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ComAct report: Energy poverty in the privately-owned, multi-family apartment buildings

What is ComAct?

ComAct - Community Tailored Actions for Energy Poverty Mitigation is an EU funded Horizon2020 project that aims to make comprehensive energy efficient improvements in multi-family apartment buildings in Central and Eastern Europe (CEE) and in the republics of the former Soviet Union (CIS).

The key is to make renovations affordable and manageable for energy poor communities, as well as to provide needed assistance for lifting said communities out of energy poverty.

The idea is to identify energy poor households and to create a new understanding of energy poverty. Next step is intervening across the three key dimensions, being it stakeholders and communities, the financial, and the technical one, and finally testing the approach in five pilot countries - Hungary, Bulgaria, Lithuania, North Macedonia and Ukraine.

Energy poverty is rather a complex concept. Hence a detailed and specific solutions are needed to tackle it, for which there is ComAct with its new report.

The overview report on energy poverty concept

The Overview report on the energy poverty concept is aimed at highlighting the need to tackle energy poverty as swiftly as possible, as it is an issue that acts as a gatekeeper against a higher standard of living. The report was put together by a consortium of organizations that contribute to ComAct - Building Performance Institute Europe, Metropolitan Research Institute, LVOA-ALCO, OHU, ENOVA, IWO, EnEffect, Burgas Municipality as well as Habitat for Humanity International and Habitat for Humanity Macedonia. All of these organizations brought together their best experts in the field of energy poverty and housing to deliver a report on the state of energy poverty within the five ComAct pilot countries, how energy-poor are identified there, and what financial and other supportive programs are in place to support them. Furthermore, the report has identified existing financial schemes from all over Europe, which have been proven to help alleviate energy poverty in multi-family apartment buildings (MFABs).

Some of the key findings related to the concept of energy poverty are:

Energy poverty in the pilot countries

As mentioned above, the report and the ComAct project itself focuses on five pilot countries of the CEE and CIS regions:

Countries in the CEE and CIS regions have the most energy-poor people in Europe, mainly due to high energy prices and poor energy efficiency of the buildings, heating systems and appliances. In these regions, the housing stock is predominantly privately-owned and characterized by a large percentage of MFABs. This is the result of mass privatization in the 1990s, along with the deconstruction of the social safety net: utility and energy costs of the flats massively rose, burdening the family budgets. At the same time, the socialist-era collective maintenance mechanisms were left behind, and the decay of homeowners’ associations has not been addressed effectively with a clear set solution.

To address the complex roots of energy poverty, there is a need to develop a new approach to make interventions affordable, substantially influence energy costs and consequently reduce the high energy poverty level in the CEE and CIS region.

Following is a short description of the state of energy poverty of each ComAct implementing country.

Hungary

Surprisingly, the country has a rather low level of energy poverty compared to other states within the ComAct project. Just around 5 to 10% of households are energy poor in Hungary. It is mostly the rural areas, specifically the family houses that are more affected. Nevertheless, MFABs have a myriad of other specific problems, such as a large number of apartment owners that make renovation more challenging from an organizational point of view. Hungary also uses the term 'vulnerable consumer' for law-making, which is a descriptor of social status. Problem is that there are no socially targeted renovation subsidies available, which might make it harder for Hungary to implement the coming EU Renovation Wave Strategy in the most effective way.

Bulgaria

Among the ComAct countries, Bulgaria has the highest share of energy-poor households, with a whopping 10 to 35% of households being energy poor, and with only 3.6% receiving a heating allowance. The current renovation program also lacks income components to help facilitate an alleviation of energy poverty in the country.

Lithuania

Following Bulgaria, Lithuania is the second energy poorest state, with an energy poverty level of 10-26%. MFABs in cities and towns are more affected than family houses in rural areas. There also is no official definition of energy poverty, but there are some measures like heating allowances and socially targeted renovation schemes, which aim at alleviating the energy poverty stricken owners.

North Macedonia

North Macedonia is very forward thinking, as it already addresses issue of energy poverty in several strategic documents, as well as through policies targeting vulnerable energy consumers. The number of energy-poor households is comparable to that of Lithuania and Bulgaria, which highlights how being within the EU does not automatically mean a higher standard of living, as it takes time and appropriate policy work. Although the condition of buildings in rural areas is worse, the problem of energy poverty is much more severe in urban areas due to the affordability of energy.

Ukraine

Ukraine has a large energy poverty problem since the cancellation of its high energy subsidies during the last five to six years. Not all subsidy schemes were abolished and some are still in place, but as there is a large energy-poor population and the building stock has a very low energy performance, it is difficult to target these schemes at the most vulnerable consumers.

The EU perspective on energy efficiency of buildings

Energy poverty has a long tradition inside the EU, hence according to the known regulations such as the National Energy and Climate Plans (NECPs), and also as a part of the Renovation Wave Strategy or the EU Green Deal, the EU has dedicated mechanisms to support building renovation, for which money is earmarked within the Recovery and Resilience Facility, as well as other instruments. Problem is though that the EU member state implementation is rather insufficient, and hence energy poverty is still a large issue.

All EU member states should ensure the necessary supply of energy for vulnerable customers and in doing so integrate an approach, which looks at various policy areas that could be used to measure and tackle energy efficiency improvements of housing. Effectively, these directives should acknowledge the existence of energy poverty and say that the protection of vulnerable consumers is a minimum requirement to eliminate it, keeping in mind that energy poverty is a broader concept than that of vulnerable customers.

Existing energy policies

The Clean Energy for Europeans package takes it a step further, as it consists of eight legislative proposals targeting various sectors: energy efficiency, energy performance of buildings, renewable energy, energy security and more. The Governance of the Energy Union and Climate Action Regulation also stipulates that EU member states should assess the number of energy-poor households, but measures and solutions are still not exactly clear. Similarly, the Energy Efficiency Directive tackles energy poverty in a way, in which it calls for measures to address vulnerable households as a priority. Lastly, under the revised Energy Performance of Buildings Directive, EU member states are required to outline relevant national measures to help alleviate energy poverty as part of their Long-term Renovation Strategies, to support the renovation of both residential and non-residential building stock.

Said legislations are also important for the Energy Community members, such as North Macedonia and Ukraine, although they have still not implemented the Clean Energy package, as their legislation is lagging behind that of EU member states.

All in all, the EU is primed to address energy poverty within and even outside the EU. However, if it means to do that properly, heavy cooperation with both the EU member states and the civil society experts will be necessary, as they are the ones with the real field expertise. And just as the overview report of ComAct illustrates, solutions must be direct and comprehensive, targeted at the most vulnerable energy consumers.


Find more information about ComAct on the official website of the project here.

For more information on the overview report and its findings, please visit this site.

Habitat for Humanity Armenia (HFH Armenia) has recorded the first success in its advocacy efforts in reforming the legislation on residential buildings management in Armenia. In December 2020, the Government of Armenia approved “Decision on Bank Account Opening and Servicing Procedure” for the implementation of mandatory and other payments set by the “Law on Residential Buildings Management”. What does it mean in practice? Each building shall have a separate bank account for the management of its funds, which will increase the overall transparency of the fund management for each building. In addition to this, by the decision of the homeowners assembly, they can set up a separate reserve fund account for each building to be used to cover the expenses related to the unforeseen accidental renovation works in the building, as well as other expenses related to the operation and betterment of the buildings.

Until the end of the last year, Armenian homeowners had been suffering from the lack of proper and systemic regulation on maintenance of residential buildings and its commonly owned shared spaces. The recommendation proposed by HFH Armenia had been advocated since 2015, accompanied by many side events and activities. Let’s see together what stands behind this housing problem by looking at the history of its residential buildings maintenance system, its weaknesses and negative impacts and the benefits resulting from a successful policy change that has come into power just at the end of 2020.

Buildings in Yerevan, Armenia

Buildings in Yerevan, Armenia

 

History of the residential multi-unit buildings maintenance in Armenia

Before 1990, Armenia was part of the USSR, the communist block of countries. The collective housing dwellings under the communist era were both state-owned and state-managed. In practice, this meant that the state was not only the owner of the residential multi-unit buildings but it was also responsible for the maintenance of these buildings. State building maintenance companies were in charge of these maintenance services and works.

In Armenia, with the fall of the communist regime, a huge wave of privatization took place and transformed not only the economic system but also the housing ownership structures. Due to this process,  the ownership of the housing stock went from the hands of the state to the hands of the homeowners who formed homeowner associations or other management bodies for the management and maintenance of the buildings. However, due to the lack of proper management of the buildings, low collection rates and certain gaps in the respective legislation, the technical condition of multi-apartment buildings has been continuously deteriorating.

In numerous countries of the former Soviet Union, the former state building maintenance companies turned into private entities and continued with the maintenance services for these buildings, reporting to the newly established homeowner associations consisting of private owners of housing units. Each building established its own bank account and was in charge of its own financing, accompanied by the assistance and services provided by the private maintenance companies.

However, in Armenia, the legislation did not set requirements for opening and maintaining a bank account for each building separately, which often created uncertainty in the minds of homeowners regarding the use of their funds set by mandatory norms.

Hence, lacking regulation and rules on the responsibilities and competencies of buildings’ management bodies, and lack of loyalty of homeowners towards the management body of their building resulted in a rather unsystematic collection of money. This became the main issue to the actual maintenance of the Armenian residential multi-unit building stock.

 

Escaping the ineffective system

HFH Armenia identified this issue and started to develop recommendations that would solve the problem of misfunctioning financing and capacities within the home-owner associations, their position and their role in the system. They referred to the need of specifying minimum mandatory norms for management, maintenance and exploitation of the multi-unit housing stock and the establishment of the control system improvement mechanisms. In this way, the implementation of mandatory norms and renovation works, maintenance and servicing would become more accessible for the homeowners.

HFH Armenia saw it essential to create a law that would make it mandatory to open a separate bank account for each building by the residential building management body. Thanks to this step, it would allow even for opening a savings account for each building managed. Therefore, a portion generated from maintenance fee collection for the maintenance fund could be transferred to this saving account and contribute to the overall financial stability of buildings’ owners.

The most significant result of such an action is making the residential building management bodies a reliable player, possessing its own finances and with the ability to manifest its spending and savings upon the need, or for example, when applying for a loan for reconstruction works.

Building in Yerevan, Armenia

Building in Yerevan, Armenia

Advocating for a change

In order to actually realize the proposed policy change, HFH Armenia has been working hard to advocate for these changes since 2015. The work has started with the support of the Visegrad Fund thanks to which the resources were allocated to the preparation of the primary research paper about the housing situation of residential multi-unit buildings in Armenia. Then, HFH Armenia developed and submitted a set of recommendations to the State Development Urban Committee, organized two roundtable discussions with the government representatives in Yerevan. The Armenian case was presented also during one of the roundtable discussions organized under the UN-Energy Summit in Yerevan in 2015. Moreover, they contributed to the REELIH regional conference organized by Habitat for Humanity International and USAID in Brussels in 2017 where several government representatives were present as well. Additionally, they participated in the three Working Group meetings set to develop the reform of the residential building management law in Armenia.

UN - Energy For Sustainable Development Forum 2015

UN-Energy For Sustainable Development Forum 2015

 

Benefitting citizens and local communities

With the change of the residential building management law, numerous benefits for the homeowners and their homeowner associations are coming. Thanks to the fact that each building, from now by law, has to have its own finances managed on a separate bank account, the process of maintenance works and renovation of the buildings becomes easier and more accessible. Among the main benefits are:

Before and After of muti-apartment building renovation

Before and After of muti-apartment building renovation

In Habitat for Humanity, we believe that for homeowner associations, mixed financing schemes are the best and most effective solutions for maintenance and renovation works of the commonly owned spaces of the buildings. The mixed financing consists of three elements:

The three mentioned ways of financing are only possible when the homeowner associations have direct power over their own resources. Thus, thanks to this policy change, the Armenian homeowner associations are becoming more stable, self-sufficient and in the end, fully-fledged market players.

 

Empowering communities and its common interests

Along with the work done in advocating for the change of the law on the national level, HFH Armenia has been working on a local level, too. As the current system resulted in huge mistrust in the maintenance companies, it was inevitable to start developing a sense of ownership between the flat-owners towards the shared space of their properties. This activity was done in order to develop trust among the owners and their deepened willingness to contribute to the funds and being supportive of the investment into their buildings once the law changes.

In this respect, HFH Armenia advocated for the creation of mechanisms for awareness-raising on housing stock energy efficiency. The prefabricated buildings that were built during the communist era are highly energy inefficient and have a further negative impact on people who spend a high amount of money on energy bills. Through the introduction of training courses related to housing stock energy efficiency in primary, and education programs in secondary, the citizens would become aware of their possibilities and motivated to invest in their buildings.

In 2019, as part of its awareness-raising activities, HFH Armenia has conducted training for homeowners on energy efficiency measures in the buildings. The post-training behavior change monitoring survey showed that 72% of respondents started saving energy in their apartments after participating in the training through:

This activity demonstrates the efficiency of trainings on the behavior change of the tenants towards a smarter use of energy at home and implementation of other energy-saving measures.

 

The fight is not at the end

It will take some time for the new law to fully bring its benefits as there appeared new challenges in the implementation process. Change in the payment system from cash to online brings about one of the biggest issues. It now requires homeowners to make non-cash payments directly to the bank account and most tenants simply do not pay, because there is no one going and knocking on their doors for collecting the fee, as they were used to in past. Moreover, especially pensioners are not used to going to banks to make payments, as well as they are not even aware of the possibilities of online payment methods. Hence, in the short run, the collection rate of maintenance fees has dropped but is expected to grow after the change is well communicated with the homeowners. HFH Armenia has already started discussions with the Yerevan Municipality to run awareness-raising campaigns to make the transition to the new payment method faster and smooth.

Yerevan Municipality Roundtable

Yerevan Municipality Roundtable

To add, it is necessary to create new, effective enforcement mechanisms for payments of mandatory fees, as the current one proves not to be that efficient. Therefore, as a next step, HFH Armenia has started advocating for having a better enforcement mechanism for mandatory payments via submitting its recommendation to the State Urban Development Committee.

The last remaining, and probably the biggest challenge, is the creation of the saving accounts for the buildings. Under the current law, the homeowners of the buildings have to create their basic bank accounts and store their funds there which allows them to have control of their spending in the first place. The additional saving accounts would give even more reliability to the homeowner associations, but unfortunately, this recommendation was accepted only as a voluntary and recommended action. HFH Armenia plans to further advocate to make the creation of the saving fund mandatory to ensure even more financial stability for the multi-unit buildings, as well as advocate for setting more efficient enforcement mechanisms towards the betterment of the collection of mandatory fees.

The Armenian advocacy success is proof that hard and systematic work and dedication can really make a change. Fingers crossed for HFH Armenia in their future work.


Find more information about HFH Armenia here.

Compendium of best practices on standards and technologies for energy efficiency in buildings in the UNECE region is a fresh publication which collected the best case studies in the UNECE region supporting energy efficiency of buildings.The case studies serve as best practice examples providing practical information as well as inspiration for others.

The report was prepared under the framework of the UNECE projects "Energy Efficiency Standards in Buildings in the UNECE region” by the activities of the UNECE Joint Task Force on Energy Efficiency Standards in Buildings. The compendium serves as a basis to improve the knowledge of UNECE member States concerning energy efficiency best practices related to existing standards and technologies, so that they will be able to develop and implement more effective energy efficiency policies in buildings.

Due to a specific character of some parts of this region such as Eastern Europe,the report turns its attention to existing building stock and its retrofitting which is a crucial activity for future development and fight against energy poverty in many countries.

Success stories and positive numbers are recorded in the following categories:

As Habitat for Humanity International EMEA has long been working with UNECE, we were approached to contribute with local best practices from the field in Bosnia and Herzegovina, Armenia and North Macedonia thanks to our common project with USAID and delivered four successful case studies focusing on residential energy efficiency.

Case studies are focusing on efficient management and maintenance of multi apartment buildings, organizing homeowners to make a common decision together, raising awareness of the energy efficiency retrofits and its process and creating viable and sustainable financial models to support vulnerable households to reduce their energy consumption. All these components are essential for an "eco-system" of residential energy efficiency to work.

All of the four case studies are included in the report, two of them showcasing REELIH project of Habitat for Humanity International and USAID and other two showcasing work of HFH Macedonia that were possible to implement thanks to their previous residential energy efficiency projects funded by USAID.

The four case studies from HFH network in the UNECE compendium:

We thank UNECE to be the convener of showcasing best practices from the region and enabling to share the knowledge further, so that these cases become a mainstream practice instead of one time project cases.


Find the new UNECE report here. Find more information about REELIH project on this website and here. Find more information about UNECE here

Habitat for Humanity contributed to the new UNECE Guidelines on the Management and Ownership of Condominium Housing thanks to being part of Real Estate Market Advisory Group.

UNECE Real Estate Market Advisory Group consists of specialists assisting the Committee on Housing and Land Management and the Working Party on Land Administration to develop stronger housing real estate markets. Its activities include discussion of energy efficient housing, affordable and social housing, its financing and others.

Being a member of this group, we were able to contribute to reviewing of original document of Guidelines on Condominium Ownership of Housing for Countries in Transition published in 2003. While this original guideline was mostly targeting the countries of Central and Eastern Europe, the new Guidelines on the Management and Ownership of Condominium Housing focuses on all the UNECE countries; including Western Europe, the United States and Canada. Successfully updated publication of guidelines was formally approved on October 4th, 2018 during the 79th session of the UNECE Committee on Housing and Land Management held in Geneva.

Throughout the last year, this small group of specialists was meeting regularly and discussed many challenges not only of Central and Eastern European region. HFHI  comments and messages touched exclusively the CEE and CIS countries based on our experience and expertise in this region. Thanks to our REELIH project and regional advocacy done in relation to it, we took this chance to push our messages and provided professional advice.

As the cornerstones for our claims we used three documents developed in regards to REELIH project and Visegrad Four project in Armenia done by HFH Armenia:

HOW TO IMPROVE RESIDENTIAL ENERGY EFFICIENCY IN SOUTH EASTERN EUROPE AND CIS:
POLICY DISCUSSION BRIEF FOR NATIONAL GOVERNMENTS AND INTERNATIONAL ORGANIZATIONS

ANALYSIS OF SUBSIDY SCHEMES AIMING TO SUPPORT ENERGY EFFICIENT RENOVATION OF MULTI-FAMILY BUILDINGS IN SELECTED COUNTRIES OF CENTRAL AND EASTERN EUROPE:
LESSONS FOR ARMENIA AND BOSNIA & HERZEGOVINA

LEGAL-REGULATORY SOLUTIONS FOR STRENGHTENING CIVIC INVOLVEMENT IN CONDOMINIUM MANAGEMENT IN ARMENIA:
UTILIZING THE KNOWLEDGE WEALTH FROM VISEGRAD STATES AND UKRAINE


 

Rapid rate of privatization of public housing, lack of maintenance and rising energy costs led to the emergence of low-income homeowners phenomenon and their inability to cope with the situation. Moreover, the collective decision-making of new homeowners brought other complications, that ended up with slow deterioration of multi-apartment buildings.

 

Hence, our main contributions to the updated condominium management guidelines included:


Find more information about condominium management guidelines here.

Find the press release about new publication here.

Written by Nino Khukhua - Local Democracy Agency Georgia, Dinara Jalagonia- Charity Humanitarian Centre “Abkhazeti”, and Natia Aphkhazava -  Civil Society Institute

The Housing Initiative for Eastern Europe (IWO e.V.) implements with international partners the project "The way forward for reforms in the housing sector: empowering grass-root homeowners associations in Azerbaijan, Belarus, Georgia, Moldova and Ukraine " (Project HOME). The three-year project aims, through the establishment of 11 Technical Advisory Centres (TACs) to improve housing management and to promote energy efficiency refurbishment of residential buildings in the partner countries.

In the 1920s cooperatives for consolidation of builders’ resources were created to develop home construction and operate and maintain existing dwellings in Georgia. After the country became independent in 1991, mass privatization gave residents their homes to own and manage privately. As a result, owners became responsible for building maintenance. The Georgian Law on Homeowner Associations adopted in 2007 provides for common property management. Within the project HOME, Technical Advisory Centres (TACs) have been established in three most populous cities of Georgia: Batumi, Kutaisi and Tbilisi. They provide technical and legal assistance through regular trainings and individual consultations. Successful solution of issues discussed by homeowner associations (HOAs) is directly linked to involvement of the HOA’s chairperson and members.

Features of an HOA in Georgia:

Common Problems and Recommendations:

       

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