Challenges and Variances in Renovation Costs and Ownership Profiles Across the EU: A Closer Look at the Energy Performance of Building Directive
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VEKA estimates that renovation costs of inefficient buildings vary between €15,000 and €100,000. Nonetheless, important national variations exist. In Germany and the Netherlands, the average renovation costs lie between €15,000 and €30,000, and Belgian homeowners face higher costs with, on average, €50,000.
Also, research from our economists shows that renovation costs have increased faster than inflation. Despite that, renovations represent a significant share of the building industry in the Union. The study also highlights that Western European countries have a higher share of renovation out of their total building production.
Renovations represent a significant share of building industry despite costs increasing faster than inflation
The second variable to consider is the ownership profile. Just as for the renovation costs, ownership varies across the EU. However, it’s a crucial point in the discussion as it determines the feasibility of energy renovation.
Indeed, significant differences persist between EU jurisdictions. For instance, Belgium shows not only a high rate of ownership but also a high rate of low-income ownership, with 44% of the lower-income population owning property. This share is only 20% and 15% for Germany and the Netherlands, respectively. Countries with an important share of low-income homeowners can expect more difficulties in improving the national renovation rates as access to liquidity is more complex for this part of the population.
Home ownership rate varies across countries as well as homeowners' profile
Financial institutions are directly affected by the renovation wave as most households will need a loan to make the necessary changes. Furthermore, the sector faces increased devaluation risks through the existence of energy premia. We'll be looking at that shortly.
All in all, the Energy Performance of Building Directive combines financial, social and technical aspects, making it a significant challenge for the EU to reach its GHG emission reduction goals.
