants is practically gone. Instead, the whole budget is going to be allocated to support the energy efficient refurbishment of governmental buildings.

The government argues that:

it is not ready to be able to handle these kind of programmes because the use of the new financial instruments is risky both with regards to application and to execution. This means basically that the Hungarian financial sector is not able to do the job.
The reason why the country is not able to handle this is due to several modifications in the Ministry structures since 2014. The staff have not have time to start working on the new programming period, because they had to keep reporting on issues from 2007-2013.

The fact that housing associations will not be able to make their condomiums energy efficient is just one of numerous consequences of this decision. Also, rsocially disadvantaged groups who cannot afford to refurbish their homes and fight energy poverty won't be able to make use of energy investments/grants. The decision also implies that the ambitious objectives set in the Operational Programmes that we reported about in our paper will not be met.

Tamas Farkas, President of LOSZ highlighted that

“the support schemes for housing associations stay thereby limited. The government supports the renovations only with a so called special interest subsidy credit and different saving scheme systems, therefore housing associations are in a more challenging position than ever before.”