State plans major energy renovation grants for housing companies

Finland’s Ministry of the Environment is preparing grants covering 35 percent of energy renovation costs for housing companies in areas where homes are inexpensive and residents’ incomes are below the national average, Yle reports.

The support is intended for areas where the average sales price of shares in a housing company is below 1,500 euros per square metre. The national average is 2,500 euros per square metre.

The ministry estimates that around one-third of Finland’s 90,000 housing companies are in areas where low property values make it difficult to arrange financing for major renovations. Banks may be reluctant to lend because the buildings do not provide sufficient collateral.

The proposed grant could be used for window and door replacements, additional insulation or changing the heating system, for example to heat pumps or district heating. The state’s contribution could make it easier for housing companies to obtain bank loans.

To qualify, a building would also have to be at least 20 years old and have an energy rating of C or lower.

“It is needed, and finally. There is a need for repairs,” said Jorma Luoma, chair of the board of Asunto Oy Mahlakoski, a housing company in Loimaa built in 1967.

Some of the building’s windows are original to the 1960s, and its upper and lower structures as well as exterior walls need additional insulation.

“We are not talking about energy efficiency, but energy inefficiency. This building is in the lowest G category. The next level is a brush hut,” Luoma said.

The planned support is part of the ministry’s national plan for the Social Climate Fund, which will direct new European Union funding towards the green transition. The aim is to reduce energy consumption and, through that, climate emissions.

The proposal is currently open for consultation. The ministry says similar support targeted at what it calls vulnerable groups has not previously been implemented.

The estimated total cost of the measure is 123.6 million euros. Most of the funding would come from the EU, while the national share would be 25 percent.

According to the ministry’s calculations, the grant would enable renovations in 1,800 housing companies and cover around 36,000 homes and households. Applications are expected to open in 2028, and the programme would continue until 2032, subject to final approvals.

The ministry is also proposing to increase the state guarantee for housing companies’ renovation loans. The guaranteed share would rise to 80 percent from the current 70 percent, with the changes intended to take effect at the beginning of next year.

Timo Levonen of Hemman Isännöinti, which manages Luoma’s housing company among others, said housing companies could obtain loans if their renovation projects were carefully prepared, although the amount and terms might differ from what they had sought.

Satu Nurmi, head of small and medium-sized business financing at OP-Pohjola, said the decisive factor for a housing company in a remote area was demand for the apartments throughout the loan period. It was also important whether enough shareholders would continue paying their financing charges.