Peter Sweatman, Author
The EU Renovation loan will broaden the access to energy efficiency finance for homeowners
Published in November 2022
At present, European households are unable to afford energy renovations meaning they face skyrocketing bills and unhealthy living conditions well into the future, while the buildings sector continues to contribute to the climate crisis and the EU’s dependence on imported gas, including from Russia.
Building on the work of 2021’s Mortgage Portfolio Standards (MPS), this report by Climate Strategy & Partners calls for the introduction in EU legislation of a new financial instrument, the EU Renovation Loan, which will provide low-cost, easy-to-access and long-term financing for Europeans to renovate their homes.
The report, ‘The European Renovation Loan: a new instrument to fund the Renovation Wave’ finds that a new EU Renovation Loan (ERL) would allow homeowners borrow the amount they require to finance the energy renovation of their homes, with nothing to pay until sale, transfer or after 30 years and with an interest rate that is lower than the market value. ERLs combine an EU guarantee with ECB green liquidity to offer the elderly, and hard-working families zero-coupon, affordable debt offered by local lenders to insulate their homes from sky-rocketing energy prices and transition risks.
The ERL can indeed assist Europe to broaden the access the energy efficiency finance, including:
Peter Sweatman, CEO of Climate Strategy commented: “The ERL provides homeowners with a new way to cost effectively unlock home-equity and allows those without savings and with tight budgets to make their homes energy efficient. Households would be able to enjoy the benefits of renovation immediately – including lower energy costs and a more comfortable home and would not be required to repay the loan until the property is sold, transferred or in 30 years.”
Dr. Tobias Horn, Head of Portfolio Management & Strategy, CRO, Deutsche Bank Group said: “Mortgage lenders need to offer homeowners attractive ways to save energy in the coming years. A tool like an EU Renovation Loan can open the market to a wider range of families, and allow them to invest and renovate heating, photovoltaic etc. which will reduce bills and improve their credit standing at a time of inflation and raising interest rates.”
Seán Kelly, Member of the European Parliament – Group of the European People’s Party said in the context of the ERL: “There needs to be much stronger links between the financial and the renovation sectors. The EPBD can play a big part in this; firstly by ensuring banks have the appropriate access to data so that they can assess their risks. Secondly, there must be serious consideration given to making Mortgage Portfolio Standard for banks mandatory.”
Claude Turmes, Minister for Energy and Minister for Spatial Planning, Luxembourg said in the context of the ERL: “Making loans for renovation more accessible, also for those already struggling to pay their bills, is imperative to speed up the necessary renovation of the EU housing stock.”