Where to start when an apartment association wants to renovate an apartment building?

Nearly half of Estonia’s population live in houses in need of renovation. Around 100,000 detached houses and 14,000 apartment buildings, with a total of 54 million square metres, would need to be renovated. Marko Kiisa, the Head of SME Financing at LHV, gives advice on where to start if you want to renovate an apartment building.

1. Reaching consensus

The first thing that underpins all the rest of the endeavours is to find a consensus among the residents. First, everyone should come to a common understanding that the building needs to be renovated. Getting there may not be as easy or as smooth as it seems, but reaching a common decision is the basis for the association’s future actions. There are very few rational reasons why improving the living environment for residents while at the same time significantly reducing energy use should be delayed at all. The choice is whether to fix the houses immediately and properly, or later and even more expensively.

2. Overview of the current state of the building

An energy audit gives a good overview of the current state of the building, as it is the source document for the whole renovation process. Depending on the audit, it is possible to get an overview of, for example, the state of the heating, plumbing, ventilation, and electricity supply, the humidity and temperature situation, and the energy balance of the building. The audit also makes recommendations on the order in which the renovation work should be carried out.

3. Planning the necessary construction work

After the energy audit, the board of the association should have a comprehensive overview of what work needs to be done, how much and in what order, and what the schedule could be. This allows you to communicate with different contractors, take offers, and find out the approximate cost of the work.

4. Resolution of the general meeting of the association

There is one more important step to be taken before renovation can start: a resolution by the general meeting of the association. As the construction and the costs it entails concern all residents, it is a common decision of all residents. This is where finding compromises and a common language is crucial. It should not be forgotten that renovation leads to a better quality of life: better air in the apartment, more stable temperatures, the elimination of possible mould and damp, and a visually beautiful and tidy house, which will also increase in value through renovation. In the case of a building that clearly needs renovation, it is not really a question of whether or not to renovate, but of the conditions.

5. Applying for a loan and reaching suitable conditions

Once compromises have been made and a consensus reached, it is the right time to find a source of finance for renovation. The conditions offered by the different banks vary, from flexibility to the interest offered. For example, the LHV loan for apartment associations has the most flexible repayment period. To improve the energy class or reduce the energy consumption of apartment buildings, from spring, LHV is offering a loan with an interest rate of 1.29% + 6 months’ Euribor. Compared to the previous conventional interest rate of 1.9–2.4%, this gives an average monthly saving of around 8 euros per apartment, almost 100 euros per year.

In addition, Kredex (EIS) also supports the renovation of apartment buildings, through which both grants and loan guarantees can be applied for.