The progressive reduction of building subsidies opens up a question that goes beyond the future of individual bonuses: how to finance the redevelopment of Italian real estate in a phase in which European objectives require accelerating the improvement of the energy performance of buildings?
The risk of a slowdown in investments
A deep energy requalification often requires a significant initial investment, while the economic benefit deriving from the reduction in consumption is recovered over the years.
The problem is particularly evident in condominiums, where financial difficulties are compounded by the need to coordinate owners with different incomes, ages, financial resources and time horizons.
Reducing the incentive without simultaneously building instruments capable of financing the initial cost therefore risks producing a slowdown in interventions just as European objectives require accelerating the transformation of the building stock.
The EPBD changes the horizon
The European Directive 2024/1275 on the energy performance of buildings (EPBD) sets a long-term objective: the transformation of European real estate towards zero-emission buildings by 2050.
For residential stock, Member States must ensure a reduction in average primary energy consumption of at least 16% by 2030 compared to 2020 and 20-22% by 2035. At least 55% of the reduction must be achieved through interventions on buildings belonging to the 43% of the residential stock with the worst performance (European Parliament & Council of the European Union, 2024).
For non-residential properties the system is different and provides thresholds referring to 16% and 26% of the assets with the worst performance, from 2030 and 2033 respectively.
It is therefore important to avoid a widespread simplification in the public debate: the directive does not establish that every Italian home must automatically reach a certain energy class by 2030. For the residential stock it instead introduces a trajectory referring to the average reduction in national energy consumption.
This flexibility leaves States an important margin in the choice of instruments. And it is precisely here that the debate on the Italian incentive policy opens.
The energy class can become part of the value of the property
The energy transition will also have consequences on the real estate market. The value of a home traditionally depends on location, surface area, construction features, state of conservation and available services. However, energy performance is destined to take on an increasing importance.
Two properties similar in location and size but belonging to very different energy classes entail different management costs and investment prospects. Purchasing an inefficient building may mean having to subsequently incur costs for insulation, windows, systems or renewable sources. An already efficient building instead incorporates at least part of these investments.
The energy class can therefore progressively transform from technical information to an economic variable of real estate value.
This dynamic already finds empirical confirmation. A study by the Bank of Italy based on the Italian real estate market estimates, other property characteristics being equal, a price differential of around 25% between homes with the best energy performance and those belonging to the worst classes, albeit with significant differences between territories (Loberto et al., 2023).
This could lead to an increasing segmentation of the market: efficient properties could benefit from lower management costs and greater marketability, while the more energy-intensive ones could suffer a discount capable of incorporating at least part of the future redevelopment costs.
From the generalized bonus to more selective incentives
Future Italian policy could therefore overcome the alternative between exceptionally generous incentives and progressive public disengagement.
One possibility is to build a more selective system in which support is more closely linked to the energy result obtained. Incentives could be concentrated on buildings with the worst performance, on families with less financial capacity and on interventions capable of producing the greatest energy savings compared to the public resources used.
This system could be supported by financial instruments capable of reducing the need to fully advance the capital: loans for redevelopment, green mortgages, public guarantees and, possibly, new strictly regulated forms of mobilization of tax credits.
The credit market is also showing signs in this direction. According to an analysis by the Bank of Italy, in 2022 around 30 banks, representing almost half of the assets of the Italian banking system, disbursed 3.5 billion euros of green mortgages, equal to 12% of the total mortgages disbursed by the institutions considered. Furthermore, between September 2022 and June 2023, green mortgages had on average an interest rate approximately 7 basis points lower than other mortgages (Abate et al., 2024).
The principle should be simple: less dependence on exceptional rates, greater ability to transform reasonable incentives into actually financeable investments.
A new role for real estate professionals and operators
This transformation directly concerns designers, technicians, condominium administrators, companies, banks and real estate market professionals.
During the season of large bonuses, a significant part of the demand was generated by the fiscal convenience of the intervention. In the future it will be increasingly necessary to demonstrate its overall economic convenience.
How much does the surgery cost? How much does it reduce consumption? What is the payback time? How can it be financed? How much can it affect the value and future marketability of the property? Energy requalification therefore becomes a process in which technical expertise, financial analysis and real estate evaluation must be integrated.
From incentivized spending to investment
The progressive reduction of bonuses does not eliminate the need to redevelop Italian real estate. Rather, it requires identifying more sustainable tools.
The experience of recent years leaves an important lesson. The ability of a public policy to mobilize investments does not depend only on the nominal percentage of the incentive, but on its financial architecture.
The transfer of credits had introduced a particular mechanism: the private individual could transform a future tax benefit into present liquidity, while for the State the effect on revenue could be distributed over the following years. This mechanism has also produced significant critical issues and must not be idealized. But eliminating its excesses does not necessarily mean giving up the economic principle that supported it.
A future redevelopment policy could recover that ability to mobilize capital through less generous but more selective, controlled and results-linked incentives, integrating them with bank credit and sustainable finance.
The Italian challenge will therefore be to reconcile three needs: sustainability of public finances, ability of families to finance interventions and achievement of European decarbonisation objectives.
The decisive question is no longer just how much the state has to reimburse for a renovation. It’s like using every euro of public support to activate the greatest possible volume of investments, energy saving and valorisation of real estate assets.
It is on this transition – from incentivized spending to energy and asset investment – that the next phase of Italian building redevelopment will probably be played out.
