Incentives through Transparency: European Rental Housing Framework for Profitability Calculation of Energetic Retrofitting Investments

Project Information

RentalCal

Grant agreement ID: 649656

DOI

10.3030/649656

Project closed

EC signature date 5 February 2015

Start date 1 March 2015

End date 31 July 2018

Funded under

• SOCIETAL CHALLENGES - Secure, clean and efficient energy

Total cost

€ 1 996 766,25

EU contribution

€ 1 996 765,75

Coordinated by

INSTITUT WOHNEN UND UMWELT GMBH
Germany

Periodic Reporting for period 2 - RentalCal (Incentives through Transparency: European Rental Housing Framework for Profitability Calculation of Energetic Retrofitting Investments)

Reporting period: 2016-12-01 to 2018-07-31

Summary of the context and overall objectives of the project

RentalCal addressed the building sector with its 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. RentalCal broadened the financial perspective from owner-occupier to the wide range of professional and non- professional landlords.
As for the profitability related to energy efficiency investments the analysis of upfront costs and the resulting financial benefits (for the investor reflected in higher rental and/or sales premiums and lower vacancy risks, for the tenant in increased energy savings), was prominent for the development of the RentalCal web based tool. Keeping this in mind RentalCal aimed at three objectives:
1) To develop a standardised methodology for the profitability assessment of such investments
2) To provide transparent and comparable information on the prerequisites of such investments given in the beneficiaries’ states, including a cross-country comparison and
3) To raise the awareness and spread the knowledge of the importance of “green values” connected with energy efficiency investments.
These overall objectives have been translated into the RentalCal web based tool, a “tool to talk” in order to strengthen the dialogue between housing sector, consultants and financial market actors in the private sector, with an emphasis on the different categories of landlords.
Investing into energy efficiency is of investors’, tenants’ and society’s interest: 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 1980s or earlier, offerings great potential for energy efficiency investments and contributing to energy saving and CO2 reduction.

Work performed from the beginning of the project to the end of the period covered by the report and main results achieved so far

RentalCal’s results relate to the three mentioned objectives
1) The RentalCal web based tool offers profitability calculations for different types of energy efficiency investments into the rental housing stock. The RentalCal tool applies a dynamic calculation model in the form of a complete financial plan (the so called VoFI) which is used to test the profitability of energy efficient modernisation procedures in rental housing and is applicable to each type of residential housing stock. As a result the tool shows the Return on Equity and other important key performance indicators from an investor’s perspective as well as the consequences on net rent and gross rent from a tenant’s point of view. Moreover the ‘green’ benefit of an investment, i.e. the reductions of CO2 and primary energy consumption are shown. Finally, the RentalCal tool also points out the additional non-monetary impacts of the refurbishment like e.g. positive impact on inhabitants' health.
2) Behind the tool a great deal of substantive information on framework conditions (technical, legal, financial and institutional) of eight member states are available. The cross country comparison has been condensed to five pagers dealing with the framework conditions, a policy paper with policy recommendations and national fact sheets. The place to find all these information is the online information platform (www.rentalcal.eu).
3) Professional stakeholders as well as the young academic generation trained at the six partners’ universities have been made familiar with the RentalCal results, the tool and its background information. University education includes RentalCal. The tool will come to its full success rather at the end of the lifetime of the project and beyond. There is positive feedback from testers who state the RentalCal tool is e.g.: ‘…a useful support for the strategic decision making process’ and a ‘(…) interesting tool for a ‘quick check’ especially for smaller housing companies and non- professional landlords.’
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.
Exploitation and dissemination of the RentalCal findings takes place in University education, in applying the tool by the housing sector, i.e. energy consultants, landlords, and rather lately the financing sector as green financing and green premiums gets higher attention. Policy recommendations digested from the project are used in national contexts.

Progress beyond the state of the art and expected potential impact (including the socio-economic impact and the wider societal implications of the project so far)

The creation of the RentalCal tool accessible in seven EU languages and delivery of a wide range of technical, legal, financial and investor types framework conditions reflecting eight member states investment condition is a remarkable progress going beyond the state of the art. The tool builds upon existing tools of TABULA and EPISCOPE and integrates a broad green value approach (e.g. rent increases, exit values, energy savings and non-monetary impacts).
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.

RentalCal tool - Methodology diagram

Project logo

RentalCal project poster