A "renovation bank" to fill the blind spot in financing major co-ownership works

The outlines of a potential "renovation bank" were presented to the Ministers of Economy and Housing on Friday, July 11, with the aim of bringing together real estate professionals and banks to improve financing for renovation work in co-ownerships.

Energy renovation of housing, adaptation to global warming, rehabilitation and maintenance of buildings and adaptation to an aging population represent a total investment requirement of 96 billion euros per year by 2030, compared to 84,6 billion spent in 2023, according to this report which was entrusted to parliamentarians and real estate and financing professionals.

Finding the missing 12 billion euros "requires massive investment from the private sector, without prejudice to existing public funding," the Ministry of Housing said in a press release.

In 2023, 68,8% of private housing renovations were financed by households using their savings. Traditional bank loans accounted for less than a quarter of these investments.

For individuals, the range of credit "is wide, and a priori capable of covering all their needs," according to the report.

But for modest or elderly owners, whose profiles are considered too risky, and for co-ownerships, which lack "suitable financing products," there are obstacles.

The report therefore recommends a "shared tool between voluntary private banks", which would take either the form of a new banking establishment - a possible option that would be more expensive and take longer to set up - or the form of a "third-party management service" for the benefit of existing banks.

The issue of pre-financing is considered a major challenge, especially in co-ownership where the inability to advance the costs for a household blocks the entire process.

Valérie Létard, Minister for Housing, "welcomed the launch of this new renovation financing instrument."

For his part, Eric Lombard, Minister of the Economy, recalled that "it was up to private actors to seize the tools, to innovate and to pool their resources to remove the obstacles to financing" energy renovation.

The primary objective is to "reduce and control the level of risk for banks" in the housing renovation market.

"Banking stakeholders have committed to working on the prefiguration of this tool and to deploying collective loans for co-ownerships," the Ministry of Housing stated.

Illustrative image of the article via Depositphotos.com.