Public loans, funds and grants in EU Member States, Ukraine & the UK

Brussels, Belgium Climate sustainability, Financial incentives


State housing development funds are well-established and effective instruments which are used by various member States across Europe. The European Investment Bank (EIB) also provides investment and co-financing for low-carbon technologies and housing projects.[1] This investment by EIB is established under the Emissions Trading Directive.

Slovakia has a state housing development fund in the form of favourable loans for investment in larger renovations (deep renewal), including thermal insulation of residential buildings and apartments.

The Danish National Building Foundation follows the same principles. It is used for large renovation projects and social development plans in distressed housing areas.[2] The Foundation is a revolving solidarity fund, and acts as a savings and investment account for the whole of the social housing sector in Denmark.

The Danish Government is also spending 30 billion Danish croons (EUR 4 billion on green renovations in the social housing sector as the first step towards green recovery[3]. The programme aims to raise the standard of older properties to reach contemporary energy standards, insulating exterior walls, roofs and ceilings, and replacing old windows with energy-efficient ones, to make substantial heat savings (between 30 per cent and 40 per cent).

In practical terms, the Danish scheme will cut 50,000 tonnes of CO2 and reduce energy consumption by approximately 500 gigawatt hours, which corresponds to the heat consumption of 40,000 typical apartments.

The scheme also has positive social implications. For example, due to the number of units being renovated, it will help to deliver “accessible” housing (e.g. old-age friendly) at around one third of the usual price. It will also get thousands of construction sector workers and apprentices back into the labour market.[4]

Austria has been providing relatively stable and affordable housing conditions for decades.[5] To finance new and renovated dwellings, each province designs subsidy schemes reflecting local policy preferences, providing long-term low-interest public loans with various conditions and target groups that differ across the provinces. While new construction is mainly financed via public loans, public funding for renovation is mainly via non-repayable grant funding (see section on revolving funds and auctioning in this chapter).

Typically, these loans start out with very low rates of interest and gradually grow in predictable steps over time. In turn, loan repayments and interest are reinvested into revolving funds for housing purposes in the provinces.[6]

In Estonia, a pressing housing policy concern is the quality and energy-efficiency of homes in apartment buildings. Many people live in apartments that were built between 1960 and 1990. These were privatized and, for the past 30 years, have relied on individual owners to maintain them. In the past decade, over 1,100 apartment buildings have been renovated, primarily in major cities, often with international financial assistance. However, rural apartment buildings have lagged behind, as have household incomes in these areas, and many buildings are now in a very poor state of repair and subject to demolition.

New legislation in 2018 has made it compulsory for owners to form an association, become more involved in managing their buildings, and take greater responsibility for ongoing maintenance. However, many property owners do not have the financial capacity to renovate their buildings to achieve high energy standards (C) or have a long-term plan for their maintenance.

Government support and rural economic development is therefore still required. However, a key problem has been unstable financing to support effective measures. So far, current renovation activities have not been sufficient to address needs.

For this reason, a national programme of renovation grants has been provided in strategic areas since 2019, and Estonia has recently approved a long-term national strategy[7] to achieve the full renovation of all buildings erected before 2000 by 2050. This strategy aims to improve the living and working conditions of 80 per cent of citizens and has set long-term targets to increase the number of renovations each year. It will employ state-funded loans, guarantees and grants, new technologies, information measures, and research and development. The apartment renovation strategy is not an isolated effort, rather it is part of national energy and climate plan of Estonia.

As Estonia has limited public sector resources, it looks to various EU funds, revenue from trading GHG emission allowances, and private funds through market-based services to fund its renovation plan.[8] Ongoing evaluation will be vital to adapting investment in rural housing, as the economic situation changes over time.

A French scheme, known colloquially as the Loi Denormandie[9], provides tax incentives to help investors to renovate housing in over 220 designated urban centres in France, in return for agreeing to rent the newly renovated dwellings to a reserved group of low-income tenants. This provides shared benefits for the purchaser and the tenant, who will be able to rent a higher-quality and less-costly home at an affordable price. From the investor side, housing costs of up to a maximum of either EUR 300,000 or EUR 5,500 per m² are eligible for the scheme, and the renovation costs must represent at least 25 per cent of the overall total investment. The renovation works must improve the energy performance of the dwelling by at least 20 per cent for apartments and 30 per cent for houses, attaining a minimum energy certificate of E.[10]

The German Kreditanstalt für Wiederaufbau (KfW) promotes the refurbishment of houses if they do not exceed a specific energy requirement for a comparable new house after refurbishment[11]. KfW has defined six levels of support for a building renovation into a “KfW Efficiency House”. If the cost and effort of a complete refurbishment are too high, it is also possible to select individual measures.

Financing is available, for example, for the thermal insulation of walls, roof and floor space, the renewal of windows and exterior doors, the installation/renewal of a ventilation system, and the optimization of heat distribution for existing heating systems.

Grants are also offered for quality control of executed construction works, sometimes in collaboration with the banks of the federal states (Landesbanken). Through the Hamburgische Investitions- und Förderbank, which is an investment and development bank, direct subsidies are offered for implementing a higher standard within the social housing programme and energy improvement measures including construction works quality controls. 50 per cent of the costs of a technical expert and up to EUR 4,000 can be granted.

Another example of pre- and post-renovation monitoring that is dedicated especially to social housing comes from the Netherlands. There, the concept of the zero on the meter (nul-op-de-meter) renovation target is defined as a building (usually social housing renovation projects) in which the yearly building-and user-related energy consumption equals the generated renewable energy in the building and surrounding area, for example with photovoltaic (PV) panels on the roof.[12]

The Slovenian Environmental Public Fund (Eco Fund) was established in 1993. Its main purpose is to promote development in the field of environmental protection by offering financial incentives such as soft loans and grants for different environmental investment projects. It began with soft loans for investments in environmental protection as a revolving fund. It has provided support to environmental investments through soft loans and developed a strong focus on the financial sustainability of the projects it supports. In 2008, the Fund was granted the use of additional financial mechanisms, such as grants, to support environmental investments.

A few years ago, Eco Fund took over the organization and financing of a free energy advisory network, offering free expert advice on how to improve energy efficiency for households. It also took over part of the task of energy poverty reduction by covering the entire cost of several environmental investments of households struggling with energy poverty. Currently, Eco Fund is facing new challenges, such as adapting financial incentives to meet the new demands of national strategies that set additional tasks for the Fund: larger energy renovations vis-à-vis smaller renovations, a higher number of required renovations, the stimulation of the remaining, unrefurbished building stock, energy poverty reduction, the development of innovative financial instruments, etc.

From 1 January to 31 December 2019, a total of approximately EUR 62 million subsidies were paid by Eco Fund to various beneficiaries, namely:

  • EUR 41,618,294 – for energy-efficiency and renewable energy measures in residential buildings, including self-sufficiency in electricity
  • EUR 35,528 – for the performance of energy audits in companies
  • EUR 1,897,005 – for energy-efficiency investments by companies
  • EUR 8,797,908 – for investments by municipalities in the construction of nearly zero-energy buildings
  • EUR 9,415,548 – for environmentally friendly electric vehicles and buses
  • EUR 335,774 – for charging stations for electric cars in the Natura 2000 area and protected areas.

In Spain, the “Plan Estatal De Vivienda 2018-2021” programme aims to finance renovation work to improve energy efficiency and sustainability, with special attention paid to the building envelope in buildings of a collective residential type. The maximum amount of the subsidy is between EUR 8,000 and EUR 12,000 per home (which can be increased if the property is declared an Asset of Cultural Interest or if disabled people reside there), or 40 per cent of the eligible investment (which can reach 75 per cent, depending on the level of family income). Eligible actions include the improvement of the thermal envelope; the replacement of carpentry and glazing of the openings, or others, including the installation of bioclimatic and shading devices or the installation of residual energy recovery devices; the implementation of free cooling (process of using external ambient temperature to reject heat, rather than using a refrigeration process that consumes electricity) using outside air and heat recovery from the provision of fresh air; and the connection of homes to existing heating and cooling networks.

An interesting complement is the Spanish national programme on energy rehabilitation of buildings – Programa Rehabilitación Energética de Edificios (PREE) – with a budget of EUR 300 million[13], that forwards funding to public housing and energy communities. An important aspect of the PREE, in addition to its positive effects on improving energy efficiency and the environment, is its social scope: special attention is paid to renovation in buildings that accommodate vulnerable groups affected by energy poverty. In line with the National Strategy against Energy Poverty 2019-2024, additional aid is granted for renovation in housing buildings whose owners have been granted the social bonus – the “bono social eléctrico” is as a public mechanism to address energy poverty – as determined in the selection process carried out by the regions.

The city of Barcelona offers grants for up to 55 per cent of the cost of renovations for solar energy generation (both for individual applications and those submitted by a community of owners), and for up to 50 per cent of the cost for comprehensive energy improvements[14]. The Spanish Government has approved a EUR 20 million (USD 22.5 million) subsidy scheme to support the installation of solar PV capacity on the Canary Islands (Solares en Canaria – SolCan). The SolCan programme for 2020 was expected to spread the public funds across projects that are likely to bring 150 MW of PV power to the archipelago, according to the Ministry for the Ecological Transition and the Demographic Challenge.

In the Netherlands, the Renovatieversneller (renovation accelerator)[15] programme focuses on rental and owner-occupied homes by offering conditional and varying grants. It aims for scale, e.g. through initiatives to industrialize production, and runs for three years, between 2019 and 2022. The programme has already contributed to making 100,000 homes free of natural gas. About half of these houses will be connected to local heat networks, mostly in urban areas where this technique is already widely used. In addition to technical assistance, 100 million euros is available in grants over four years.

The Energy Efficiency Fund was created by the Ukrainian Government, in order to support energy-efficiency initiatives, implement incentive tools, and support measures aiming to increase levels of energy efficiency in buildings and energy-efficiency measures in the residential sector. This is done with due consideration for the National Plan of Energy Efficiency, and with the aim of reducing CO2 emissions to fulfil the Paris Agreement. The Fund provides support in the form of grants to homeowner associations for the implementation of comprehensive technical solutions for energy-efficiency renovations in multi-family buildings, while factoring in the best European thermal modernization practices. Activities are funded from the State Budget and supported by the European Union and the German Government. The Energy Efficiency Fund Programme is implemented in cooperation with the International Finance Corporation, Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, and the United Nations Development Programme.

In Austria, many direct investment programmes have improved the energy efficiency of rental, ownership and affordable housing by raising standards, researching materials and processes, and granting subsidies for suitable measures. The most important schemes are the “housing promotion schemes” of the nine Austrian provinces, which all have dedicated programmes for new construction as well as for renovation. Subsidies can only be provided on the condition that housing built or renovated will meet higher energy and heating standards. These subsidies have usually been designed as a contribution to investment costs (mainly for renovation) or as a loan (mainly for new construction) with reduced interest rates. Renovation subsidies account for about a quarter of total spending on housing by regional governments.

Limited-profit housing in Austria is already rather energy efficient, due to earlier efforts and a good recycling of surplus funds towards housing maintenance and improvements, as required in the law. A specific measure that has already been implemented is a subsidy to replace oil and gas boilers with renewables or low-carbon district heating systems. It is a federal subsidy but can be combined with similar subsidies at the regional (provincial) level. Whereas in the beginning it was mainly addressed to owners of single-family homes, it has recently been extended to owners of multi-family houses. For 2021 and 2022, a total of EUR 650 million is dedicated to this initiative[16]. The measure is limited to a maximum grant of EUR 5,000 per home. With two thirds of all homes of limited-profit housing associations already being connected to district heating systems, other sectors (including single-family homes) are likely to be the main beneficiaries of this initiative.

Wales, United Kingdom, committed GBP 20 million to its Optimised Retrofit Programme, which looks to reduce the carbon footprint of existing social housing in Wales, make energy bills more manageable for residents, and provide new, local job and training opportunities. It is funding the retrofit of over 1,000 homes and is supporting the social housing sector under different approaches to reach carbon neutrality.

This Programme funds the collaboration of 68 partners, including 26 housing associations, which aim to make building fabric improvements, use low- and zero-carbon technologies, and install intelligent ongoing operational controls. The project will retrofit a wide range of building typologies and develop a variety of digital tools to enable each home to be easily and quickly surveyed.

There is a focus on the foundational economy, to ensure that the funding improves the way the local economy works in Wales by developing growth to vital services and goods. As well as social housing providers, this large-scale collaboration of partners includes a range of research, innovation, academic, technology, energy, industry organizations from across the United Kingdom.

The Programme is funding a Citizens Assembly, which is run by four Welsh housing associations, third-sector organizations, and a local authority.  The Citizens Assembly recommendations inform the decarbonization decisions of housing associations, the regional government and local authorities.



More information

[1] EIB, EIB Energy Lending Policy: Supporting the energy transformation (November 2019). Available at (accessed on 8 October 2020).

[2] Landsbyggefonden, “The National Building Foundation”. Available at (accessed on 10 October 2020).

[3] Housing Europe, “Green recovery for Denmark: a new renovation scheme for the social housing sector”, 13 May 2020. Available at (accessed on 23 November 2020).

[4] Ibid.

[5] For a profile of the Austrian Federation of Limited-Profit Housing Associations (GBV), see (accessed on 10 October 2020).

[6] Wolfgang Amann, Alexis Mundt and Walter Hüttle, “Austria: Social housing providers at the forefront of energy efficiency” (2011). Available at

[7] Tallin Technical School, “Long-term strategy for building renovation”, July 2020. Available at

[8] Ibid (2020), p.61. In the coming years, the measures of the long-term renovation strategy will be implemented using the State’s tax revenue, the funds of the EU budget framework for 2014-2020 (above all, the funds of the European Regional Development Fund, the Cohesion Fund and, to a lesser extent, Horizon 2020), and the auctioning revenue from the EU scheme for greenhouse gas emission allowance trading (in accordance with the objectives listed in Article 10 (3) of Directive 2003/87/EC117, subsection 161 (4) of the Atmospheric Air Protection Act and the State’s budgetary strategy).

[9] For more of the scheme, see

[10] For information on this law, see

[11] KfW offers loans according to efficiency house level (

[12] Olivia Guerra-Santin and others, “Designing for residents: Building monitoring and co-creation in social housing renovation in the Netherlands”, Energy Research & Social Science, vol. 32 (October 2017), pp. 164–79.

[14] Housing, Barcelona, “Grants for energy-saving renovations”. Available at (accessed on 10 October 2020).

[15] De Renovatieversneller. Available at (accessed on 23 November 2020).

[16] Klimaaktiv, “Funding campaign 2021 for thermal building renovation and boiler replacement “out of oil””, 8 April 2021. Available at