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13.11.2018

Local governments using the opportunity to build modern rental housing

Local governments are able to apply for investment support from KredEx for the development of public housing

Thus far two application rounds have taken place, during the course of which EUR 16 million in support has been granted to 14 local governments for the construction of 18 rental housing buildings or the reconstruction of already existing buildings. The new application round will open on 3 December and applications can be submitted until 4 February 2019.

According to Regina Michaelis, Head of the Housing Division at the Ministry of Economic Affairs and Communications, the rental housing programme will help local governments to erect new buildings in places where there is a need for modern rental apartments. “New jobs are being created in many places across Estonia, however the available housing stock is out of date and those jobs remain unfilled due to a lack of good places of residence. In order for life in Estonia to also develop outside of big cities, the state must help in the creation of so-called places of residence as well as the provision of necessary services,’ said Michaelis.

Support for developing the local government housing stock can be used for the construction of new buildings or the reconstruction of existing buildings. In particular, the support is geared towards increasing the mobility of the labour force across Estonia, but also fulfils the goal of allowing low wage specialists to rent a modern residence for themselves. Support can also be applied for the construction of rental housing for underprivileged target groups. In total, the state is contributing more than EUR 60 million over a period of three years to the development of rental housing, with more than EUR 16 million having already been covered by applications received during previous rounds. So far support has been granted to 14 local governments, for a total of 18 buildings, of which 10 are new structures and 8 are buildings undergoing reconstruction. Applications have been submitted from across Estonia.

According to Triin Reinsalu, Head of the Housing and Energy Efficiency Division at KredEx, local governments have a great interest in the construction of modern and energy efficient housing. ‘It is positive that in addition to the construction of new rental housing the support is also being used for the complete reconstruction of existing buildings. For example, Valga Municipality Government is planning to fix up an architectural heritage monument, which will definitely have a positive effect on the city space, while also helping to alleviate the shortage in rental housing.

Acceptance of applications will once again begin on 3 December and applications can be submitted until 4 February 2019. Support of up to 50% is available, with the remaining costs having to be borne by the local government’s budget. The maximum grant amount for all application rounds combined is EUR 2.5 million per each local government.

The terms and conditions for investment support for the development of housing that is intended for local governments can be reviewed on the KredEx homepage at www.kredex.ee/toetus

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