The Financial Instrument for Urban Rehabilitation and Revitalization (IFRRU 2020), provides EUR 1.4 billion for urban rehabilitation in Portugal.
IFRRU 2020, created under Portugal 2020 (Partnership Agreement between Portugal and the European Commission), provides loans under exceptionally advantageous conditions, compared to those existing in the market. For an operation of one million euros, the average spread goes from 2.5% to 1.3%; and the initial fee will be 0.65% (of capital) for companies and 1% (of capital) for individuals, a reduction of 39% and 17%, respectively. The financing amount can go up to 20 million euros, with extended deadlines - maturity of 20 years for lease and seven years for sale - and grace for up to four years. IFRRU 2020 also provides a guarantee, accessible to companies.
IFRRU 2020 finances projects located in the urban rehabilitation areas defined by the municipalities, which in a simplified way are historical centers, abandoned industrial zones and riverine areas. Any type of beneficiary, whether individual or collective, public or private, can apply for the complete rehabilitation of buildings, for housing purposes or other activities, including the most appropriate integrated energy efficiency solutions for rehabilitation.
The applications are carried out at a branch of the commercial network of any of the four banks selected to operate under IFRRU 2020.
In order to boost investment, IFRRU 2020 brings together several funding sources, such as European funds from PORTUGAL 2020, the European Investment Bank and the Council of Europe Development Bank, combining them with commercial banking funds.
Evidence of success
In five months of activity, 200 investment intentions have been registered, amounting to EUR 750 million, as well as 30 applications, worth 100 million euros and 3 contracts have been signed.
The first rehabilitation project funded by IFRRU 2020 is located on the Madeira island and will cost 645,000 euros. It is expected to be completed by the end of the first half of this year.
Potential for learning or transfer
IFRRU 2020 is part of the Portuguese Government's strategy for creating the conditions for rehabilitation to be the main form of intervention in building and urban development. Rehabilitation must be the rule of the transformation of edification into the creation of new spaces. It must be clearly stated that the rehabilitation of urban and built-up areas emerges as an approach par excellence for sustainable urban development.
IFRRU 2020 stands out for the following reasons:
1. Each municipality has an interlocutor, who supports the licensing process;
2. In order to ensure the selection of the best solutions to increase the energy efficiency of the property to be rehabilitated, a qualified expert will carry out the Energy Certification process;
3. Applications are presented at the moment the investor considers most appropriate, with no pre-determined phases for submission and decision on applications, or limits on the number of applications.
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