How to budget and finance your home's energy-label improvements

Are you tired of wrapping yourself in a blanket while working or sitting on your couch? Miyo Okuda, the founder of Terra Maxima, walks you through the process of how to budget and finance your energy improvements in three steps!

Since the energy crisis, the Netherlands has experienced two winters where many of us consciously tightened energy usage at home to save costs. A silver lining under this economic climate is that there are now various financing possibilities to improve your home's energy efficiency, and hence its comfort and value.

Step 1: Understand your house's current state and needs

The first step is to check if you have an energy label certificate for your home. If the answer is yes, it is good news! This certificate shows you the property's insulation levels, glazing quality of windows, type of heating system and, more importantly, improvement suggestions.

If you cannot find your energy label certificate, it is advisable to ask an expert to inspect your home. They can help you understand the current energy-efficiency level and give you specific improvement points.

You can contact an energy advisor, an advisor from your municipality or a professional energy consultant.

Which energy label should you target?

Achieving an A-rating or higher is important as it gives you (A) a lower interest rate, (B) a significant value appreciation (3 to 10%), (C) lower energy bills and (D) long-term security.

Also important to know is that the Dutch A-rating is not necessarily the top rating in other nearby countries. The Dutch A+ rating is equivalent to a German / French B energy-rating or an Austrian C energy-rating! So, be aware of what you are trying to achieve!

Step 2: Estimate your budget

Once you know the measures to take for your home, you want to understand how much these improvements may cost. Most energy-saving projects in the Netherlands fall between €5.000 to €50.000 and includes materials, installation labour and removals plus VAT. However, these costs exclude structural works or finishing materials such as tiles. You will then ask various installers about your desired renovations and obtain quotations from them.

Alternatively, you might want to hire a contractor who can undertake the whole working scope if you are planning a large refurbishment. In such a case, be mindful that their work will be probably 10 to 15% more expensive than that of individual installers.

Real-life example

Let's dive a bit deeper into what costs to expect by using an anonymous, real-life example. Stefanie and Nick are a couple who have consulted with an expert and designed a renovation roadmap of their house. They have a 100-sqm terrace house that was built in the 1980s, which has undergone internal renovations including insulation works. Their final energy label shows a C-rating.

When they asked an energy expert for an assessment, they found that their house could achieve an A+ rating by spending €17.000 (floor and wall insulation, windows and solar panels) on energy improvements and an A++ (roof insulation, a hybrid heat pump and high-spec ventilation in addition to the above) by spending €38.000.

The couple were happily surprised that they could achieve an A+ rating for a lower cost than expected, so they decided to go for this option and explore the financing possibilities.

Step 3: Finance your works

Can you carry out these energy-saving measures even if you are cash-tight at this moment? The great news for people in the Netherlands is that from 2024, there are more financing possibilities and incentives to get your renovations done.

Loans

The Nationaal Warmtefonds provides flexible, annuity-based energy-saving loans to owner-occupiers and VvEs. They assess your current debt as well as your spending behaviour and determine the loan amount. They offer 0% interest for households with an annual income below €60.000. The benefit of this programme is that they do not require an appraisal report nor notarial documents - so it can be cash-free for you! Be aware that you can only utilise the facility if you get some paperwork from your contractor or installer and remember to receive invoices from them!

Mortgages

Mortgage lenders might be able to give you an additional mortgage (€10.000 - €20.000) to finance your sustainability renovation. On the other hand, if your current valuation is higher than the original, there is a possibility that you can borrow more as the loan-to-value ratio has improved. In any case, you will have to pay for an appraisal report and a notarial deed, which are expenses that you might not be so happy to have. However, the mortgage repayment is slower than energy-saving loans. Mortgage maturity is normally 30 years while energy-saving loans have a maximum of 20 years (however in most cases it is between 7 - 15 years). This makes the payment per month bigger for consumers.

Subsidies

The Dutch Enterprise Agency (RVO) has subsidies for homeowners / home occupiers who have implemented certain sustainable measures. The key point is that you first have to pay the installers yourself and have completed the work, and then the money comes back to you later in the future. The RVO can cover partial costs for this, but not everything. The subsidies may cover around 20 - 50% of the costs for improvement measures. If you have sufficient cash available, this option saves you the most in terms of investments!

There are specific conditions and requirements so you will need to familiarise yourself beforehand with what case is eligible (Check the RVO's website to read about ISDE subsidies for homeowners).

Plan your energy-saving renovations well

The difficulty of all of these processes is that there are so many workstreams and diverse subjects to cover that you cannot easily have a full picture of them. Ideally, you would like to see each measure's potential financial and environmental impacts in that picture.

With an energy expert next to you (if you hire one) helping you to navigate you through the jungle, you can easily plan, make decisions and weigh the priorities, merits and drawbacks. Make sure you plan your renovation well so that it can enhance the long-term value and comfort of your home!

Terra Maxima helps homeowners and potential homebuyers make a roadmap for their energy-saving and sustainable renovations and help to implement these plans together. It is a tailor-made, personal approach that enables people to build a long-term plan which fits their unique, financial and home situations. Learn more about Terra Maxima and their services by visiting their website.