The petition demands a right to reuse for existing buildings based on three key pillars: (I) tax reductions for renovation works and reused materials, (II) fair rules to assess both potentials and risks of existing buildings, and (III) new values for the embedded CO2 in existing structures.
Here is the organization’s website: https://www.houseeurope.eu/
The only thing I don’t support with this petition is the VAT exemptions for building renovations as companies are unlikely to pass these reductions on to consumer prices. Many investigations have shown that the prices can even be higher in the long-term as companies increase prices once the VAT exemption is over, passing the increase on to consumers.
The intentions go in the right direction, though, as avoiding the use of new materials in buildings can help to reduce greenhouse gas emissions.
So this is not about ‘landlords vs renters’, but an environmental issue that is absolutely necessary.
The European Environmental Agency published a briefing a couple of years ago for those who want to dig deeper into that.
That’s been policy here in Germany for well over a decade. Doesn’t seem like something that requires steering on EU level.
Err… doesn’t incentivizing via tax reduction mean we are all gonna pay the bill for the building owners?
If anything, we should disincentivize (via fees or increased property tax) those who don’t properly renovate their buildings. The same goes for demolitions if you think they are evil.
So making people pay who currently can’t afford a renovation? That way you’ll get even fewer renovations and raise inequality in the process.
Does it say somwhere the tax cuts are for low income oeners only? If you can’t afford to own a house (or car, or anything else) you’ll have to sell it.
Does it say somwhere the tax cuts are for low income oeners only?
Not that I know of, but that is beside the point as it’s not what you originally suggested. Restricting the tax cuts to low-income people would be a much more reasonable idea.
If you can’t afford to own a house (or car, or anything else) you’ll have to sell it.
From what you suggested, you want to actively price people out of their houses. So non-rich people in rural areas etc won’t be able to keep their homes anymore and have to rent. Their houses will either get bought by rich people or real estate companies who can afford to do the renovations or they’ll be left abandoned. People who are already rich can afford the renovations and won’t be affected by the penalties. Is that really a desirable outcome to you?
To give a concrete example, a policy like you suggested might make my mom homeless. She’s not rich, my parents were both social workers and paying off the house took decades. The house is from the 1920s, so it needs a lot of renovations to be up to modern standards. Currently, she can slowly save up some money and do them one at a time. You’d place an additional financial burden on her, which would make her unable to save money for the renovations and possibly cause her to lose her house.
From what you suggested, you want to actively price people out of their houses.
That conclusion exists in your mind, not mine.
When I say “If you can’t afford to own [something] you’ll have to sell it” I just mean that “If you can’t afford to own something you’ll have to sell it”, which is a general principle in our society, and specifically a consequence of how people are not expected to expend their own resources to preserve other’s private properties the same way they are expected to expend resources to preserve other’s lives (I know full well that this obligation is not legally enforced everywhere -eg. lookup duty to rescue- I do believe it is felt everywhere as a moral duty).
So non-rich people in rural areas etc won’t be able to keep their homes anymore and have to rent. Their houses will either get bought by rich people or real estate companies who can afford to do the renovations or they’ll be left abandoned.
Again, in your mind, not mine.
I explicitly said “we should disincentivize (via fees or increased property tax) those who don’t properly renovate their buildings”, so… such people would just have to pay fees or more taxes (realistically and depending on fee/tax amount, they would take a loan instead or do the exact same thing they would have to do if renovations were needed for whatever other external reason such as aging of the building, fire, flood, etc.).
People who are already rich can afford the renovations and won’t be affected by the penalties.
This is a general issue, not specific to this topic. Anyway the solution to penalties not being as hard on rich people as they are on poor ones cannot be that we use taxpayer money to
Is that really a desirable outcome to you?
I think I’ve shown that what you label an outcome of my proposal is such only in your mind.
To give a concrete example, a policy like you suggested might make my mom homeless.
That would be reason enough for me to be adamantly opposed, were I in your shoes.
For a case study on how incentives actually go, lookup “Superbonus 110%” in Italy:
- prices skyrocket (both prices of building materials, and prices of construction work)
- construction companies are overflown and have to choose which customers to prioritize. Needless to say, they prioritize the bigger ones (ie. rich people with lots of buildings and real estate companies) and the smaller owners/condos simply cannot find anyone to work on their building
- worksites open quickly, but construction goes slowly (because of lack of materials, because construction companies try to parallelize as much as possible, and because you get money as you go rather than only when you finish)
- the chances to get a worksite inspections are even fewer than usual, because of the huge number of worksites. Together with the the exceptional demand, this leads to an increase in illegal labour and in worse safety conditions (and work conditions in general) at worksites
- fraud is rampant
- countries end up with HUGE amount of extra debt beyond what is initially calculated (because costs always exceed initial calculations, but also because in this specific case you just cannot foresee the effects of construction material prices and how many inefficiencies the whole thing will produce)
In the case of Italy, they initially thought incentives would cost some 35B. In 2024 they were calculated at around 160B, and they will probably sum up to even more.
I explicitly said “we should disincentivize (via fees or increased property tax) those who don’t properly renovate their buildings”, so… such people would just have to pay fees or more taxes (realistically and depending on fee/tax amount, they would take a loan instead or do the exact same thing they would have to do if renovations were needed for whatever other external reason such as aging of the building, fire, flood, etc.).
The problem is that a large portion of those people you talk about aren’t renovating because they can’t. Renovation already makes financial sense in many cases, but it requires a huge initial investment. You think for example an older retiree can just take out a loan? Haha, no. Fires, floods etc leave many people destitute unless they have a good insurance, which wouldn’t apply to this situation.
You keep arguing against the proposal of incentives, which is fair enough. I can understand the argument that you don’t want to finance people’s private property. But what I take issue with is your idea of increasing the financial burden on those people with increased taxes and fines. I don’t think you’ve presented a good argument as to how this would improve the situation in any way.
what I take issue with is your idea of increasing the financial burden on those people with increased taxes and fines
The financial burden of maintaining an asset (any asset) is always unknown.
If you interpret “asset” is the wider sense, this is essentially what people call “business risk” (eg. you can rent for all your life and have higher expense and lower risk, or you can buy a house, saving some money but accepting more risks).
In this sense, regulation changes are not different than any other risk.
Now it is true that we usually use public money to compensate people who stand to lose from regulation change (well, depending on how powerful their lobby is - see decades of car incentives that were supposedly for ecology but actually for the automotive industry) and that we also usually compensate people for the major disasters (such as floods etc, but only the major ones than make the news: if it’s just your house that gets flooded you are on your own), but what I’m saying is that we should stop doing that.
Fires, floods etc leave many people destitute
Even assuming 100% loss of asset value (which is very rarely the case: even if your house is completely destroyed at the very least you can still sell the land), a flood leaves owners in the same condition of needing to rent that non-owners were to begin with (ok, this ignoring that they might also lose their job etc - which is however also the case for non-owners).
I’m not saying it’s nice to just wake up and find out your building is gone. I am saying it’s your building and that I don’t want to compensate you for your loss, essentially because I don’t share the benefit that come from you owning such building.
what I take issue with is your idea of increasing the financial burden on those people with increased taxes and fines
But you are ok increasing the financial burned of everyone (including those who don’t stand to benefit at all), and to benefit the richest the most?
I must concede that, in a sense, since we are all going to benefit from eco-friendly homes we should all pay for it… but it’s not just to finance that via general taxation, because that basically means income tax (which in turn basically means the workers pay most of it).
A more just way to finance such incentives would be via property tax (and specifically property of buildings, since it doesn’t make sense for people to contribute based, eg, on what cars they own), and of course it would make sense to exempt those buildings who are ok with regulations… what remains is essentially a fee or extra tax on the non-conformant properties (*)
(*) actually, a better way to do it all would just be to increase excises on fossil fuels a lot, since limiting fossil fuel usage is what we are really after and if I had a house on the beach where I went 2 weeks a year in summer it would make zero sense (economic or ecologic) to renovate it so that it needs less heating gas
edit:
I just realized I keep using “just” and “better” without specifying what I mean. Let’s analyze that a bit more in depth.
We want buildings to be renovated to be more eco-friendly. Well, let’s assume we want that… personally, I’d say that are cases (eg. holiday homes) where not renovating may be more eco-friendly that renovating and cases where renovation might not be the most efficient way to go (eg. for buildings in hot climates, a couple solar panels to run HAVC units from will probably make much more sense than changing windows and/or coating the whole building with insulating material).
Now the question is: who do we want to pay for renovating?
One way would be to say “everyone should pay according to what they get out of it”. In this case, after quantifying the immaterial benefit for the general population against the very much material one for business owners, it would make sense to create incentives (the form of which really doesn’t matter) that the general population pays landlords to renovate their buildings. By no means the incentive should cover all renovation costs and fines will also be necessary, otherwise people will just ignore the whole regulation (actually, they would exploit it when they independently decided to renovate for other reasons and otherwise ignore it).
Another way (the one I advocate for) would be to say “whoever pollutes the most pays the most, and the ones who don’t pollute don’t pay”. In this case, incentives do not make much sense, and one should instead fine the ones who pollute. We can decide those are the landlords, and it will push them to renovate; we can decide it’s whoever fits the heating bill and it will push them to pressure the landlords to renovate and/or to move to a more eco-friendly building, the final result should be the same either way. Having landlords pay would probably lead to quicker results but leaves the problem of different climates and mostly unused buildings; increasing excises on oil/gas would be slower to get the desired effect and exacerbate social tensions between landlords and non-landlords (which are already quite hot). I’m not really sure which way would be preferable.
PS: as for those who could lose their home, I don’t see why we should give special treatment to those who lose it because of this law over other causes. We can talk social housing, but let’s do it in the context of social housing, not that of eco-renovations
You can tax as usual and have some renovations, or tax less and have more renovations.
You don’t seem to get my point. How much money would someone who rents their house (or someone who owns it but doesn’t own more) pay? How much tax cut would they get? What about someone who owns three villas and six airbnb apartments?
I get it: you would bind the tax discount to individual wealth.
What if I’d tell you that a minimal renovation would eat the earnings from a rented house for 5-10 years and be therefore completely anti economic for the landlord?
Nope.
I’m saying that a tax cut is just a different form of taxpayer money and asking why, in the first place, we should want to use taxpayer money to increase the value of the assets of people (or companies) who own buildings.
What if I’d tell you that a minimal renovation would eat the earnings from a rented house for 5-10 years and be therefore completely anti economic for the landlord?
I would really feel for that poor-poor landlord who would no longer be able to live off the rent they are paid every month (and who surely would not just increase such rent), but I still wouldn’t want to use my money for improving their building.
PS: income is not a measure of wealth. One can live off their wealth (often inherited) and still generate little or no income.
I’m afraid you know little about the real estate business, and are blinded by the assumption that landlords are all just rich bastards.
Your PS is correct if you, like Elon Musk, are able to live borrowing money using your wealth as a collateral. For most of wealthy people that’s impossible.
Did I ever say landlords are a bunch of rich bastards? This is twice you put words into my mouth. IDK if it’s a way of thinking or a deliberate debate technique, but please stop: it’s really irritating.
Also, since “you are afraid I know little about the real estate business”, would you be so kind as to enlighten me with your wisdom? or should I defer to your authority and just trust you? (BTW: we are not talking about how things work - we are talking about how we think they should work. I know full well that building and renovations -among other activities- are often incentivized. That has much more to do with politics than ethics).
I would really feel for that poor-poor landlord who would no longer be able to live off the rent they are paid every month
Did I ever say landlords are a bunch of rich bastards? This is twice you put words into my mouth.
Mind your tone if you don’t want to be misunderstood.
would you be so kind as to enlighten me with your wisdom?
Sure. Real world example:
- Apartment rented for €700/month.
- Tax on the rent around 30%.
- Property tax €1.500.
- Expenses from the building about €1.500/year.
- Fees for the agency 5%/year.
Total: €2.880/year. To that, subtract the fees for the agency and occasional maintenance that can range from €100 to a few thousands per year. Yes, it’s possible to go negative.
A minimal renovation to improve the energy class (like changing the windows) is in the €10-15.000 range that means that no landlord will find it economically reasonable. A lack of renovation of rented properties means that who lives in them (including poor working class) will have higher energy bills and lower quality overall. When an apartment becomes too old to be rented out, it is sold and typically stops to be rented out limiting the number of affordable homes for the low income class.
So, before complaining because a tax cut may help “poor-poor landlords”, remember that without them there will be no renovations (so 0 taxes instead of a positive discounted amount) and low income families will not see improvements in their places very easily.
To me it feels like no additional law is required - those with bad buildings will pay more for heating. If they carry those costs to tenants their rent will be higher than others and they will no longer be competitive.
Except there is a big housing shortage, so tenants will have to accept those higher rents.
True, but higher rent apartments will be at a disadvantage and will be rented out after the cheaper ones.
Agreed: if anything we should tax combustibles more to make them less appealing
O&G is actually subsidized.
Maybe only where you live?
AFAIK in most places (and certainly where I live) people pay taxes on heating oil/gas (VAT and oftentimes excises too)
The subsidies come mainly in a form of tax breaks for producers.
But… we were talking about disincentivizing the use of fossil fuels (so that less is burned), not their production (so that more is imported)
