Barbara Steenbergen: Green Deal cannot be paid by the most vulnerable tenants

This article is part of our special report The future of affordable housing.

The European Union must ensure that nobody is evicted when houses or apartments undergo major renovations, says Barbara Steenbergen. Moreover, rent increases if they occur, must be fully balanced by energy savings, she argues.

Barbara Steenbergen is the Head of the International Union of Tenants (IUT) EU liaison office, which she established in 2008. She is Vice-Chair of the Tenant Union of Bonn, Germany, and chairs the European Responsible Housing Awards jury.

The EU proposed the revision of its climate, energy and transport-related legislation under the so-called ‘Fit for 55 package’ to align current laws with the 2030 and 2050 ambitions. From your point of view, what are the main challenges and benefits of Fit for 55 to the most vulnerable households?

Tenants are 30% of the population of Europe, and the figures are growing. Less and less people can afford to own a flat, especially in times of pandemic. When you look at the Eurostat figures, you see that in comparison, the costs of living in rented housing as a tenant are higher than someone who lives in their own flat. Why is that so? Governments highly subsidise ownership. You have tax deductions, or you get even direct allowances. So, living as a tenant makes you economically more vulnerable as you spend a higher part of your income on housing. 

Would the renovation of the house or flat pose a higher risk to the tenant than to the owner?

The European institutions did not realise sufficiently that according to the national rent laws, it is possible to pass on the renovation costs to the tenants, entirely or partly. If you are a landlord and are making the investment, you can pass on this investment in several parts directly or over the years in percentages. This usually leads to rent increases which cannot be paid by those already struggling with high housing costs.

What is your suggestion?

It would be fair if energy savings also balance those rent increases at the same amount. We need to ensure that people can remain in their homes, and it is possible only when the overall housing costs are capped and stay the same.

But savings are coming after the renovation, so how do you suggest covering the investment cost? 

When talking about public policies, Fit for 55 and all national climate plans, they should not stand alone. They must be all complementary and be targeted to the local needs of residents.

It is a common interest to improve the emission standards of the buildings to fight climate change. Therefore, the public should also pay for it. We are talking about grants and subsidies or very low-interest loans given by the European Investment Bank or by national public investment banks complemented by national and regional climate funds. One of the big banks which is doing that in Germany is KfW Development Bank.

According to European Commission’s ‘Fit for 55’ package, emissions trading should also be applied to buildings. The Commission promised to compensate for possible social impacts through the new Social Climate Fund. Do you think this is sufficient?

We are also talking about the transition towards a green economy, right? We asked Commission officials how it is financed and their concrete proposal on how to meet this target, but they did not give a real answer.

The Green Deal cannot be paid by the most vulnerable people forced to live in run-down, energy inefficient housing. If this is not prevented, the climate policy will divide society. The gap between rich and poor will become even wider.

What we, the International Union of Tenants, is proposing is to pay a so-called climate allowance. 

What is it exactly?

If people are affected by the huge costs of renovations that energy savings will not fully balance, they should receive a kind of climate allowance. 

The goal is to prevent these “renovictions” – a technical term for evictions by renovation. 

Is it not better to prevent the passing on of these costs in the first place?

Responsible not-for-profit social and housing providers do not pass on the costs and fully reinvest their profits from rental payments into the energy-efficient renovation.

But this is not the common business model in housing markets currently more than ever dominated by profits. Housing costs neutrality, combined with mandatory tenants’ participation in planning and execution of renovations, is a way out. With that, you ensure that the renovation is made in an energy-efficient and socially balanced way that it is a win-win situation for both parties – the tenants and the landlords.

What do you mean by housing cost neutrality?

Housing cost neutrality (entailing rents, energy costs and local taxes) should be the main principle of the EU Green Deal. As renovation costs can be passed on to the tenants in most EU Member states, renovation often contributes to the displacement of residents and the gentrification of entire quarters. Affordability in renovation means that energy savings fully balance rent increases.

The Commission is saying that member states can mitigate the possible social impacts on people. What is your view on that?

It makes sense that we make this in a European way. If the Commission provides the finances, they should set up the guiding rules to keep people in their homes. It could set up a rule that the whole process must be socially just, that nobody is evicted when it comes to the renovation of housing stock. This principle must be enshrined in EU legislation – in the Energy Efficiency Directive (EED), the Energy Performance of Buildings Directive (EPBD) and the Renewable Energy Directive (RED).

There is a considerable amount of money earmarked for building renovation. But in some countries, this money does not target low-income households but middle or high-income households with enough capital to do the renovation. This money is also subsidising fossil fuel boilers; what is your stand on this? 

The Commission intends that investment in the recovery and resilience packages should target the most vulnerable households and less energy-efficient buildings. These two criteria are most of the time coming together. The law of the housing market says that better-off homes live in superior housing, whereas low-income families live in inferior housing conditions. The poorest households are living in rental accommodation.

Together with the Member States, the EU commission is in a position to break this iron law. Commissioner Margrethe Vestager should also check the compliance of this targeted approach with the less efficient buildings and the poorest households to see if it is indeed granted in the national recovery plans.

But obviously, this is not happening as much as is necessary. For example, in Italy, the bonus from the recovery package is concentrated on private homeowners and is not targeted on the social and public rental housing stock. This should change fundamentally.

Why?

This housing stock can be a game-changer. If you are living in rental housing, you are not on the steering wheel of the ship. The only person who can decide about your living conditions is the landlord. If the landlord invests, he can afford it and offer you a fair deal; you are lucky. If he says no, I don’t do it, you as a tenant cannot change this and has no legal leverage so far.

So more ambitious renovation should have loans with better interest rates?

Landlords who will guarantee housing cost neutrality should be eligible for zero or very low-interest rates. 

What other measures against energy poverty are you proposing?

In some countries, legislation forbids renting out apartments that do not meet minimum energy standards.

To do this, there is a need to implement specific standard labels to measure the energy effectivity of the buildings and the effectiveness of the renovation, right?

Yes, exactly. Now we have Energy Performance Certificates. The problem is that they are not harmonised among member states. Existing differences, for example, in the definition of energy classes, qualification schemes for certifiers, quality control systems, national registers and more, make it difficult to compare the national schemes. 

We favour a system measuring and labelling in kWh/m²/year, showing primary and final energy consumption. This would be comparable and transparent. 

Apart from differences in energy labels and certificates among member states, there are also considerable differences in the ownership schemes. For example, in eastern Europe, you have many poor homeowners and, on the other hand, less available public and social flats compared to western Europe. How should this different situation in member states be reflected in the legislative rules?

Our organisation also represents those owners in in Central and Easter Europe who were given a chance to buy their apartments after the fall of the Berlin wall. We call them “poor owners”, and we have to find a solution for them as they sometimes live in very energy-inefficient, prefabricated housing estates with unsustainable energy supplies. It is hard to implement the solution that fits all, but it is not the end of the road. 

How do you imagine it in practice?

I think there must be a specialised program for Central and Eastern Europe. We should provide solutions to facilitate the establishment of residents’ cooperatives. For the investment necessary for a new roof or heating installation, a cooperative can establish residents’ majorities, a business plan, and a legal entity for the investment that can apply for grants and loans at the banks.

After that, it should be easier for this block of flats or even entire quarters to apply for publicly financed zero or super-low interest rate loans. Specialists are dealing with those issues at the European investment bank to overcome the investment gap in large CEE housing estates. 

The European Commission can build on the EU Urban Agenda Action plan for affordable housing

There are targeted recommendations for Central and Eastern Europe. Those hands-on recommendations and plans can be taken into consideration – now is the chance. 

We can do it – it is a historical chance to change housing policy for the sake of the many, not the few. This is what the European Commission should reach out for no more excuses. 

[Edited by Alice Taylor and Frédéric Simon]

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