The Ministry of Climate has completed a preliminary version of Estonia's national building renovation plan through 2050 and is now seeking public feedback. Under the plan, Estonia's building stock is expected to be energy-efficient and low-carbon by that date.

The document estimates that the public and private sectors will need to invest €8.6 billion in building renovations between 2026 and 2035, while the state will need to allocate approximately €1.5 billion to renovation grants and financial instruments to support those investments.

The plan sets a target of reducing the average primary energy consumption of Estonia's entire housing stock by 20–22 percent by 2035. More than half of that reduction is expected to come from renovating the 43 percent of residential buildings with the poorest energy performance. These are defined as apartment buildings constructed before 2000.

The renovation plan also covers non-residential buildings, for which minimum energy performance standards will be introduced to reduce the share of the least energy-efficient properties.

Under the proposal, at least 16 percent of the least energy-efficient non-residential buildings must be renovated by 2030 and at least 26 percent by 2033. Additional interim targets will be set for subsequent years.

The Ministry of Climate sees the public sector as leading by example. Beginning in 2028, all new public-sector buildings must be zero-emission and at least 3 percent of the floor area of buildings used by state institutions will be renovated each year.

Building renovations will be guided by cost-effectiveness principles. For residential buildings, this means prioritizing comprehensive renovations, while non-residential buildings will be upgraded in line with minimum energy performance standards.

Homeowners will be supported primarily through measures aimed at making financing more affordable, including loan guarantees and co-financing instruments. Non-repayable grants will be targeted mainly at lower-income households.

In addition to financial support, the plan envisages practical assistance for renovation projects through technical advisory services, standardized energy-efficiency procurement procedures and digital tools. The aim is to accelerate the pace of renovations by making the organizational aspects simpler for homeowners.

For apartment associations, non-repayable grants will remain the primary support measure, supplemented by state-backed loans and guarantee instruments.

The plan favors renovation solutions based on factory-produced prefabricated elements, which are expected to improve construction quality and shorten building timelines, enabling a faster pace of reconstruction.

When designing funding measures, the government will seek to maintain regional balance, preserve culturally valuable buildings and support vulnerable households. It also plans to continue organizing bundled procurement projects to achieve economies of scale. For public-sector buildings, the goal is for the state to set an example.

Tax incentives aimed at renovation mulled

Tax incentives to support the renovation of apartment buildings are also under consideration. According to the plan, such measures could have a significant positive impact, while nearly 30 percent of construction costs would return to the state budget through tax revenues, creating a stable tax base that could be reused for targeted support measures. However, the document notes that the idea requires further analysis, as tax incentives have not previously been used for this purpose.

The plan also proposes amending the Apartment Ownership and Apartment Associations Act to reduce legal obstacles. The current framework is considered overly complex in some cases and does not clearly specify the voting thresholds required for different types of work.

As a solution, the document proposes legislative changes stipulating that apartment associations would need a simple majority for routine management decisions, a 51 percent majority for reconstruction and modernization projects and a nine-tenths majority for major alterations.

The proposal would also amend provisions governing jointly owned property. At present, converting a basement or attic into a new apartment unit requires the consent of all apartment owners. Under the proposed changes, a nine-tenths majority would be sufficient in buildings with at least 10 apartments.

In 2020, there were nearly 239,000 buildings in use in Estonia, about three-quarters of which were residential. Buildings constructed before 2000 accounted for nearly 82 percent of the total net floor area. These buildings have substantial renovation needs and are the primary target group of the renovation strategy.

By 2020, approximately 33 percent of apartment buildings constructed before 2000 had been renovated, compared with about 10 percent of detached and semi-detached homes.

By 2050, Estonia will still need to carry out comprehensive renovations on roughly 10,000 apartment buildings and phased renovations on an additional 2,500.

The Ministry of Climate plans to complete the final version of the national renovation strategy in December of this year.

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