REFURBISHMENT PROCESS IN LITHUANIA Assoc. Prof. Dr. Natalija Lepkova, Department of Construction Economics and Property Management, Faculty of Civil Engineering, Vilnius Gediminas Technical University, Vilnius, Lithuania “IP Project RenoPassCoDe ” Austria, 2014

The presentation based on: Vice-Minister of Ministry of Environment Daiva Matonienė presentation “Promotion of energy efficiency through the housing modernisation in Lithuania”; Statistics Lithuania; The Lithuanian Housing Strategy, 2004; Other information. NOTE: some slides contain audio record with explanations Assoc. Prof. Dr. Natalija Lepkova Vilnius Gediminas Technical University, Lithuania

MAIN ECONOMICAL INDICATORS IN LITHUIANIA

Main indicators of economic and social development (annual) in Lithuania Indicators Annual average population number, thous. 3454,23394,13366,23187,7 (2012) 2971,9 Unemployment rate, by labour force survey data, % 12,45,94,313,913,4 (2012) Inflation (December compared to December of previous year), % -1,34,58,13,42,8 (2012) Average monthly gross earnings of employees in the whole economy, LTL 1072,6 (310 €) 1500,22052,02045,9 (592 €) 2123,8 (2012) (615 €) Source: Statistics Lithuania, 2012, 2013

Numbers of completed buildings in Lithuania New dwellings (residential buildings) completed Indicators Useful floor area of dwellings completed, thous. m² Number of residential buildings completed New non-residential building construction Indicators Total floor area of non-residential buildings completed, thous. m² Number of non-residential buildings completed Source: Statistics Lithuania, 2012, 2013

Energy Efficiency in Residential Buildings in Lithuania Population – 2,97 mln. 66% of population lives in multi family buildings built before 1993 (> 38,000 multi family buildings and > 800,000 apartments) 97% privately owned, only 3% municipal rental stock 65% of buildings supplied by district heating system Problems: poor Soviet construction standards and little maintenance inefficient heating systems and engineering equipment bad quality windows, roofs, seals between panels huge energy losses most buildings in poor condition, lack of proper management Most of Lithuanian households are not satisfied with their homes

LEGAL SYSTEM The Lithuanian housing sector is mainly regulated by 6 laws: The Civil Code of the Republic of Lithuania; The Law On Construction of the Republic of Lithuania; The Law On Multi-family Apartment Home Owners' Associations; The Law On State Support to Acquire or Renting an Apartment and for Modernising Multi-family Apartment Houses; The Law on Real Property Register; The Law on Heating Sector.

HOUSING SECTOR MANAGEMENT Ministry of Environment - technical and physical management of the housing stock Ministry of Finance - funding of the housing programs Ministry of Social Security and Labour - is authorised to provide heating, hot and cold water subsidies to low-income families Ministry of Economy - issues related to energy use Ministry of Agriculture - manages land matters Ministry of Justice - is responsible for the real estate register Ministry of the Interior - formulates and implements regional development policy, ensures coordination of the state and local government interests, and establishes legal and economic provisions for the functioning of the local communities

THE LITHUANIAN HOUSING STRATEGY Housing Strategy approved at January 21, 2004 by the Lithuanian Government English version available on the internet site Program for modernisation of multifamily buildings approved in 2004 Program for social housing development (approved in 2004 Main goals are: To expand the housing choices to all social groups of the population. To ensure efficient use, maintenance, renovation and modernization of existing housing, as well as efficient energy use. To strengthen capacity of the housing sector parties to participate in the housing market, aiming for the establishment of a sustainable housing sector management system on the national, local government and community levels, their interaction mechanisms, to ensure protection of the consumer rights, also to facilitate public communication, continuous training and education of the housing sector stakeholders. Source: The Lithuanian Housing Strategy, 2004

ENERGY SAVING POSSIBILITIES Experience from energy efficiency upgrading projects Lithuania shows that a combination of measures: o replacement of windows and external doors o insulation of external surfaces: roofs and walls o retrofit of heating substations and balancing of heat distribution around the building reduce energy consumption by around 50%. Verdict Good for home-owners: greater comfort, lower bills, added value Good for Lithuania: reduced gas consumption, better security of supply Good for the Planet: lower carbon emissions, resource conservation

PROGRAM FOR REFURBISHMENT OF MULTIFAMILY BUILDINGS Supported implementation of energy efficiency measures After refurbishment possibility to reduce energy consumption up to 70 % By implementing the Programme also solved environmental protection issues (reduction CO² emission, urban environment, cities regeneration plans, etc.)

Source: Housing Energy Saving Agency, Internet access:

EXAMPLE OF REFURBISHMENT PROJECTS IN LITHUANIA Adress: Didlaukio 44, Vilnius Data: 9 floors, 108 flats. House built in General heated area: 5673 sq.m. Completed works: - wall insulation, - replacement of windows, - balconies glazing, - Replacement of roof coating installing thermal insulation layer, - Replacing radiators in common premises, - balancing valve installation, - pipe insulation. The total investment value - 1,95 mln. Litas (~ Euros) Energy savings - 44 %. Home renovation and modernization works completed in Source: Housing and Urban Development Agency, 2013, Internet access:

JESSICA HOLDING FUND JESSICA (Joint European Support for Sustainable Investment in City Areas) is an initiative of the European Commission in cooperation with the European Investment Bank (EIB) and the Council of Europe Development Bank (CEB) in order to promote sustainable investment and growth of jobs in Europe’s urban areas. Lithuania - one of the first countries in the European Union which uses the initiative of JESSICA for the improvement of energy efficiency in multifamily buildings.

FUNDING CONDITIONS FOR RENOVATION OF MULTI-APARTMENT BUILDINGS Maturity – 20 years Interest rate – fixed for the entire loan period at 3% p.a. Self-financing – bank may require a down payment (not more than 5%) Maximum monthly instalment – determined for each multi-apartment building Insurance – no loan insurance requirements Guarantees – no third party guarantee requirement

PROGRAMME IMPLEMENTATION MODELS (1) There are two possible implementation models for housing refurbishment in Lithuania: 1. Home-owners their own initiative prepare investment projects, take loans and implement modernization The main problems of this model: lack of home-owners initiative psychological fear to take a loan mistrust of the quality of the upgrading At the end of May 2013, amount signed by UDFs with final beneficiaries about EUR 15m. This corresponds to almost 100 projects signed/renovations of multi-apartment buildings financed.

PROGRAMME IMPLEMENTATION MODELS (2) 2. Investment projects are implemented based on the Energy Efficiency Programmes approved by the municipalities: Investment projects initiated by the municipalities Projects are implemented by the Programme appointed by the municipality Administrator Loan is taken by the Programme Administrator Programme Administrator is organising procurement as well taking all the responsibilities with respect of implementation and financial management of the project The energy savings (Fig. 1, Slide 12) are used for repayment of upgrading costs by the owners

New Programme participants National: Ministry of Environment / Ministry of Finance / JESSICA Holding Fund, managed by EIB Housing Energy Saving Agency (HESA) Financial institutions administering JESSICA funds (selected by JESSICA Holding Fund managed by EIB) Central Procurement Office (CPO) Local: Municipalities (Programme preparation, approval, appointment of Programme Administrator, supervision of implementation) Programme administrators (Housing Maintenance company or other responsible company) Engineering – consultant companies (Investment Project preparation, supervision of works) Contractors Home-owners

New Programme model implementation (based on Municipalities programmes) started in 2013 – two municipalities already started with upgrading of 85 ( ) buildings

EXPECTATIONS OF THE NEW MODEL, Municipalities (out of 60 in Lithuania) started with participation in the new model. In February, 2013 was created a New Model; In May, 2013 were signed 56 agreements on renovation of 839 buildings; In June, a new legislation regarding modernisation of multi apartment houses came into force; 50 multifamily buildings are currently being renovated

THANK YOU FOR YOUR ATTENTION ! Assoc. Prof. Dr. Natalija Lepkova, Department of Construction Economics and Property Management, Faculty of Civil Engineering, Vilnius Gediminas Technical University, Vilnius, Lithuania