Housing Initiative for Eastern Europe – IWO e.V. for the Support of Market-oriented Structures in the Housing and Construction Sector in Eastern Europe “Strategies and Instruments Supporting Energy Efficient Refurbishment (EER) in Germany” Knut Höller, Britta Schmigotzki IWO e.V., Berlin / Germany Tallinn, 29. November 2006 “Strategies and Instruments Supporting Energy Efficient Refurbishment (EER) in Germany” Knut Höller, Britta Schmigotzki IWO e.V., Berlin / Germany Tallinn, 29. November 2006

Structure of Presentation 1. IWO e.V. – tasks and structure 2. German experiences in energy efficient refurbishment of prefabricated housing estates – „The Berlin Strategy“ - after reunification 3. German strategy for energy efficient refurbishment (EER) – today’s approach

complex approach IWO (Initiative Wohnungswirtschaft Osteuropa) e.V. – Housing Initiative for Eastern Europe – is an association of private and public partners who aim at a market-oriented and ecological development of the housing and construction economy in transition countries, mostly in Eastern Europe. IWO, located in Berlin, is an officially registered non-governmental and non- profit organisation. Company Profile: Housing Initiative for Eastern Europe – IWO e.V. Finance Industry Housing Public Authorities Education & Training Energy Academy: EAIB GmbH

German experiences in energy efficient refurbishment „The Berlin Strategy“ Initial situation after 1990:  Eastern part of Berlin: 632,000 dwellings, of these 360,000 built after 2 WW  273,000 dwellings in prefabricated multi-family buildings. 800,000 people, i.e. 2/3 of the inhabitants in Eastern Berlin, live in these flats. They are located mainly in the districts Marzahn, Hellersdorf, Lichtenberg and Hohenschönhausen  Berlin government quickly decided that the maintenance of the existing stock and the immediate refurbishment with new support instruments should by applied instead of adopting a policy of wait and see.

German experiences in energy efficient refurbishment „The Berlin Strategy“ The main elements in the strategy: 1. Legal assignment of the property and reorganisation of the housing administration/housing economy. 2. Improvement of the residential environment 3. Renovation and modernisation of the building stock  Main difference to situation in CEE: No Privatisation. Housing stock administrated by municipal companies. Rental housing stock!!!

„The Berlin Strategy“: Improvement of the residential environment

„The Berlin Strategy“: Renovation and modernisation of the building stock The approach:  At the beginning of the 90s the Berlin Senate ordered extensive structural studies, to determine the renovation and modernisation need of the different buildings types.  A „measure/cost-matrix“ was developed relating 17 building series with 21 renovation measures, and stating an average price for the measure and the overall sum per flat. Prices varied from 7,000 €/flat (newer buildings) to 34,000 €/flat (QP 59). The matrix was the basis for the Berlin support guidelines.  Measures listed included: - improvement of thermal insulation and heating system, - new sanitation, - new windows and balconies, - renovation of elevators as well as - modernisation of the housing entrances and staircases.

„The Berlin Strategy“: Renovation and modernisation of the building stock In October 1993, the pilot phase of the programme supporting the refurbishment of prefabricated housing estates started...

„The Berlin Strategy“: Renovation and modernisation of the building stock... and from 1994 on, the renovation programme was implemented on a large scale (over a period of 10 years).

„The Berlin Strategy“: Renovation and modernisation of the building stock

„The Berlin Strategy“: Renovation and modernisation of the building stock Methods and instruments:  Cooperation of players (esp. housing companies, district administration, planners, architects): development of integrated district concepts which enable the individual quarters in the district to develop special identities.  Communal district management focussing especially on the participation of inhabitants and other important actors in the district.

„The Berlin Strategy“: Renovation and modernisation of the building stock Basic principles of financing:  Nearly all refurbishment measures were financed with long-term loans with reduced interest rates  Every credit was secured by mortgages  When necessary: additional state or municipal guarantees were provided  Two levels providing support: - Federal Government - Municipality of Berlin

„The Berlin Strategy“: Renovation and modernisation of the building stock Financing / Main support programmes: a. The „KfW-dwelling modernisation prgramme“ of the Kreditanstalt für Wiederaufbau (KfW), provided reduced interest rate loans which were supported by the German government. Alltogether, loans of around 3 Billion € were used for the renovation of the housing stock in Eastern Berlin. b. The „Prefabricated buildings renovation programme“. In accordance with the so-called „InstModRL“ the Berlin government provided long term interest subsidies for buildings, where renovation costs could not be covered by rents and with KfW-loans alone. Approximately 650 Mio. € were provided in the form of long term interest subsidies by the Berlin government.

„The Berlin Strategy“: Renovation and modernisation of the building stock Consequences for the residents:  The costs for the complex refurbishment of the buildings amounted to 23,000 Euro per flat  Measures have been refinanced through the rents  Rents have been increased by 11 percent annually  The average rent in refurbished dwellings included approx. 135 Euro costs for the refurbishment  On average, the rents in renovated buildings amount to 25 percent of the net household income

„The Berlin Strategy“: Renovation and modernisation of the building stock Overall results:  60 % of the stock has been extensively refurbished 25 % “ has been partly refurbished 15 % “ has not been refurbished  Between 1993 and 2003 around 6.2 Billion € have been invested in the renovation and modernisation of the prefabricated building stock in Eastern Berlin, that is on average 23,000 € per flat, of which ~8,500 € used for energy efficient measures.

German strategy for EER in the housing stock - today Strategies and Instruments 1. Legal: e.g. Energy Conservation Ordinance EnEV 2. Financial: - Financing programmes by KfW - Financing programmes by regional governments and municipalities 3. Information and Transparency 4. Research and increase of know-how

German strategy for EER in the housing stock - today Main Financing Instruments 1. Promotion mainly by the Federal Government through the (Kreditanstalt für Wiederaufbau (KfW) - Reconstruction Loan Corporation) 2. Promotion by - reduced-interest loans - grants - tax-relief

Promotion of EER by KfW programmes What is the KfW? Kreditanstalt für Wiederaufbau (KfW) = “Reconstruction Loan Corporation”:  Owned by federal government (80 %) and federal states (20 %)  KfW Förderbank = KfW Promotional Bank  Funding areas: housing construction, modernisation, energy conservation

Conveyance principle budget funds e.g. BMVBS co-operative banks/ savings banks „conveying bank“ commercial bank owner co- operatives Capital market (AAA) 12 private companies owner

Promotion of EER by KfW programmes Financing Principles  Long-term, low-interest financing for projects that reduce CO2  Interest rate is set considerably below capital market level  Interest rate fixed for 10 years – reliable basis for calculation  Financing of up to 100 % of the investment costs  Partial dept relief for the KfW loan once the level of a low-energy house has been attained  Possibility of combination with other promotional funds and with other KfW programmes

Promotion of EER by KfW programmes Eligible Applicants and Programmes Applicants:  Whoever wants to invest in owner occupied or rented residential buildings (Private individuals, Housing companies, Housing cooperatives, other investors, municipalities, districts etc.) Relevant Programmes: a. CO 2 Building Rehabilitation Programme: 4 fixed packages of extensive energy refurbishment measures - high interest rate reduction b. Housing Modernisation Programme: certain energy efficient measures (ÖKO-Plus) or modernisation in general (STANDARD) – comparatively low interest rate reduction

Promotion of EER by KfW programmes Volume of the CO 2 building rehabilitation programme  Total amount approx. 1.4 billion EUR state support per year, of these billion EUR for CO 2 Building Rehabilitation Programme, divided in * 600 million EUR reduced interest loans for residential buildings * 200 million EUR grants for residential buildings * 200 million EUR for schools, kindergarten etc.  From 2001 to 2005 approx. 5 billion EUR have been granted for loans in the programme, for the energy efficient refurbishment of 304,820 dwellings.  2005: Average size of daily (!) received application amounted to 5 million EUR.

German strategy for EER in the housing stock - today Current state of the programme:  Improved conditions since February 2006 lead to the approval of loans amounting to 7.5 billion EUR until August  Due to the huge demand for the programme, an additional amount of 350 million EUR has been approved by the budget committee of the German Parliament.  Currently discussion about re-launch of modified programme from January 2007 on.

“Strategies and Instruments Supporting Energy Efficient Refurbishment in Germany” Thank you very much for your attention!!! Contact: Initiative Wohnungswirtschaft Osteuropa (IWO e.V.) Knut Höller / Britta Schmigotzki Friedrichstraße Berlin (Germany) Phone: Fax: