There are more than 39,500 multi-apartment residential buildings in Latvia, and renovation is necessary for at least 26,600 of them. However, currently, only about 4% of such buildings have been renovated, and the responsible ministries have not utilized all opportunities to improve the accessibility of renovation funding. This conclusion was reached by the State Audit in an interim report of the audit, reports LETA.
The State Audit assessed whether the existing support mechanisms contribute to increasing the energy efficiency of apartment buildings. The interim report was prepared as part of the audit "Do investments in heating supply and increasing the energy efficiency of buildings ensure sustainable and economically justified heating?".
According to estimates, apartment residents pay 360–390 million euros annually for heating energy, and at current rates, these expenses will exceed 10 billion euros over 20 years. The State Audit emphasizes that timely renovation of buildings could significantly reduce these costs while improving the quality of life and increasing property values. However, the audit shows that due to the rapid rise in renovation costs and lack of funding, even motivated residents are forced to postpone renovation decisions, facing unpredictable expenses and insufficient support.
State Audit Council member Mārtiņš Aboliņš points out that more than half of the apartment buildings in Latvia were built 40–50 years ago and have not received the necessary investments for updates.
"As a result, the condition of the buildings is gradually deteriorating, and the high level of energy consumption leads to excessively high heating bills," he says.
He emphasizes that renovation is not just an updated facade, but a necessary condition for housing to be of high quality, energy-efficient, and economical to maintain.
"The longer the decision on renovation is postponed, the more expensive it becomes. However, today in Latvia, only about 4% of housing has been renovated, which clearly shows that solutions need to be sought to make renovation easier and more accessible," notes Aboliņš.
Nevertheless, residents' interest in insulation is growing. For example, this year, funding from the renovation program by the development finance institution "Altum" was fully reserved in less than a month and a half. This indicates people's readiness to act when financial support is available, believes Aboliņš.
At the same time, the State Audit notes in the audit that the Ministry of Economics and the Ministry of Climate and Energy have not used all possible tools to expand the availability of renovation funding.
It turned out that the awareness of apartment owners is still insufficient and often becomes a serious obstacle to starting renovations. According to a survey conducted by the State Audit, only 39.5% of owners are aware of the possibilities for increasing energy efficiency or complete renovation of buildings, while 29.8% are partially informed.
Only 8% of respondents know at least the approximate cost of renovation. According to the State Audit, this means that often there is simply a lack of basic information to make a decision. This is also reflected in the dynamics of the processes: in 44.4% of cases, the meeting of owners, where a decision on renovation should be made, has to be held three or more times, and projects often get stuck even before the technical work begins.
Furthermore, as noted by the State Audit, a significant portion of residents do not receive targeted information about renovation opportunities at all — 57.8% of respondents indicated that they were never offered participation in building updates. The main obstacles to making a decision on renovation are concerns about costs (30.2%), quality of construction work (22.7%), and complexity of procedures (15.6%).
Professional project management assistance is currently available only after obtaining a loan, although the most complex tasks — preparing documents, gathering technical information, and convincing residents — should be done beforehand. The State Audit found that at this stage, homeowners often remain without support, and this is one of the main reasons for delays and increased costs of projects.
It has also been established that the volume of responsibilities placed on apartment owner societies (which often operate on a voluntary basis and without professional training) is disproportionate and exceeds their capabilities. According to the survey, due to poorly prepared documents, some societies had to redevelop the project, which caused significant delays and increased costs.
The State Audit emphasizes that the rapidly rising construction costs in recent years are one of the main barriers to updating buildings, as they significantly reduce the economic return from renovation for residents. Since 2017, project-related costs per square meter have increased by 127%, while overall construction costs have risen by 52%. This means that the rise in renovation costs is twice the inflation rate in the construction sector. As a result, in 54% of completed projects, the annual savings on heating do not cover the monthly loan payment, which can exceed two euros per square meter.
The State Audit also believes that the return on investments in increasing energy efficiency has become insufficient for residents to be confident in the financial benefits — especially with an average project cost of 880,000 euros per apartment building.
The survey shows that the increase in property value after renovation is not a key motivating factor for most owners: only about a third consider it important. A significant portion either does not feel an increase in value or has not been interested in it, and nearly 29% do not consider this aspect significant at all, as they do not plan to sell or rent out their housing.
The State Audit found that not all opportunities are being utilized in Latvia to ensure more accessible renovation funding. The Ministry of Economics has not yet applied tools to attract more favorable loans or reduce interest rates, although this would significantly increase the economic return of projects. The fixed rate offered by "Altum" — 3.9% — is higher than in Estonia and Lithuania. Its reduction would increase the number of projects where savings on heating exceed the monthly loan payment for renovation, believes the State Audit.
Additionally, Latvia lacks targeted support mechanisms for low-income households: 18.7% of residents already consider housing costs "very burdensome," 6.7% cannot ensure adequate heating, and 42% are not willing to pay more than 0.5 euros per m² for renovation. In such conditions, socially vulnerable groups cannot participate in renovation projects, which increases social tension and adds pressure on municipal benefits, notes the State Audit. Without more favorable financing conditions and clearly defined support for these groups, the pace of renovation in Latvia will remain insufficient and uneven.
Aboliņš emphasizes: for residents to make informed decisions about updating their homes, clear and easily accessible information about the costs and results of already implemented projects is necessary. "Currently, such information is lacking — the data is fragmented and unusable without deep analytics. This limits both the quality of planning and the ability to compare prices, assess risks, and understand the real costs of renovation," he says.
It was previously reported that today at 10:00, the State Audit is organizing an expert discussion on the challenges and opportunities of the housing insulation process.
The institution notes that the housing stock in Latvia is aging, and for a long time, its renovation has been insufficient. However, there are still obstacles that hinder the updating of apartment buildings and the implementation of energy efficiency measures. The expert discussion will be organized to improve the situation and seek specific solutions.
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