In any case, the home renovation subsidy can be counted as a success – László Koji, president of the National Association of Construction Companies (ÉVOSZ), told Index.
He recalled that the program started in the “peacetime” before the energy crisis, so its use was spread across a wide spectrum of users. “In the last year, however, we clearly saw that mainly energy efficiency investments were realized through the support.”
Ákos Balla sees it differently. According to the owner of Balla Ingatlan, the public’s efforts in the direction of energy efficiency modernization were only visible at the end of the housing renovation subsidy. “Unfortunately, the level of awareness of the average person is low, so in most cases, the optimal use of the grant amounts can only be achieved by clearly designating the grant path. The government supporting housing renovation should also be directed in this direction if the project is extended,” explained the real estate expert.
Home renovation takes 20 percent of the construction pie, which falls short of the EU average of 36 percent. “There is room for improvement in the field of modernization,” remarked László Koji.
This is where most of the support was spent
According to the president of ÉVOSZ, it is clear that facade insulation and heat pumps took the lead in energy efficiency investments.
“Let’s look at a 100-square-meter residential building, which does not have external facade insulation, and the heating and hot water comes from a gas boiler. On the other hand, if the insulation is carried out and the gas boiler is replaced by an air-to-air or air-to-water heat pump, and the cooling and heating is then carried out through it, then this investment – given that in the future it only consumes electricity, gas but no – it pays off in 4 years”, László Koji outlined the return on energy investments with an example.
However, according to Ákos Balla, the housing renovation subsidy “went a bit astray” because there were no clearly defined conditions.
It was enough if the specialists carrying out the renovation were able to pay – which served to whitewash the sector. However, the main goal of the beneficiaries was not to improve the energy efficiency of the properties, but in many cases they used the support only for aesthetic corrections, which thus did not create real value, and this could backfire in an economic crisis.
The heat pump is out of stock
The increase in demand for heat pumps is clearly shown by the fact that there was a shortage on the market by the end of the summer, pointed out the president of ÉVOSZ. Such equipment is not manufactured in Hungary – at most it is assembled domestically – the purchase is made entirely from imports. The shortage is fueled by supply chain disruptions, and due to the weakening of the forint exchange rate, imports are realized at higher prices.
Wrinkles need to be sewn up, but it’s worth continuing
In September, Prime Minister Viktor Orbán stated that the issue of home building subsidies will be on the government’s agenda in the second half of November. We expect that various home renovation plans will be available next year as well – said László Koji.
“Personally, I do not recommend continuing to run the housing renovation subsidy program in its current form. The government’s programs aimed at family support and housing should be better coordinated so that the common set of the two areas is as large as possible. In this regard, we have sent our proposals to the cabinet’s table,” added the president of ÉVOSZ.
According to him, the primary focus of the family home creation allowance (csoc) should be to facilitate housing. Within this, it is advisable to direct users towards energy-saving real estate investments, as well as newly built properties that ensure energy-saving operation.
Ákos Balla also believes that the support conditions need to be revised.
Today, a cardinal question from the point of view of housing is how much is the overhead. Therefore, the housing renovation subsidy must be transformed in such a way that the available HUF 6 million can be used for energy efficiency and modernization, i.e. for replacing windows and doors, replacing the roof, thermal insulation on the facade, or switching to electric heating
said the real estate expert. In addition, it is important that the social tax and the discounted 5 percent housing VAT remain – the latter is urgently needed for the construction industry, he added.
The Magyar Nemzeti Bank also advocates the continuation of housing renovation subsidies. “The Home Renovation Grant can be applied for until December 31, 2022. The paid invoices for renovations that have already been completed must be submitted to the State Treasury by December 31st, therefore, taking into account the execution deadlines, the option for newly started renovations is no longer available in practice. In the current energy price and interest rate environment, it would be advisable to continue the program, or to introduce a financing program similar to this, available for energy efficiency renovations,” they write in their statement sent to Index.
The population has no money
László Koji pointed out that the housing savings of the population are not sufficient for the necessary renovations and investments in the current price conditions. “Compared to the necessary technical content, the population has reached the limit of its ability to pay,” he said. He added: it is necessary to avoid half-solutions resulting from a lack of resources, for example, that in a household the doors and windows are renovated, but there is no money for thermal insulation on the facade. The goal is to have full-fledged, energy-saving renovations and new constructions on the real estate market. The solution to the financing issue plays an important role in this.
Interest rates on housing loan projects have practically reached double digits. At an interest rate of five percent, there is a psychological limit above which the population is reluctant to take out a loan.
“Therefore, we recommend that, on the one hand, a 5 percent interest rate cap be placed on housing loans. On the other hand, it would be considered expedient if, in the case of the family home creation discount, the emphasis was placed on interest subsidies as opposed to non-refundable subsidies, since with the latter, the circle of beneficiaries can be drawn in a significantly larger arc. And last but not least, it puts less of a burden on the budget,” outlined the ÉVOSZ president, adding that, in addition, the continuation of state-subsidized credit schemes would be welcome, such as, for example, the 3 percent interest rate, up to HUF 6 million, attached to the home renovation subsidy loan amount home improvement loan.
László Koji stated: ÉVOSZ puts newly built apartments and properties in need of renovation on the same shelf – the main goal in both areas is to cover the country with energy-efficient buildings. In the renovation market, approximately 20 percent of the existing Hungarian real estate stock complies with the energy regulations in force.
Keeping the subsidized credit scheme, or even introducing a new one, is an important issue, since
people don’t renew because they don’t want to, but because they don’t have the resources to do so
Ákos Balla pointed out the problem. The energy crisis mainly affects those who do not have savings. For them, a discounted loan would be a lifeline, he said. At the same time, he emphasized that this can only be a solution for residents with income. Discounted loans cannot be an option for people who do not have income for various reasons, because we have already experienced the negative effects of foreign currency loans. “It’s no coincidence that today they only lend to those who have an adequate income and can pay the installments. This practice should not be changed,” he added.
It should not be a privilege only for families with children
Although the government’s policy of supporting families is to be welcomed, the improvement and modernization of housing conditions (also from an energetic point of view) is important not only in the case of households with children.
That is why we want to extend the 5 percent interest rate cap to a much wider social group
said László Koji.
(Cover photo: Danny Gohlke/picture alliance via Getty Images)