The “Renovate the Grandma’s House” programme
About 56% of family houses in the Czech Republic, were built before 1980. These old properties, while theoretically valuable in the millions, typically have poor technical conditions and high energy consumption, therefore requiring major renovation investments. Consequently, for some owners it is more cost-effective to demolish and rebuild them, than to modernise these properties, as the main obstacle lies in their financial constraints.
The support provided by programmes such as the New Green Savings and ‘Renovate the Grandma’s House’ (Oprav dům po babičce) could alleviate these difficulties by covering more than half of the renovation costs. Specifically, the latter was introduced by the Ministry of the Environment in mid-July 2023 with the aim of accelerating the renovation process of older buildings, helping to revitalize the nation’s existing housing stock, and offering young families the opportunity to secure affordable housing options.
This initiative, which is part of the New Green Savings program, was launched last year in September, offering advance financing for these complex property renovations.
Details and conditions of the program
As already mentioned, the program aims to accelerate renovations in order to reduce buildings’ energy consumption and use the existing housing stock to increase the availability of affordable, high-quality housing. According to the Czech Statistical Office, in fact, approximately 17% of family houses in the Czech Republic are uninhabited, representing a huge potential resource. The programme aims to exploit this resource to avoid urban sprawl and preserve agricultural land. The aim of this programme is to offer to young families the possibility of securing decent, yet affordable housing, despite the high cost of living and the limited availability of mortgages.
The subsidy can be applied for by economically active owners of a single family house or recreational property used as a permanent residence, and the condition for obtaining the support is the implementation of complete and optimal energy-saving insulation that leads to a reduction in energy consumption. All members of the household must have permanent residence in the property and reside there for at least 10 years after the project is implemented.
Programme Benefits and Additional Support Options
Basic support covers up to 50 % of direct implementation costs until a maximum of one million CZK. It is paid in advance and people can apply by filling in a form available on the State Environmental Fund website (https://novazelenausporam.cz/) specifying all measures to be carried out.
The program also supports other energy-saving measures, such as the installation of photovoltaic systems, the replacement of obsolete heat sources and controlled ventilation with heat recovery. Applying for this additional subsidy in the same application gives access to an additional combined bonus of CZK 10,000.
Finally, applicants can receive a family bonus of CZK 50,000 for each child and a bonus of 10% of the total subsidy amount if they are located in designated regions, including Karlovy Vary, Moravian-Silesian regions and Ústí .
This subsidy aims to prioritize the renovation of older properties over new construction, while also taking into account the needs of those who do not possess adequate financial resources. Therefore, funds are disbursed in advance, in some cases even before the works begin. For example, a family residing in an outdated, uninsulated property with high operating expenses can apply for a grant through the “Renovate the Grandma’s House” program to optimize insulation and install new generation heating systems, photovoltaic systems, or green roofs. Recipients will receive financial support upfront and, starting in March 2024, they can also apply for a specific loan with favourable terms to cover the remaining part. Along with the subsidy, this loan will cover renovation costs, ideally requiring little or no upfront savings from the household.
The program has received great interest, such that by the end of February 2024, 1.232 applications for advance subsidies for complete home renovation had already been received by the SEF.
Subsidized loans for insulation and renovation of old buildings
Starting in March 2024, in addition to the subsidy, applicants have the possibility of applying for a long-term subsidized loan without the need for a real estate loan. The terms for such loans will be defined during 2024, with interest rates expected between 3% and 4%.
Economists approve of this initiative, calling it an excellent financial tool to ease the administrative process with the possibility of reinvesting the returned funds in further renovations.
The initiative provides for repayment of the loans through small installaments. This way, the full amount can be amortized over 20 or more years, enabling households to reduce housing costs in the immediate term and benefit from lower energy bills in the long run.
Financing for subsidized loans will be provided in equal parts, interest-free by the SEF (financed by the Modernization Fund), construction companies, and financial institutions. This combined approach will result in halved interests, with a fixed rate for at least five years. For 2024, the maximum APR is set at 3.5%.
In conclusion, the combination of the soft loan and the initial upfront subsidy will enable Czech households to increase their renovation efforts. These funds will not only boost household savings but also stimulate economic growth through the multiplier effect, while the repaid funds will be reinvested to support further energy-saving initiatives.
The program resulted in increased interest in old real estate properties
Such Grandma’s House Renovation program has increased interest in buying old houses. The subsidized loans for insulation and partial renovation of the property have expanded the eligibility of properties subject to the program so that more than 15% of old houses can benefit from it, and their average price is found to be 20% lower than the average price of houses in general.
Last year, old houses experienced the most significant price decline of all time, falling in some cases by 34%. This, together with the possibility of obtaining support during renovation, has increased the demand for old real estate properties that have emerged as an attractive alternative for those who want a home of their own but for whom apartments in large cities are configured as unaffordable.
In conclusion, the Renovate the Grandma’s House program stands as a key initiative in the Czech Republic’s housing renovation landscape, offering substantial support to improve energy efficiency and the quality of existing homes. Through generous subsidies and subsidized loans, the program not only aims to meet climate and energy-saving goals, but also offers significant economic opportunities for households. Increased interest in buying older homes and improved housing conditions highlight the positive impact of this initiative, which is expected to continue to benefit young families on their path to decent and sustainable housing.
Sources: https://cijeurope.com/, https://www.expats.cz/, https://www.e15.cz/, https://www.ceskenoviny.cz/, https://novazelenausporam.cz/
