10 years of renovation of multi-apartment buildings by VIPA: 1,000 of multi-apartment buildings transforming the face of cities and the quality of life
The renovation processes of multi-apartment buildings in Lithuania that have been carried out for more than 15 years, represent efforts of many public authorities to increase the energy efficiency of buildings and thus not only to reduce the heating bills of residents, but also to contribute to the reduction of the direct climate change effects. Žaneta Maskaliovienė, the Housing Investment Department Head at the Public Investment Development Agency (VIPA), which provides preferential loans to residents participating in the multi-apartment building renovation (modernisation) programme, gives a detailed overview of the renovation processes in the country, and discusses the significance of renovation of buildings for the residents, the country and the planet.
More than 60 % population in Lithuania live in multi-apartment buildings, most of which are morally and physically outdated, non-renovated and inefficiently heated. Winds whistle through walls and windows of many of them, and the heat entering the buildings is immediately released outdoors.
In 2005, the process of multi-apartment buildings in Lithuania intensified under the approved Housing Strategy and the Mechanism for Modernisation of Multi-Apartment Buildings. During this long period, the multi-apartment building modernisation programme has kept changing: several amendments to the laws regulating the renovation of multi-apartment buildings have been drafted, and the rules and conditions of the programme have been updated to make the modernisation of buildings more attractive for residents.
Meanwhile, according to the Long-term Renovation Strategy of Lithuania, 74 % of multi-apartment buildings are to be renovated by 2050, i.e. more than 30,000 out of 40,000 buildings. Since the start of the renovation process, about 5,000 multi-apartment buildings have been renovated in total in Lithuania between 2005 and April this year.
In less than a decade, the life of 92,000 households improved
Ž. Maskaliovienė notes that although the pace of renovation must be further accelerated, the involvement of municipalities in the modernisation process in 2013 has significantly speeded up the renovation of buildings, and the positive changes in this period alone have managed to impact the lives of more than 92,000 apartment owners.
“People living in renovated multi-apartment buildings are definitely reaping the full benefits of modernisation of buildings. It’s not just a significant reduction in heating bills, but also a more comfortable and healthier living environment, better quality of life or higher value of housing,” says the interviewee.
According to her, the favourable assessment of the Lithuanian renovation model by international institutions is also encouraging: “In the European Court of Auditors’ 2020 report on energy efficiency in buildings, the Lithuanian financing model of the renovation of multi-apartment buildings was identified as a best practice. The use of EU funds in the financial instrument by providing preferential loans for the renovation of multi-apartment buildings is a success story for other EU Member States”.
Most funding goes to renovation projects
VIPA Housing Investment Department Head adds that VIPA is now in their tenth year of operation. According to her, the Agency has been actively contributing to the implementation of multi-apartment building renovation in the country from the very beginning.
“Already in 2013, upon signing the agreement for EUR 29.9 million, we became the financial intermediary of JESSICA Fund controlled by the European Investment Bank (EIB). Later, in 2015, VIPA was entrusted with the management of the Fund for Multi-apartment Building Modernisation (DNMF), financed from the European Regional Development Fund. The latter remains one of the main sources of funding for renovation in Lithuania.
Overall, financing of multi-apartment building modernisation projects accounts for about 54 % of the project portfolio we manage. This means that as much as EUR 433.5 million of the total EUR 799.35 million we have pooled is allocated specifically to the financing of multi-apartment building renovation projects through long-term loans,” says Ž. Maskaliovienė.
In her words, the funds were raised from various sources: “The contribution of EUR 74 million from the European Union funds to DNMF was complemented by the returned funds, and we also received EUR 50 million from the European Bank for Reconstruction and Development (EBRD). In addition, we received EUR 68 million from the proceedsf on-lent State loan financed in 2018 following the highly successful issue of green bonds by the Government of the RL. The proceeds of the on-lent State loan financed from the Council of Europe Development Bank loan, represent a further EUR 167.5 million of the renovation portfolio. Finally, we have signed another financing agreement with the EBRD for EUR 67.5 million in 2021.”
According to VIPA Housing Investment Department Head, given the demand for financing of multi-apartment building renovation projects, VIPA is constantly looking for ways of raising additional sources of financing, digitisation and optimisation of processes, reduction of bureaucratic burden, and improvement of the quality of services.
“For example, we have recently made it possible for project administrators, contractors and residents in multi-apartment buildings to monitor the current status of payment requests submitted to VIPA on their website. This way we ensure greater transparency and prompt provision of information for more effective implementation of projects”, – explains Ž. Maskaliovienė.
Provides preferential loans
Also, one of the cornerstones of moving forward the renovation processes is the support provided by the State and the facilitation of access to finance for modernisation works.
“VIPA offers residents in multi-apartment buildings the opportunity to obtain preferential loans with no administration fees and at the fixed interest rate of 3 %. An important aspect is that this loan is granted for a long period of time, i.e. up to 20 years. In addition, we understand that residents prefer flexibility; therefore, they can choose to enter into loan agreements for the benefit of residents (project administrator model) or on behalf of residents. The latter option is particularly convenient for associations of multi-apartment buildings”, says VIPA Housing Investment Department Head.
Financed the renovation of over 1,000 multi-apartment buildings
Since 2013, VIPA has signed 1,051 multi-apartment building renovation loan agreements for almost EUR 418 million, and is in the process of signing another 118 loan agreements for almost EUR 39 million.
“In total, the funds we have raised have helped complete the renovation of more than 870 multi-apartment buildings. This means that nearly 31,000 households are enjoying improved living conditions and lower heating bills. Renovation projects of about three hundred more multi-apartment buildings are currently under way. VIPA-funded buildings are being renovated in more than 40 municipalities in Lithuania, with the largest number of renovations in Vilnius (120) and Jonava (106). The renovation of these buildings also facilitates in saving more than 49,000 tonnes of CO2 per year”, maintains Ž. Maskaliovienė.
Full benefits for residents
Speaking about the improvement of the everyday life of the country’s residents as a result of VIPA’s activities VIPA Housing Investment Department Head distinguishes the municipality of Jonava.
“The active modernisation of multi-apartment buildings in Jonava has resulted not only in a new face of the city, but also in a significantly improved quality of life for residents and visible energy savings. Residents of Jonava and other cities are proud of their changing living environment, and their neighbours, seeing such examples, are determined to make changes in their own backyards,” says she.
UAB Jonavos paslaugos Deputy Director Romualdas Dautartas points out that the start of the renovation of multi-apartment buildings in Jonava was very good, but due to different circumstances, the processes of modernisation have recently lost momentum.
Nevertheless, R. Dautartas emphasises that the renovation of multi-apartment buildings has actually benefited Jonava a lot: “The renovation of these buildings has brought a sense of order, beauty and permanence to the city and residents. It has also improved people’s living conditions, allowing them to heat their rooms more independently and saving money. We are pleased that smooth cooperation with VIPA, which responds promptly to challenges, gives quality advice and is very supportive in other areas, has made these outcomes possible.”
Ž. Maskaliovienė adds that renovation of buildings is one of the most effective ways to not only ensure energy independence and contribute to mitigating the negative impact on the climate, but also to significantly reduce heating bills.
“In addition, residents see the benefits of renovation elsewhere. For example, flats in renovated multi-apartment buildings are in higher demand on the real estate market than flats in non-renovated buildings. In addition, municipalities often pay more attention to modernised dwellings. For example, the municipality of Jonava gives priority to renovated buildings when managing the environment of multi-apartment buildings,” says VIPA Housing Investment Department Head.
Contributing to a greener future
Importantly, renovation of multi-apartment buildings helps tackle climate change and global challenges. With the building sector accounting for around 40 % of energy consumption and more than 35 % of CO2 emissions in the EU, one of the best ways to curb this pollution is to improve the energy efficiency of buildings.
Residents of non-renovated multi-apartment buildings become increasingly aware of this untapped potential. A recent survey conducted by the Environmental Projects Management Agency, which administers the Multi-apartment Building Renovation (Modernisation) Programme, has shown that more than half (56 %) of people living in the old multi-apartment buildings constructed before 1993 say that the increase in heating prices encourages them to think about renovation of their homes, according to the representative survey conducted by Spinter Research in February*.
“This position of residents is of great significance because Lithuania, as a member of the European Union, is committed to renovate the majority of multi-apartment buildings and become climate neutral by 2050. It is encouraging that Lithuania is increasingly realising that the benefits of renovation are not just local, intended for a particular city or house. It’s the broad-based saving of energy resources, reducing environmental pollution and a means to boost the economy,” says Ž. Maskaliovienė.
*The representative survey carried out by Spinter Research on 17–25 February 2022. 1,015 people aged 18–75 were interviewed. 409 of them live in a non-renovated multi-apartment building of old construction, 216 live in a renovated or newer building, and another 390 – in a one-flat or two-flat house.