Housing: EUR 400 million home improvement loans with zero interest rate

Within the next 15 months, the finance ministry expects to give landlords the tools needed to open more of the 600,000 “closed” apartments recorded by the ADC. Last year, without any real incentive, 7,000 closed properties returned to the market, a fact which, according to the government, shows that with the right support the situation in the property market and rents can improve.

First of all, the “Renovate-Rent” program, which had a limited scope and proved weak due to low income criteria for subsidy recipients and a small subsidy, is being fixed. The result was just over 1,000 applications. But the facts are changing from next November, with an increase in subsidies to 60% and a maximum subsidised expenditure limit of €13,330, in order to make it more attractive to property owners who keep them closed.

The main “tool” for the necessary renovations, which are essentially a prerequisite for thousands of properties to reopen, is the 400 million euros for repair loans up to 25,000 euros with zero interest rate, which is thrown into the battle of housing by the government!

From next January, borrowers will have zero interest on loans of up to €25,000 with a repayment period of up to 7 years. Those who opt for the program will have to make any energy upgrade expenditure (windows, heating and cooling systems, thermal insulation, etc.), without the energy category upgrade restrictions of the “ExoGeo” programs. Thus, a person receiving the maximum loan amount of €25,000 will pay less than €300 per month for 7 years to repay the loan. The program is financed by the Recovery Fund (€300 million) and the banks (€100 million) with a full interest rate subsidy.

An important factor in all of this is timing, as the three-year tax exemption for income from long-term rental of these properties has already come into effect and has many “hidden” conditions! Interested parties must dispose of their properties by December 31, 2025, so all necessary renovations must be completed in the next 15 months before they can take advantage of the tax exemption “window.”

These properties must have been “vacant” for at least the previous three years. How will the audit be done? Through the E2s, where the properties are declared, the HRA is able to make the first relevant cross-check. However, because many cases of tax evasion from undeclared property income have been uncovered from time to time, an additional “layer of control” will be added: data will be sought from energy providers, based on the clock number of the properties in question, to determine whether there has been energy consumption in the last three years that is not justified for a “vacant” apartment. What remains to be clarified is whether the cross-checking procedures will be done internally by Taxis or whether owners claiming the three-year tax exemption will have to fill in data on an online platform.

Given that the measure is socially targeted (i.e. to reduce rents), it was considered appropriate to set a ceiling on the square meters of the properties that will be “opened”, which should not exceed 120 sq.m. These are, after all, the square meters that cover the housing needs of a family of four, according to the provisions for the exemption of the first residence tax.

Finally, the three-year tax exemption applies to individuals who have “closed” apartments, excluding legal entities from the relevant incentives, even if they manage residential properties. It also appears to exclude “closed” commercial properties, which could be converted to residential use. However, there are reportedly thoughts of allowing tax exemption for properties owned by charities and non-profit institutions.

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