Report

Teaser, summary, work performed and final results

Periodic Reporting for period 1 - RentalCal (Incentives through Transparency: European Rental Housing Framework for Profitability Calculation of Energetic Retrofitting Investments)

Teaser

The building sector offers great potential for reducing CO2 emissions by means of energy efficiency investments. The RentalCal project offers a new approach: Based on the European Union EPBD (recast2010) the “cost optimal level” for minimum energy performance requirements...

Summary

The building sector offers great potential for reducing CO2 emissions by means of energy efficiency investments. The RentalCal project offers a new approach: Based on the European Union EPBD (recast2010) the “cost optimal level” for minimum energy performance requirements, the rental housing sector is considered. So far, the financial perspective was restricted to the owner-occupier while the wide range of (non-)professional landlords had not been looked into. However, there are more obstacles than a limited methodological framework:
• “Housing” is a very national ,even local activity embedded in its legal regulations, closely connected with the respective national financial environment such as markets and financing mechanisms.
• There is great variety of the physical objects, e.g. rental dwellings within Europe. The housing stock, its technical standards and requirements in case of modernisation differ from country to country. The understanding of housing quality and comfort also differs between national governments and types of tenants. The range of housing types in Europe has been documented in TABULA and EPISCOPE. RentalCal works with the results and adds the financial and economical dimension.
• Housing depends to a large extent on its owners: There are private professional and non-professional landlords. It is a different challenge to convince a small private landlord who rents out some individual flats or to encourage a municipal housing provider or even an in-ternational real estate company to invest into energy efficiency. Motivation and strategies are distinct from investor to investor and need specific analysis.
Keeping these challenges in mind, the RentalCal project works towards the following objectives:
1. to focus on the energy efficiency investments in rental stock which are profitable by means of developing a standardised methodology for the profitability assessment of such investments;
2. to provide a “tool to talk” in order to strengthen the dialogue between housing sector, consult-ants and financial market actors in the private sector, with an emphasis on the different categories of landlords;
3. to provide transparent and comparable information on the technical, legal, financial and institutional framework conditions for energy saving investments offered to the housing markets of EU member states. This should lead to increased competition between the countries, pave the way towards a harmonisation process of the markets and remove investment barriers in national housing markets.
4. to raise awareness and to spread the knowledge of the importance of “green values” connected with energy efficiency investments. Aiming at directly affected investors and related consultants, financial institutions, politicians and to haves a special emphasis on education, training and research. Universities and other knowledge institution will benefit from the project.
RentalCal represent housing markets from eight EU member states (Czech Republic, Denmark, France, Germany, Great Britain, Poland, Spain and the Netherlands). These markets comprise a huge share of the EU’s largest rental housing markets with about 33 million dwellings and the private rental sector, with about 46 % of it built in the 198s0 or earlier, offerings great potential for energy efficiency investments.

Work performed

The relevant technical framework (housing stock and energy saving measures), the legal framework (rent and taxation regulations, building requirements and planning codes) and the institutional framework (relevant investors, parameters for and the constellation of decision taking) have been analysed. The market and financial framework conditions (including measures and best practice approaches for reducing/removing market barriers; grants and other subsidies; “green premiums” for energy efficiency; and overall financing conditions) have been looked into. This is supplemented by four empirical studies covering a German, a Dutch and two British cases relating to the evidence on green premiums.
All the listed framework conditions are put together in so called fact sheets, e.g. reports with eight country specific sections and a comparative descriptive analysis. All reports can also be downloaded from www.rentalcal.eu.
Describing the full variety of fact sheet information would be beyond the scope of this summary section, therefore only three major aspects will be mentioned:
1. Impact of energy efficiency investments on sales and rental prices. The case studies show that the rental markets respond to energy efficiency investments with higher rental returns from such dwellings. Additional benefits of energy efficiency investments are seen in terms of fewer vacancies and a higher chance of renting out such rental units. It also turned out that high EPC ratings in dwellings lead to a significant premium on sale prices relative to dwellings with an average EPC rating.
2. The relevance of the variety of investor types for private rented stock and the associated need for information. With an average of two thirds of the investors (28,559.377) managing 42,036.501 units in the private rented housing sector of the RentalCal countries, the private natural landlords are the primary project target group. Though this group is not homogeneous - between 50 % and 70 % of it consists of natural persons owning few dwelling units. Their lack of information and technical competences makes the need for external and local support a key factor for success with improving energy efficiency in the private rented sector.
3. Together with generating relevant knowledge, RentalCal’s main achievement had been the development of a methodology for the calculation tool for energy retrofits in rental buildings.

Final results

Considering the big share of EU’s large rental housing markets dwellings and referring to the EPI-SCOPE findings www.episcope.eu , cost effective emission reductions in the residential sector will account for 37 - 53 % by 2030 and up to 88 % - 91 % decreases of greenhouse gas emissions by 2015, compared to 1990 levels. It becomes evident that energy efficiency investments need a steady and even increased performance.
As the profitability of any investment will continue to stand out RentalCal energy efficiency prof-it(ability) tool offers an important device for the assessment of potential investments. The impact of the project is, however, broader than just the profitability assessment of energy efficiency investments.
Establishing a broad knowledge base relevant for energy efficiency investments and its dissemination to stakeholders contributes to the socio-economic impact: Starting with teaching and research activities at universities and entering into a dialogue with future stakeholders, consultants and politicians means building a broader basis for the issue of energy efficiency. Making the “tool to talk” familiar in the relevant communities of energy consultants, financial institutions, landlords and tenants will increase the understanding of the individual and the societal relevance of energy efficiency investments. Balancing the financial with the technical aspects of energy efficiency investments and the “affordability” of such refurbished stock for its users is the societal implication of the project. The knowledge base of RentalCal allows for governance strategies in order to balance individual landlords’, tenants’ benefits and the public goal of climate protection.

Website & more info

More info: http://www.rentalcal.eu.