Author: María Gracia Moreno Vegas
As we explained in the previous article on the Next Generation Funds , the European Union has included in its long-term budget an item of more than 800,000 million euros destined to the rehabilitation and resilient recovery of Europe after the inflationary crisis and economic recession resulting from the COVID19 pandemic. Articulated through the Recovery and Resilience Mechanism (RRM), the React-EU fund and others such as Horizon Europe or EAFRD, Spain will receive 140 billion euros from these funds, of which 3.42 billion will go to the rehabilitation of housing and residential buildings as part of the “Spain Can” Recovery, Transformation and Resilience Plan.
These funds will be administered and allocated by the Ministry of Transport, Mobility and Urban Agenda, establishing a system of budgetary investment in the Autonomous Communities, which will distribute the European funds in the form of public aid and incentive programs. Of the 3.42 billion euros earmarked for the renovation of housing and residential buildings, 2.97 billion will be allocated to the rehabilitation of housing and residential buildings:
- 2 970 million will go to subsidies,
- 450 million in personal income tax (IRPF) deductions and
- 1.1 billion to ICO guarantees (RDL 8/2020).
At the time of its approval, Royal Decree-Law 19/2021 on urgent measures to boost building rehabilitation activity provided for a total of 3.97 billion euros to be applied from MRR:
- 2,970 million to housing rehabilitation and
- 1,000 million for the construction of housing to be used for social renting.
And, on the other hand, RDL 19/2021 described that the autonomic distribution of these means would be carried out by means of a transfer resolution over three years, starting in the year of its entry into force. This distribution will consist of redistributing the aforementioned 2,970 million among the Autonomous Regions, starting with the transfer of 1,151 million which was already executed in 2021, passing through another transfer of 1,389 million planned for this current year, and a last one of 430 million in 2023, thus liquidating the total amount of the funds available for the housing rehabilitation subsidy. The receipt of these funds is currently divided among the Autonomous Regions according to the number of households and is presented as follows:
PRTR distribution graph in the Autonomous Regions
Now, how can firms and individuals benefit form this aid?
Following the information published by MITMA, there are 6 aid and incentive programs through which companies or individuals can apply to be benefactors of this rehabilitation program:
-Aid program for rehabilitation actions at the neighborhood level: the financeable actions will be those aimed at reducing energy demand (heating and cooling) by at least 7% and reducing non-renewable primary energy consumption by at least 30%. It may be applied for mainly by owners, tenants and usufructuaries of dwellings and only those actions carried out in their main and permanent dwellings (accredited by certificate or registration form) will be eligible for financing. The amount will cover 40% of the cost of the action, with a limit of the minimum cost of the action of 1,000 euros and the amount of the aid reaching a maximum of 3,000 euros per dwelling. The collection of this aid may be assigned to third party agents who carry out the management of the rehabilitation. The processing of this will be by means of a public call of the Autonomous Regions or autonomous cities, through a selection process of simple concurrence of order of presentation until the funds are exhausted, with a deadline for processing up to the second quarter (June 30) of 2026 and for carrying out the works of up to twelve months once the aid has been awarded. These actions will have to be justified before the instructing body by submitting a report no later than three months after the completion of the works, indicating the conditions imposed on the award, the actions carried out and the benefits obtained.
–Program to support rehabilitation offices: The provision of a comprehensive service to support the implementation and management of housing energy rehabilitation projects and actions will be financed. This will consist of providing assistance, resolving doubts, providing energy advice and promoting and disseminating the program, with the aforementioned offices being «at the service of citizens, homeowners’ associations, companies and rehabilitation agents in general, taking into account that the rehabilitation and regeneration actions at neighborhood level will have their own one-stop offices». The amount of these aids will be covered by the funds of the rehabilitation plan at building level and will be valued at 800 euros per dwelling actually rehabilitated, depending on the territorial scope, and with a limit of 100% of the accredited costs. Deposited either as advances or payments on account, this aid will only be available until June 30, 2026.
-Aid program for rehabilitation actions at building level: With the objective of reducing the demand for primary energies by at least 30% and reducing the overall annual consumption of heating and cooling (by 35% in climate zones D and E, and 25% in climate zone C), the aid will be destined to actions of integral rehabilitation of buildings in collective residential typology and in isolated or grouped single-family dwellings. With special emphasis on the remodeling of facades and enveloping architecture, it is required that the buildings have at least 50% built above ground, have a residential use, and the actions have the agreement of the owners’ community. The following may apply for the aid:
- The owners or usufructuaries either natural or legal persons.
- The public companies, the mercantile societies participated by the public administration, the organisms, the entities and the own public administration as long as they are owners of the residential buildings.
- The communities of owners.
- Owners who, as a group, are owners of buildings.
- The cooperatives composed by owners of houses or buildings and the cooperatives in regime of cession of use of their houses.
- Companies and cooperatives that are lessees or concessionaires of the buildings. In order to be able to request the aid they must present a contract that grants them the express faculty to undertake rehabilitation works.
- The tenant of the dwelling will be able to request the aid as long as he has agreed with the owner to pay for the works in exchange for the payment of the rent. The tenant must present an agreement that accredits this commitment.
The amount of this aid will be arranged in an ascending scale of percentages according to the energy efficiency obtained with a maximum limit of:
- For a 30-45% reduction: 6,300 € for residential housing and 56 € per m2 for commercial or other use premises.
- For a reduction of 45-60%: 11,600 € for residential housing and 104 € per m2 for commercial premises or other use
- For a reduction of more than 60%: 18,800 € for residential housing and 168 m2 for commercial premises or other use
The aids included in this plan will be subject to awarding by simple concurrence published by the Autonomous Regions until funds are exhausted, and may be paid as advances when so established by regional regulations, and are compatible with other public aids for the same purpose as long as they do not exceed the total amount of the actions and do not cover the same amount of the cost.
-Program of aid to actions for the improvement of energy efficiency in housing: They are mainly aimed at owners, usufructuaries and tenants of housing and only the actions carried out in the habitual and permanent domiciles of the owners, usufructuaries or tenants will be financed, which can be accredited by means of certification or registration form. The amount of these aids will consist of a financing of 40% of the cost of the action with a limit of 3,000 € per dwelling, having to be the minimum cost of the action 1,000 € per dwelling. These recipients will be able to combine the receipt of this aid with the rehabilitation aid at neighborhood level, with the rehabilitation program at building level and any other public aid with the same purpose, as long as the total cost of the actions is not exceeded and they are not destined to pay the same expenses. As in the previous procedures, the Autonomous Regions will award these aids by means of a public call, following the order of presentation until the funds are exhausted. The deadline for completing the works will be twelve months, and for processing this aid until June 30, 2026. Likewise, the expenses and results must be justified in a report, carried out by a competent qualified technician and deliverable within a maximum period of three months after the completion of the actions.
-Aid program for the preparation of the book of the existing building for the rehabilitation and the drafting of rehabilitation projects: Depending on the number of dwellings per building, these aids will be endowed with a maximum amount of 3,500 € per book of the existing building and 30,000 € per rehabilitation project, being granted through public call of the autonomous administrations following the regime of simple concurrence already mentioned above. Eligible beneficiaries:
- The owners or usufructuaries of single-family houses isolated or grouped in rows, and of existing buildings of residential typology of collective housing, whether they are natural persons or have legal personality of private or public nature.
- The public administrations and the organisms and other entities of public law, as well as the public companies and mercantile societies participated, integrally or in majority, by the public administrations owners of the buildings.
- The communities of owners, or groups of communities of owners.
- The owners who, in grouped form, are owners of buildings.
- The cooperative societies of landlords.
The collection of these aids may be assigned to the rehabilitation agent or manager «in charge of carrying out actions of promotion, follow-up, management of public aids and access to financing.»
-ICO credit program and tax deductions: Instrumentado por el Programa de recuperación económica y social de entornos residenciales, estos beneficios fiscales supondrán:
- Deduction of 20% of the IRPF for reducing by 7% the energy demand for heating and cooling in the habitual residence or for renting as habitual residence, with a maximum of 5,000 euros per dwelling and applicable until December 31, 2022.
- Deduction of 40% of the IRPF for actions that reduce by 30% the consumption of non-renewable primary energy, or improve the energy rating reaching the letters «A» or «B» in habitual residence, with a maximum of 7,500€ per dwelling and applicable until December 31, 2022.
- Deduction of 60% of the IRPF for actions that reduce by 30% the consumption of non-renewable primary energy, or improve the rating reaching the letters «A» or «B» in residential buildings, with a maximum of €15,000 per dwelling and applicable until December 31, 2023.
Likewise, through an agreement between the Official Credit Institute (ICO) and MITMA, a new line of guarantees will be developed that «will partially cover the risk of loans granted by private financial entities for the rehabilitation of residential buildings that contribute to the improvement of energy efficiency», according to the provisions of Royal Decree-Law 19/2021, which introduces reforms to Law 49/1960, of July 21, regarding horizontal property, facilitating the decision making process in homeowners’ associations. These guarantees will have a term of up to 15 years for the financing of a maximum of 1,100 million euros each.
For further information on this matter or to better understand what the NextGeneration Funds of the European Union consist of, you can visit our blog of legal articles or contact us to receive advice on the procedures described above..