Fernández, A., Haffner, M., & Elsinga, M. (2022, June). Analysing the financial impact of housing retrofit policies on Dutch homeowners: Comparing user cost and cash flow approaches. In 3rd International Conference on Energy Research & Social Science, Manchester, UK.

The Renovation Wave is the latest addition to a set of European policies that aim to incentivise investment toward a low-carbon built environment. When it comes to housing retrofit, research has focused on how fabric interventions can reduce costs through energy savings and, in the long run, improve affordability. However, it is less clear how retrofit policies can have a positive impact on households with varying levels of income, energy costs and savings possibilities.

EU Member States have put in place large retrofit funding streams through grants, subsidised loans and tax deductions. This paper addresses the question: How do different housing retrofit policies impact homeowners finances’ and affordability over the short and longer-term in the Netherlands? This analysis draws mainly from the WoON 2018 dataset, a quantitative household-level survey. By focusing on household finances under different funding schemes, this paper aims to contextualise retrofit policies in the housing affordability literature. User costs are one of the main capital-based indicators of long-term affordability. Conversely, cash-flows are concerned with short-term monetary exchanges and indicate financial access to a dwelling in a given moment.

In the Dutch context of rising house prices, it is vital to measure the short and long-term economic implications of energy efficiency policies as they are likely to have a lasting impact on affordability and funding uptake. Our results show that depending on the policy adopted up to 85% of dwellings could be retrofitted with a profitable margin. The main impediment to retrofit are upfront costs that jeopardise short term affordability. On the contrary, from a user cost perspective, retrofit lowers costs over the long run. The regression analysis shows that those likely to benefit more from retrofit are middle and higher incomes in urbanised areas. This raises questions about the regressive nature of flat-rate grants and tax deductions.