CEPI:n tiedote 47

1. The recast of the Energy Performance of Buildings Directive (EPBD), 2. The Commission consults on new energy strategy, 3. Contract law, 4. State aid and Finnish Real Estate Investment Trusts (REITs), 5. State aid and Dutch housing associations

1. The Recast of the EPBD

On 18 May the European Parliament adopted the recast of the Energy Performance of Buildings Directive (see CEPI.eu#46). The recast of the Directive has been the cause of much discussion and many changes were made to the final version by the European Parliament from the original draft presented by the European Commission. Overall it will strengthen the regulations on energy efficiency of buildings. Specifically the recast provides that all buildings built after 31 December 2020 must have high energy-saving standards (nearly zero energy) and be powered to a large extent by renewable energy. Existing buildings will have to improve their energy performance after major renovation if feasible. Energy performance certificates will be required for any building constructed sold or rented and the certificates will have to provide recommendations for improvement. They may also include additional information as to the annual energy consumption and percentage of renewable energy. The energy performance indicator will have to be published in all commercial advertisements for property.

Member States will have to state clearly what financial measures they have adopted and there will also be financial penalties for non-compliance. Member States have until the end of 2012 to transpose the Directive into national legislation.

The implementation of the original EPBD was long and difficult with a lot of inconsistencies. As mentioned in CEPI.eu#46 it will be very important to follow the implementation of the recast in Member States. The CEPI Secretariat will be producing a guide shortly for member associations highlighting the most important aspects of the recast to help them monitor the implementation in their own countries.

2. The Commission Consults on New Energy Strategy

The Commission has given stakeholders until 2 July to comment on the EU's new energy strategy. The new energy strategy is expected to be approved by the European Council in March 2011 and would replace the current European Energy Action Plan. There is concern about the shortcomings of current EU energy legislation which include underachievement of energy efficiency potential. The Commission has published a statement (in the form of a stock taking document "Towards a new Energy Strategy for Europe 2011-2020") outlining the key elements of the new strategy, one of which is greater investment in infrastructure and also education and skills.

The Commission also promises complementary measures, for example to ensure the availability of skilled labour. Policy goals include:

•    developing smart grids/meters as well as energy networks;

•    improving framework conditions for investments in renewing power generation and infrastructure;

•    more integrated regional and European energy markets;

•    developing local, integrated solutions for energy, waste management and sustainable transport and housing;

•    tools to promote consumers' smart use of energy, energy taxation and phasing-out of fossil fuel subsidies;

•    "green" public procurement;

•    protecting consumers.

The Commission wants to promote discussion of the issues in the stock taking document. It is available at http://ec.europa.eu/energy/strategies/consultations/2010_07_02_energy_strategy_en.htm. Your comments can be sent to ENER-ACTION-PLAN@ec.europa.eu. If you do respond please remember to send a copy to the CEPI Secretariat. If there are enough responses, a common position can be established on behalf of CEPI.

3. Contract Law

The European Commission is looking for solutions on contract law. It has convened a legal expert group of 18 contract law experts, lawyers and consumer representatives, to propose ways to improve contract law in the European Union. There will be a public consultation in the summer which will cover cross-border problems faced by consumers and businesses and how best to solve them. One possible solution could be an optional European contract law. This would mean the right to opt to use the relevant European contract law instrument, rather than the national alternative.

4. State Aid: Finnish REITs

The European Commission has authorised, under EU state aid rules, the introduction of REITS in Finland which will be exempted from corporate income tax in order to encourage investment in affordable rental housing. Any profits made by the trusts will be subject to tax at shareholders' level in the same way as any profits made by individual investors investing directly in the real estate market.

To benefit from the corporate tax exemption, REITs will be publicly-listed and no single shareholder will own, directly or indirectly, more than 9.99%. REITs will only operate in the field of rental accommodation with at least 80% of their gross income coming from rents and will distribute at least 90% of their annual profits to shareholders as dividends.

However the Commission also decided that a provision allowing REITs to use up to 30% of their annual profits to create tax exempt re-investment reserves would constitute incompatible aid. This provision was not therefore implemented by the Finnish authorities.

For member associations which are interested in decisions on state aid there is now a State Aid Register on the DG Competition website at http://ec.europa.eu/competition/state_aid/register/ii/#by_case_number . The case referred to will be made available under case number N 131/2009 once any confidentiality issues have been resolved.

5. State Aid and Dutch Housing Associations

On 30 April 133 Dutch social housing organisations filed an objection to a decision of the Commission on the compatibility of Dutch social housing with rules on competition. The decision stipulates that housing associations may only allocate social rental dwellings to households with an income of €33,000 or less per year. The social housing organisations argue that this excludes half a million modest middle-income households in the Netherlands from social housing.

The concern of the Commission (dating back to 2005) is that it sees the fact that more than 30% of the housing stock is owned by bodies that receive state aids is disproportionate with the aim to house "the most vulnerable". Accordingly the Dutch government introduced an income ceiling of €33,000 or less per year for social housing and stated that the housing corporations should focus on answering the housing needs of the most vulnerable. It imposed a maximum rent of €650 per month.

The basic question at issue is should housing policies be targeted to provide for the most vulnerable only, or focus on a wider and more holistic role. It also raises questions about the advantages available to housing associations in the rental market. More information is available on the website of the association representing the interests of social housing www.cecodhas.org.

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