State Housing Development Fund (SHDF)

State Housing Development Fund (SHDF)

More information


1996 – present

Geografic scope



  • Individuals
  • Households
  • Associations of owners
  • Villages and autonomous regions
  • Building administrators
  • Non-profit organisations

Managing body

Ministry of Transport, Construction and Regional Development of the Slovak Republic

Other stakeholders involved

  • District-level municipalities
  • European Regional Development Fund (ERDF)
  • JESSICA Fund
  • State Guarantee and Development Bank

Volume of funding

€168 million (for 2019)

Funding method

As a result of the successful uptake of funds under the 2007-2013 programming period, a tripartite agreement between the Ministry of Agriculture and Rural Development, the Ministry of Transport and Construction and the State Housing Development Fund (SHDF) was reached regarding the implementation of the financial instrument to increase the energy efficiency of buildings through the renovation of residential buildings.
The amount devoted to providing SHDF loans for renovation of the (mostly) multifamily buildings is substantial compared to the size of the country. However, it is a revolving fund, so after 15 years of operation by now approximately 40% of the funds are coming from the state (CO₂ emission and EU funds) budget, while about 60% are repayments of the previous loans, so the fund is becoming partly self-sustainable.

Financing method: There are different interest rate levels for the different types of interventions. However, if an applicant chooses to combine different types of interventions, they get a bonus on the interest rate: e.g. combining two interventions results in choosing the lower rate from the two possibilities, combining three interventions means the lowest interest rate less 0.5%. Even a 0% interest rate can be achieved. By this combined interest rate system, the Ministry aims to encourage more complex interventions. From 2013 SHDF loans are financed not only from national resources but from the resources of the JESSICA Fund. These were used to finance purely the insulation of multifamily buildings with very similar conditions to the original SHDF loan, and operated by the same system. From 2015 JESSICA finances practically all the same renovations as the SHDF itself. The only difference between the two loans is in the duration of monitoring of consumption of heat: SHDF requires three years’ monitoring while JESSICA requires five years. In practice the applicant submits the application to the SHDF and the Fund will allocate the financing from the available budget, whether state budget or JESSICA Fund.

Own contribution

The preferential loan can reach 75% of the investment costs. The 25% own share can also be financed throughout financial institutions in the form of commercial loans. The maximum repayment term of the loan is 20 years.

Target socioeconomic group

The SHDF grants loans at favourable interest rates to natural persons that are both citizens and permanent residents of the Slovak Republic aged above 18. The support is targeted mainly at young people and takes the form of a subsidised loan up to 75% of the procurement price, not exceeding €52,300 per flat. It is charged at an interest rate between 1 and 2% with duration of up to 30 years. Applicants have to fulfil strictly defined conditions, one of which is an income not exceeding 3.5 times the living minimum.

Target housing situation

SHDF is a major tool to finance several types of housing interventions governed by the state (e.g. building social housing, renovating the municipal stock, supporting the construction and thermal insulation of family houses). In the field of renovation of multi-family buildings the fund focused on the following action till 2014: 1) the reconstruction of systemic defects of buildings (referring to 12 systemic defects defined in 2006), 2) insulation of the building envelope. Inside the multi-family building stock, structural deficiencies can be eliminated in all types of buildings; buildings to be insulated must have been officially registered before 2002.

Eligible energy efficiency measures

In SHDF’s first years of the operation only minor interventions were allowed to be executed, but currently much more complex interventions are
required. For insulation projects, the whole envelope must be insulated including the windows, façade, roof, basement and balconies. For thermal insulation interventions there is a precondition to reach at least 35% energy saving as a result of the intervention. The thermal insulation of the building in itself is appropriate to eliminate 9 out of the 12 systemic defects in the eligibility list. However, insulation cannot hide systemic failures: e.g. before installing the insulation, applicants have to follow strict instructions to eliminate cracks and improve degraded concrete. As
well as insulation, SHDF also places importance on interventions to solve lifethreatening deficiencies like exchange of wiring, gas and electricity. From January 2014 there are six main purposes defined for interventions:
1) insulation of residential buildings
2) elimination of systemic defects
3) recovery of elevators
4) reconstruction/change of common gas, electricity, sewerage, water, and heat
5) creating barrier-free access
6) other modernisation works.
The vast majority of applicants apply for a combination of these interventions.

Targeted energy performance

  • Reduction of energy intensity of housing infrastructure through
    construction/technical interventions
  • Support of energy efficiency of thermal insulation of existing apartment

Process of application

The process of application is initiated by the homeowners represented either by the homeowners’ association itself or by a professional maintenance company (mainly generated by the manager of the building). A two-thirds majority of all the owners is required to support the participation (since 2010 it can be collected in a written form independently of the general assembly meeting). As the application
procedure requires significant technical and administrative knowledge there is a need to involve technical experts from the first steps. The existence of a systemic failure must be demonstrated by an authorised civil engineer including the results of a diagnostic of the construction of the building with a description of the system fault, the extent and degree of damage, the proposed method to eliminate it and the approximate cost.
The applicant submits a written application through the district municipality, which verifies the request and sends the application to the fund. After a completed electronic application is submitted, the application is assigned a serial number.
Within 90 days of receipt of the written copy of the application, the fund will assess the application and notify the applicant of the possibility of providing support. After this, the fund will send the applicant a draft contract within 30 days. All eligible projects will be financed up to the state financial limits on a first-come, first-served basis.
Preparing the application requires in general around six months, while the evaluation procedure also requires half a year. The completion date of the
intervention may not be later than 24 months after the opening of the account.


JESSICA/SFRB provides credit with no private capital leveraged (not taking into account the 25% own co-financing). The instrument has had several positive effects, reflecting the desire to use financial resources effectively in a repayable form. Support through loans is provided to citizens whose combined incomes do not exceed 3.5 times the subsistence minimum, thus targeting the neediest of a wide range of potential recipients.
One of the reasons behind the swift implementation of both the JESSICA and national instruments is a very good knowledge of the market. The SFRB has a very good overview of the market’s needs and failures thanks to its close cooperation with (potential) beneficiaries, so has easily targeted the segments that are lacking sufficient support and access to financial Instruments.
The instruments succeeded even without an intensive promotion campaign. The SFRB has, thanks to its history, a dense network of potential beneficiaries and so was able to use informal links and communication to ensure the necessary investment flow. Thanks to previous experiences, they were also able to make valuable recommendations when setting the conditions of the instrument so that they create favourable conditions for providing financial resources. Minimising the administrative burden was another important aim, though the burden of national administration as well as the rules and regulations related to EU funds made this challenging. The fund was able to support potential beneficiaries and flexibly help them with the administration of the application as well as with realising the investment. Although they do not provide any direct technical support along with the investment, the employees of the fund are able to help the beneficiaries within their competencies.
The fund also strictly defines the beneficiaries and projects for which the repayable support is determined so that there are no overlaps in support from grants and from loans.

According to the table above (and the SHDF annual report), approximately 150,000 residential dwellings have been renovated by means of the fund so far (including a small number of family houses) – although some of these buildings may have obtained the subsidy more if different parts of the building were renovated. Currently, the demand for the SHDF loan exceeds the budgetary limits, even if these limits are expanding in general, so some applications must be rejected. However, the amount devoted to renovation purposes changes constantly due to reallocations inside the fund.
One of the most relevant changes of the scheme is the growing importance of quality control. In the first period of the scheme there was no emphasis on this factor; currently, however, only companies with a special licence and certified materials can implement the renovation projects. In general the technical requirements are becoming more and more strict (e.g. 5 cm of insulation was acceptable some years ago, while currently 15 cm is the standard). The building is technically audited before the project and there is an obligation to contract an independent supervisor to monitor the construction works (the fund also controls the quality when directly paying the contractor). Companies that implement the supervision must have a licence from the Slovak Technical Construction Office.

Best practice cases

  • Good knowledge of the market – targeting segments that are lacking sufficient support.
  • Network of potential beneficiaries – generation of necessary investment flow.
  • Favourable conditions under which resources are provided, that are attractive for the beneficiaries.
  • Use of non-refundable grants only for citizens with severe disabilities.
  • Targeting households whose joint income together does not exceed 3.5 times the subsistence minimum.


  • The demand is much higher than SFRB can serve. In the period 2007-2012 the demand for support was 40% higher than SFRB could provide.
  • Despite interviews with key supply-side stakeholders, data on potential future financial resource available for investment in the area of urban and municipal development is very limited.
  • Municipalities struggle with high indebtedness, which indicates the high risk that commercial banks take on in these large projects.

Pathways for improvement

There is considerable potential for institutions and instruments currently in place to play an active role in support of financial instruments during the next phases of operation. Slovakian commercial banks, with their strong capital reserves and integration in the market, could act as intermediaries, especially if supported with technical assistance and risk sharing.

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