Subsidies are a real incentive lever to encourage renovations

Each month, we question different sectors and professions on specific themes.

For this month of November, we went knocking on the doors of developers and large real estate groups to get their point of view on a particularly sensitive topic these days in Bern: subsidies intended for building renovation.

The answers of Gérard Greuter, Head of Energy Transition for Real Estate at Retraites Populaires.

A group of experts appointed by the Federal Council proposes drastically reducing subsidies for building renovation. How do you view this idea?

As an institutional player, Retraites Populaires invests in real estate for the long term. Thus, we have sufficient financial strength to invest in renovating our real estate assets without having to rely on subsidies. By way of indication, subsidies amount to at most 10% of the amounts invested in a typical renovation. 

However, for private individuals, the situation is different because subsidies are a real incentive to encourage energy renovations. Obtaining a subsidy helps lighten the final bill and sometimes facilitates access to borrowing. This is a bad signal sent by the Federal Council. If Bern wants to support owners' energy transition, it would be preferable to give them the means to achieve it.

The experts argue that most solutions for renovation are already profitable and that, in that case, subsidies no longer make sense. Does this argument seem valid to you?

This argument is not tenable. Indeed, subsidies mainly concern wall insulation, whose return on investment is counted in decades, that is between 30 and 40 years. In the short term, the benefits are primarily experienced by tenants, users of the renovated premises. In that sense, it would be difficult to advance the argument of return on investment.

This is a bad signal sent by the Federal Council. If Bern wants to support owners' energy transition, it would be preferable to give them the means to achieve it.

Without these subsidies, should we fear a sharp increase in the bill for tenants?

Once the renovation is completed, we submit a final statement to the various Vaud housing authorities, which are responsible for setting a range for possible rent increases. All things considered, the effect is marginal. But, once again, the psychological signal sent to tenants is different.

Could this jeopardize Switzerland's 2050 carbon neutrality targets?

For an institutional actor like Retraites Populaires, our objectives remain unchanged. However, it is possible to imagine that an individual owner might delay or even stop renovating their property because of this stance by the Federal Council. This hypothesis seems all the more realistic since, just in the Canton of Vaud, subsidies have continued to increase in order to accelerate the energy transition.

As owners, what other remaining obstacles would exist to reach this carbon neutrality?

We observe administrative slowness in obtaining various permits. In addition, these delays are compounded by additional costs related to technical-administrative requirements that could threaten certain projects. Not to mention the lack of labor. All actors want to renovate at the same time, creating a real bottleneck at every level. I am thinking in particular of the workforce, the various supplies, or the contracted companies.

This article has been automatically translated using AI. If you notice any errors, please don't hesitate to contact us.