The first paragraph of our article has been updated due to the change in the call for tenders.
At the beginning of April, the state secretaries of the Ministry of Energy and the Ministry of National Economy jointly announced that they will announce a new residential energy efficiency program with a budget of HUF 108 billion from the resources of the REPowerEU chapter of the EU recovery fund (RRF). According to the original announcement, the Home Renovation Program, which starts on June 3, can be used by owners of family houses built before 1990 and connected to the gas network, among other things, for insulation, replacement of windows, and heating system modernization. in the case of single-family houses, the condition of being connected to the gas network was removed from the call for tenders, thus significantly increasing the potential range of applicants.
The condition of the support program is that the investment must achieve an energy saving ratio of at least 30 percent, which must be verified with the help of an energy certificate before and after the investment.
The support can be used up to a maximum investment amount of HUF 7 million. Applicants must provide a deductible of HUF 1 million, the remaining part of up to HUF 6 million will be divided between a non-refundable grant and an interest-free loan. The capital debt of the loan can be reduced by a maximum of HUF 2.5–3.5 million from the non-refundable subsidy. The latter rate will depend on the claimant’s income situation, as well as the level of development of the district where the property is located. The lower the average income in a given district, the higher the amount of non-reimbursable support for those living there can be. The loan must be repaid within 8 years, so your monthly installments can range from HUF 25,000 to HUF 36,000.
The organizer of the program is Magyar Fejlzéstési Bank Zrt., the technical collaborating organization is ÉMI Építésügyi Minősésvernőrző Innovations Nonprofit Kft. Applications can be submitted at the MFB points of commercial banks.
Due to the involvement of banks, the range of users may be narrowed
In Hungary, there may be more than one million properties that were independent family houses built before 1990, and whose owner is entitled to the subsidy. According to estimates, the framework of the home renovation program will be sufficient to renovate roughly 30,000 apartments. In this way, there will certainly be no shortage of building materials, even the domestic capacities will satisfy the demand – he explained to our newspaper Attila Juhászthe president of the building materials trade section of the National Association of Construction Contractors (ÉVOSZ) and Újház Zrt.
According to Hungary’s RRF plan, the cabinet planned to spend HUF 224 billion on the program, which was reduced to HUF 197 billion this year and then to HUF 109 billion. At the same time, the government promises that the remaining HUF 90 billion will be spent primarily on the transition to green energy and on further modernization programs.
The program will be implemented and the loans will be issued with the involvement of commercial banks, Juhász pointed out. The consortium of Gránit Bank, MBH Bank and OTP Bank won the public procurement for the establishment of the MFB Pont Plusz residential network, these three banks will be able to offer the discount loan.
The main concern is precisely that
the range of beneficiaries may be narrowed by stricter banking requirements,
since, similar to market borrowing, there will be credit evaluation criteria related to income and public debt exemption, among other things. The conditions of the loans are not yet known.
Despite the fact that the loan is interest-free, the involvement of financial institutions may have been deemed necessary by the government in terms of credit assessment. At the same time, in the case of old real estate, there may be a larger number of older citizens among the owners who would like to apply for the discounted loan, but in their case, the question may arise as to whether they can get a loan, he added. Banks typically do not give loans to very old customers. According to the money.hu credit comparison site, the upper age limit is generally set at around 70 years old. However, in most cases, the upper age limit applies to the time the loan expires, not to the time of application. Thus, if, for example, the upper age limit in a bank’s regulations is 70 years, and the loan has a term of 8 years, the customer must be 62 years old or younger when applying.
The Hungarian Energy Efficiency Institute (MEHI) warns that it is expected that a mortgage registration will be required to use it, so according to the regulations, properties cheaper than HUF 7.5 million may be excluded from the range of applicants.
Similar to subsidized business loans with zero interest
in the case of this program, the bank interest will also be financed from the EU framework or state resources.
It is not yet known how much money will be provided for this.
The contributor of the tender received a lot of criticism
The fact that ÉMI Nonprofit Kft. also participates in the tender process, similar to the residential solar tender with non-reimbursable support, which is also financed from the EU RRF framework, may raise concerns among many. We previously wrote several times about the fact that, in addition to an extremely slow, cumbersome and bureaucratic assessment, two years after the program was announced, there was not a single contractor who was fully paid in the solar program conducted by ÉMI.
There is a consensus that we have never seen such a poorly compiled and managed application from the supporter’s side
– said the manager of one of the market-leading solar system construction companies, A1 Solar Kft., about the program.
In the application managed by the company, it was precisely the settlement and reporting obligations that caused the most disruptions, according to the reports, ÉMI placed an unjustified administrative burden on the public and the companies handling the applications. This was so great that last July the system had to be simplified under pressure from the European Commission.
A former employee of the organization also checked in with our newspaper earlier, and according to him, the non-profit ltd. even two years after its establishment, it operated without a stable organizational structure and process descriptions, while the tasks of the employees were not clearly defined. In addition to huge turnover, “a significant number of project managers and group leaders in leadership positions have never worked in the tender field, they only got in through acquaintances and were appointed that way,” wrote our reader. We previously confronted ÉMI and the Ministry of National Economy, which supervised the organization at the time, with the criticisms, but they did not want to respond to our suggestions.
The legislator did not officially explain what role the ÉMI will play in the tender, in addition to the MFB, and the experts who spoke to our newspaper could not say this exactly either. Thus, it is far from certain that the organization can have such a key role in the current program as it does in the case of the solar tender. Based on the NGM’s announcement, it is known that the ÉMI will create an interface, with the help of which the future applicant can calculate the expected costs and energy savings in advance. In addition, they also try to help applicants find the right professionals with contractor certification.
A big question is whether the suspension of solar payments was caused by the practice of ÉMI, or whether the support resources were not available, he told our newspaper Béla Markovich, managing director of Mapei Kft. According to his knowledge, the organization is now more prepared, they have done a lot in order to be able to perform well in the home renovation program and to respond meaningfully to the challenges of the organization.
This is what you can count on for certificates
It is expected that an energy certificate must be prepared before and after the subsidized investment. “At the moment, we are expecting difficulties in how the professionals authorized to issue the certificate will be able to satisfy the large number of requests appearing in a short time,” said Markovich.
On the part of the applicants, it may be an additional task to collect data about their property, for example, to obtain the title deed from the land office. Knowing the necessary parameters, however, it will not be a difficult task for the certifiers to determine what renovations and modifications are necessary in order to achieve a minimum 30 percent energy saving after the works. Among other things, knowing the building structure, the state of thermal insulation and the heating system, they can routinely calculate and determine what interventions are necessary, he added.
Today, in the case of a real estate purchase, the preparation of an energy certificate appears as an expectation. This certificate precisely determines which energy class the building belongs to, and on the basis of this, it can be determined quite precisely how much energy savings can be achieved with the various interventions, confirmed Attila Juhász. The issuance of an energy certificate costs approximately HUF 30-50 thousand. It is not clear whether a subsequent condition inspection will be necessary after the investment. If this is also required, then the cost of the on-site inspection will have to be reduced twice to the energy certifiers.
It is not yet known who will have to bear the costs of the energy efficiency survey. According to the expert, it can be clearly read from the announcement that the cost of the certificates will be accounted for in the subsidy.
Are applicants threatened by price increases?
Based on the average price per square meter, construction industry wages increased by 18 percent in 2023 compared to a year earlier, crossing the psychological threshold of ten thousand forints, according to Mapei Kft.’s research. Will this year hold a similar unpleasant surprise for lower-income customers who would use the home renovation subsidy?
According to Béla Markovich, it is typical of the contractors’ attitude that they try to pass on the price increase that can be seen in their “life”, in their business environment, to the customers. The fees have included the fact that wages have increased to a greater extent.
Parallel to the rise in prices, however, the construction industry went into decline, the sector’s output shrank by 5 percent last year compared to 2022. The drop in residential demand was remarkable: the number of issued building permits and simple notifications fell from 35,000 to 20,000. Although the sector has already started to grow this year, the number of contracts fell by 15 percent in January and by 7.6 percent in February compared to the same month of the previous year.
According to the manager of Mapei Kft., there is no increase in wages either.
Due to the decrease in orders, the competition between the players in the sector has become much sharper. In previous years, it was typical for construction industry bids that 3-4 contractors competed for a given job, but now there are more like 10-20 contractors in line. Customers can quickly avoid a company whose pricing is too thick.
The period of abundance in the construction industry is over, there is now a lot of free capacity. In the sector, the home improvement program is seen more as a lifeline than a lucrative business opportunity
– evaluated Attila Juhász.
By itself, the increase in demand stimulated by the program can hardly raise prices at the sectoral level, since the 108 billion frame is only 1.5 percent of the total, approximately 7,500 billion annual construction industry production, Markovich added. Company managers as a whole
in 2024, the contractor expects a price increase commensurate with inflation, not exceeding 10 percent.
What can be disadvantageous from the customer’s point of view is that the upswing caused by the program can put more pressure on facade insulation and window and door installation specialists and building engineers. In their case, the waiting time and commitment deadline may increase somewhat, especially for professionals performing quality work.
Among the raw materials, EPS-based insulating materials (commonly known as styrofoam) rose in price by 10 percent in the last two months, and the price increase continued in April. Price changes in this range of products depend on world market trends, including oil prices. In this round, an additional price increase of more than 10 percent is conceivable, similarly for board insulation materials, explained the president of Újház Zrt.
Tags: Home renovation program retired applicants afraid
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