The National Board of Housing, Building and Planning (Boverket) and the Swedish Energy Agency (Energimyndigheten) have a common assignment from the Swedish Government to develop a strategy for improving the energy efficiency in the Swedish building stock. A part of this assignment involves analysing problems and coming up with solutions related to the rate of renovation in Swedish multi-dwelling buildings. In particular, the million homes built during the 1960s and 1970s are nearing the end of their technical lifetimes and will need to be renovated within the coming years.
The rate of renovation in these building is deemed to low, which also holds back energy efficiency-enhanding refurbishments. In order to counteract this, the client needed a better understanding of what barriers are holding back investments in renovations, and a proposal for how these barriers may be overcome. Specifically, the client was interested in a financial instrument based on the green loan schemes used in e.g. Germany (KfW Green loans) and a system of credit guarantees.
The main conclusions of our study are:
In general, there are few problems in obtaining capital to make investments in renovations. In the cases where this is an issue, we found that the barriers holding back investments are mostly due to problems of information. Property owners and managers are not always aware of the renovation options available and the benefits from making such investments. However, even if they have this knowledge, there may in certain markets be problems of raising capital. In weak property markets, property owners may not be able to raise rents and fees to finance renovations. This makes obtaining credit more difficult. A similar problem arises for properties with rental apartments as practice surrounding setting rents is restrictive in Sweden. A financial instrument such as green loans or credit guarantees mainly aimed at reducing failures in the credit market. Even though these do not seem to be present in Sweden, there is de facto a problem of financing renovations in multi-dwelling housings. Based on this, we presented a suggestion for two different financial instruments, but with the caveat that there are most likely other issues that need to be addressed first.
The study is commissioned by Boverket and Energimyndigheten.Download