Vocabulary
Terms and definitions on affordable and sustainable housing *
Financial Viability
Area: Design, planning and building
Traditionally the viability of renovation has been assessed through a Discounted Cash-Flow (DCF) analysis of saved energy, which is highly contingent on the discount rate (Copiello & Donati, 2021). However, these authors propose an alternative method that capitalises energy savings into housing value, thereby circumventing the limitations of discounted predicted energy savings, which are already reflected in the property value. They employ an asset-based approach to analyse renovation viability by evaluating costs and benefits in terms of value increases.The value increase of energy-efficient improvements in real estate markets usually takes the form of a green premium identified through different econometric techniques, see for example Aydin et al. (2020) for a recent study of property premiums in the Netherlands.
To increase the financial viability of renovation, the EU proposes three approaches that have been incorporated differently by Member States (Bertoldi, 2022). First, on the one hand, grants and loans rely on the reduction or complete elimination of upfront costs –“carrot” approach– to encourage renovations (see Eryzhenskiy et al., 2022, for example). Second, the “stick” side of housing renovation incentives draws on mandatory Minimum Energy Performance Standards (MEPSs), which preclude the renting or selling of properties that fall below a certain Energy performance Certificate (EPC) level (Economidou et al., 2020). Third, the European Commission also plans to expand the Emissions Trading Systems (ETS) to encompass buildings before the end of the decade (2003/87/EC). This will likely impact energy costs and increase the viability of energy-efficient renovations (Backe et al., 2023).
Fernández, A., Haffner, M. & Elsinga, M. Subsidies or green taxes? Evaluating the distributional effects of housing renovation policies among Dutch households. J Hous and the Built Environ (2024). https://doi.org/10.1007/s10901-024-10118-5
Created on 14-10-2024
Read more ->
* This vocabulary consists of definitions of key terms related to the combined research conducted by the 15 early-stage researchers. Each term has multiple definitions, each connected to one of the three main research areas: Design, Construction and Planning; Community Involvement; and Policy and Funding.
The joint construction of this vocabulary allows the researchers' projects to be interwoven. As such, the vocabulary is a tool for conducting transdisciplinary research on affordable and sustainable housing.
Entries are reviewed by RE-DWELL researchers and supervisors. The vocabulary is updated regularly.