Inflation has stalled the renovation of apartment blocks in Lithuania. As construction costs increase, companies are unwilling to participate in undervalued tenders, while residents are not fond of paying more than initially planned.
Mindaugas Gikas was one of the initiators of the renovation of a five-storey apartment block in Vilnius. He says he and his neighbours hope to save on heating and make the house more appealing to live in: “Now, the fifth floor is not only cold in winter but also hot in summer.”
The renovation project has taken more than two years to prepare. The reconstruction works should already begin, but nothing is happening, Gikas says.
Renovation works are stuck in many more places. According to Sigitas Cirba, head of Naujininku Ukis, the administrator of apartment buildings, renovation projects are ready for 30 apartment blocks in Vilnius’ Naujininkai neighbourhood. However, only three houses are currently under renovation in the area.
“The last step is to announce the tender, choose the winner and continue to develop the projects,” Cirba says.
Last month, 10 renovation tenders were announced, but not a single company responded.
“No one wanted to carry out renovation works at project prices. The builders think that the prices are 20-25% lower than what is acceptable for them,” the administrator adds.
Dalius Gedvilas, president of the Builders’ Association, says that companies are reluctant to get involved in renovations because “most of those who try end up with losses or bankruptcies”.
Environment Minister Simonas Gentvilas blames renovation administrators for the stalling works: “Often they are simply unwilling to tell the residents that construction costs have increased.”
The increase in prices means that renovation projects must be prepared anew and renegotiated between neighbours. But not everyone is willing to pay more.
Cirba, head of Naujininku Ukis, says that renovation is also stalling because of the Environment Ministry’s decision to require the renovated houses to reach the energy efficiency class A or B, instead of the previously allowed C.
“This increase in quality is causing an increase in price. It’s up to two times more expensive to renovate a house up to class A than to class B or C. All this financial burden falls on the apartment owners,” he said.
The environment minister urges residents not to postpone renovation because it will cost even more in the future.
“Those who renovate sooner will save money. In the future, the state support will definitely decrease,” Gentvilas said.
To speed up the process, the Builders’ Association has proposed changes to the renovation financing model. They call for the state to pay a fixed amount per square metre rather than organising public tenders and covering 42% of the estimated costs.
“Residents would know that, for example, 600 euros will be paid for a square metre. Then, if a resident’s apartment is 50 square metres, he knows that he could get a subsidy of 30,000 euros. Then, he could talk to his neighbours and organise the renovation,” president of the Builders’ Association Gedvilas said.
“Now, renovation tenders are announced five times or more, which is a waste of time,” he added.
The environment minister says the fixed-price renovation model should be implemented next year.
The government has set a target of renovating 1,000 apartment blocks per year. As of mid-October, the renovation of 290 houses has been completed. (LRT/Business World Magazine)