European Policy measure fact sheet Construction Sector Czech Republic Observatory Panel 2013+ Programme Thematic Objective 1 October 2015 Implementing body: Ministry for Regional Development, Figure 1 below represents the Government’s action plan for the State Housing Development Fund construction sector in Czech Republic. Panel 2013+ is in the list of Key features & The Programme is designed to provide priority measures for the construction sector. objectives: financial support for reconstruction and modernisation of all types of blocks of Figure 1: Support in construction sector flats, which must include measures leading to reduced energy intensity. Implementation date: 08/08/2014 - 2020 Targeted beneficiaries: Households, Construction companies, Trades people Targeted sub-sectors: Construction and related trades, Energy service sector Budget (EUR): € 22 Million (2015) € 23.3 Million (2016) In a nutshell In the Czech Republic, the majority of residential blocks were built between 1954 and 1994; nearly 1.2 million flats were built under prefab technologies across the country. 1 Technological faults were a feature of this type of construction at the time creating low- quality housing. Poor insulation, water leakages and a weakening metal structure in these buildings have an impact on safety of occupiers and energy loss; therefore consumers are paying a high price for the inefficient building. Further, modernisation of these blocks requires substantial financial resources. 2 Today, approximately 25-30% housing blocks have been reconstructed and modernised in order to achieve increased energy efficiency and improved overall housing quality. The Czech State Housing Development Fund launched the Panel 2013+ programme in August 2014 (Government Regulation No. 468/2012 Co 3) as an initiative designed to provide financial support for reconstruction and modernisation of all types of blocks of flats across the country. Source: Ministry of Regional Development, 2015 4 Construction Overall, Panel 2013+ advantages are: natural and legal persons, State Housing Development Fund (SHDF) accepts applications cities or municipalities owning apartment buildings. for the program any time and there are no strict deadlines for applications to be received. Due to large demand from The eligible activities under the programme include: 6 apartment owners, the budget for 2016 has been increased; waterproofing infrastructure; The program applies to the whole territory of the Czech Republic; repairing balconies (replacement of the original balconies for It is particularly suitable for apartment building owners who are new balconies); renovating to meet the prescribed minimum amount of energy thermal insulation of the external walls of the block; savings and/or want to carry out repairs and modernisation which are energy saving oriented; thermal and hydro-insulation of the roofs; Panel 2013+ supports comprehensive renovation and repairing stairs, elevators, walls and pavements; modernisation that leads to increased building life expectancy. installation of thermo-solar panels used to produce heat or hot The application process takes an average of 14 days, signing water to houses; the credit agreement within one month. modernisation of air-conditioning; General description repair and modernisation of distribution of electricity, technical installations and gas infrastructure; The main aim of this initiative (2013–2020) is to provide low improving central heating system, which includes the use of interest loans by means of the State Housing Development Fund. renewable energy sources that can be connected exchange piping and radiators and possibly replacing/installing new heat Figure 2: Trends in housing completion and modernisation consumption meters. in the Czech Republic 1997–2014 SHDF in an effort to motivate owners to renovate and modernise houses blocs with a view to ensuring a faster repayment of loans granted to the differentiation of interest rates. The interest rate will be derived from the European reference rate which is 1.09%. The final interest rate will be calculated based on the applicant's creditworthiness and applying conditions of the SHDF. Table 1: Interest rates Loan Interest over repayment period duration 10 years reference rate of the European Union, but at least 0.75% Source: Ministry of Regional Development, 2015 10-20 years reference rate of the European Union, but at This policy measure is a long-term programme, which has specific least 0.75% + 1% objectives to support repairs and modernisation of housing block. 20-30 years reference rate of the European Union, but at Loans can be used for the repair and modernisation of the least 0.75% + 2% foundations, the building envelope, the shared spaces of houses and Source: Ministry of Regional Development technical installations, the repair and modernisation of the sanitary infrastructure, and are provided in three possible period of Example of interest rates calculation for Panel 2013+: repayment: 10, 20, and 30 years. For each band, the interest rate is fixed for the whole life of the loan. The loan can be granted for up With the total investment costs 0.22 million Euros (6 million CZK) 5 to 90% of the investment sum. and the loan amount 0.18 million Euros (5 million CZK) with an Panel 2013+ is designed for all owners of apartment buildings, interest rate of 1.09% for 20 years gives the applicant current rate regardless of the technology of construction of a residential of 3.5% advantage in terms of overall savings of 0.05 million Euros building: (1.41 million CZK). Total amount of state aid is 28% (saving on interest for the loan's repayment period). cooperatives, associations of owners of individual housing, Country: Czech Republic 2 Figure 3 Interests rates calculations Table 2 Status of Panel 2013+ programme Budget 2016 23.3 million Euros Number of applications 5 (0.5 million Euros) Loan 5 (0.5 million Euros) Credit agreements 52 (8 million Euros) Source: State Housing Development Fund (the figures were updated on the website on 16 September 2016) 9 The programme has proven to be popular. The list below provides an example of projects that successfully implemented Panel 2013+ programme: Capital city Prague, Central Bohemian Region, South Bohemian Region, Pilsen Region, Karlovy Vary Region, Usti Region, Liberec region, Hradec Kralove region, Pardubice Region, Highlands region, South-Moravian region, Olomouc region, Moravian- Silesian Region and Zlín Region. 10 For example, Panel 2013+ has made significant impact in Prague city. Dum na sídlišti Košík: apartment owners in total received 10.57 million Euros. The funds were used to repair water infrastructure, installation of heating system and replacing old windows and the roof of the house. Dum v Praze 10: community has received a support of 11.34 million Euros. The funds were used to repair leaking water pipes and roof, modernisation of air- conditioning system in the whole building, replacing windows and repairing balconies. Bytový dum Praha 4 – Háje: apartment owners benefit of 9.3 million Euros fund, which supported water Source: R. Mueller, Finance.cz 2013 7 infrastructure, replacing old windows, improving heating system. Therefore, Panel 2013+ programme ensures an optimal return on Dum v Praha 4, Zdiměřická: received 5.2 million Euros fund for the funds it invests, in terms of possible sources of financing, the renovating the entire house. These examples listed above are not number of renovation funded and in terms of repayment options for the only examples which Panel 2013+ programme completed. applicants. Further examples can be found on Ministry for Regional 11 Development, State Housing Development Fund´s website. The impact of this measure has a positive spill over which has a Table 3 Energy savings in modernised buildings multiplication affect: 0.03 million Euros (1 million CZK) will bring 0.15 million Euros (4.28 million CZK) to construction sector and 0.06 2008-2010 2011-2013 2014-2016 2017-2020 million Euros (1.5 million CZK) back to the Government’s budget. At (estimate) the same time, the house will be less energy intensive. 1.192 PJ 0.198 PJ 0.486 PJ 0.648 PJ Achieved or expected results Source: Ministry of Industry and Trade, 2014 Overall, stakeholders’ interview identified strengths and Applicants do not need to wait for specific opening dates to apply weaknesses of Panel 2013+ for the loan. There are no strict deadlines requested from the SDHF. This measure is planned to run until 2020. Strengths of the programme: Low interest rate; In 2015, the SHDF received 120 applications worth more than 19 Complexity of the repairs and autonomy in project million Euros (506.7 million CZK). 143 contracts were concluded for management; 22 million Euros (585.5 million CZK). 13 credit commitments of 2.1 Use for the panel and brick houses (construction technology million Euros (56.2 million CZK) were also granted, which goes into does not matter); 2016. By 2016, 11 active applications were submitted for 1.8 A wide range of borrowers/beneficiary: housing associations, owners’ associations, natural persons and legal entities, million Euros (50 million CZK). 8 municipalities; Country: Czech Republic 3 The amount of the loan can cover up to 90% of budgeted SDHF indicated that advantages for a consumer is that with Panel costs for repair and modernisation of the house (in 2013+ programme owners of the flats are able to save energy costs compliance with the minimum limit). as the modernisation of old equipment, including changing of windows and repair of roof, has been made. According to SHDF Weaknesses of the programme: annual report and energy estimation calculated by SHDF, 17 Owners of apartment buildings note limited funding consumers has particularly felt the advantages of the programme availability. being able to reduce their heating costs since the new heating 18 Perspectives and lessons learned system infrastructure has been renewed. Interview analysis with stakeholders indicated that the chosen According to interview analysis, all interviewed participants believe average duration for repayment of the loan is 10-20 years.