Laws&Regulations - Bank Loans with Government Guarantee for the Thermal Rehabilitation of Residential Buildings

As of 30 June, 2010 the Romanian government adopted a support scheme for the increase in the energy efficiency of housing stock. The scheme offers government guarantees and subsidised interest for loans contracted for the thermal rehabilitation of housing stock. Homeowners' associations and owners of single-family housing can thus benefit from favourable credit conditions for the thermal rehabilitation of living space built and acquired by the end of 2000.

• BENEFICIARIES

The beneficiaries of the support scheme can be: homeowners' associations (non-profit legal persons) or owners of single-family housing (natural persons).

• ELIGIBILITY CONDITIONS

In order to benefit from the support scheme, a series of eligibility conditions must be met by the beneficiary, the living space and the envisaged rehabilitation works, as follows:

A. Beneficiary

The homeowners' association is eligible if: (i) each member of the homeowners' association does not owe more than two outstanding and unpaid installments of his or her share of the expenses of the homeowners' association during the last three calendar months prior to eligibility assessment by the financier, and (ii) the general meeting of homeowners, legally constituted, decided to contract the credit with the vote of at least 90% of its members.

Owners of single.family housing are eligible provided that they do not have more than two utility bills outstanding and unpaid (electricity, natural gas or water/sewage) within the past three months prior to the eligibility assessment by the financier.

The beneficiary must also comply with the conditions set by the financier's lending rules.

Both the financier and the constructor in turn have to comply with certain eligibility criteria of their own.

B. Housing

The living space has to have been built and acquired by the end of 2000.

C. Eligible rehabilitation projects

The following types of projects are eligible:
- Thermal insulation of the building envelope and related facilities (e.g. thermal insulation of exterior walls, roof insulation);
- Building repairs, if necessary, replacement/acquisition and mounting of the block/entrance central heating, the corresponding central heating of a single-family residence and its related facilities;
- Installation, if appropriate, of alternative systems for partial/complete provision of energy for heating water, lighting and/or heating.

• FINANCING STRUCTURE

Beneficiaries have to pay 10% of the value of the rehabilitation work from their own sources. The remaining 90% is financed through bank loans in Lei, with government guarantees and subsidised interest. The loan contracted by the beneficiaries is 100% guaranteed by the National Credit Guarantee Fund for Small and Medium Enterprises (FNGCIMM), in the name and on behalf of the State.

The loan (maximum 90% of the project's value) cannot exceed the following thresholds: 1,850 EUR per room, Lei equivalent, including VAT, for loans requested by homeowners' associations and 7,400 EUR, equivalent in Lei, including VAT, for funding requested by individuals, for single-family housing.

The local public authorities may decide to finance the thermal rehabilitation work for a maximum amount of 30% of the value stipulated in the general estimate.

The repayment period of bank loans with government guarantees and subsidised interest cannot exceed five years.

Legal framework:
• Government Emergency Ordinance No. 69/2010 regarding the thermal rehabilitation of living space financed by bank loans with government guarantees, published in the Official Gazette, Part I, no. 443 of 01.07.2010;
• Government Decision No. 736/2010 for the approval of the Implementation Rules of Government Emergency Ordinance No. 69/2010 regarding the thermal rehabilitation of living space financed by bank loans with government guarantees, published in the Official Gazette, Part I, no. 537 of 02.08.2010.

Cristina Daianu, Managing Counsel                                              Diana Poputoaia, Associate

This text is for informational purposes only. It is not intended to be used as legal advice nor is it an exhaustive presentation of the analysed issues. Salans does not assume any liability derived from its implementation or from the failure to implement the abovementioned. We recommend legal consultation for any given case related to specific legal problems.