From 1 November, local municipalities can apply for grants for building rental houses

Starting from November, local municipalities that are interested in the development of their housing stock can apply for a grant for this purpose from KredEx. In total, the state is going to provide more than 60 million euros to the development of rental housing over the course of three years, of which 2.5 million will be supplied this year. Application is open until 30 December.

The grant for the development of housing stock can be used for building new rental houses or the reconstruction of existing buildings with the purpose of using them as rental houses. The building and reconstruction of rental houses will ensure the better availability of housing for a mobile workforce in areas where the demand for housing surpasses the supply and the construction cost exceeds the market value.

“Many enterprises and institutions outside Tallinn and Tartu are struggling to recruit employees, because it is not possible to find a modern place to live with low auxiliary costs for the people in the area,” said Urve Palo, the Minister of Entrepreneurship and Information Technology. “The construction of rental housing would give the local municipalities and their local enterprises the opportunity to attract households to live and work there.”

She adds that the local municipalities will also be able to provide a warm and clean home to disadvantaged people and people with special needs, as well as the elderly and large families.

In the first year, the grants will be distributed among local municipalities outside the impact areas of Tallinn and Tartu. Due to the deficient housing stock, these areas are in a weaker position when competing for the workforce compared to Tartu and Tallinn.

According to Triin Reinsalu, Head of the Housing and Energy Efficiency Division at KredEx, a lot of attention is paid to the energy efficiency of buildings when devising the terms of the grant, and among others, the houses’ suitability for urban spaces is assessed. “Taking into account that in the construction of new rental houses, they must comply with the energy efficiency class A, and in the case of reconstruction, at least class C, the houses built and reconstructed will be low-energy and modern in all ways. Among others, the grant makes it possible to adopt novel solutions, from which all market participants can learn,” said Reinsalu.

This year, 2.5 million euros have been planned for the grant, and for the next three years, 20 million euros per year. The grant amount is up to 50%, the rest of the costs must come from the local municipality’s contribution. The maximum grant sum throughout all application rounds is 2.5 million per local municipality.
Starting from next year, it will be possible to apply for grants for constructing rental housing for disadvantaged groups and the regions of Tartu and Tallinn are added.