Rabobank has taken the lead in structuring a new financial fund: the Fonds Duurzaam Funderingsherstel (Sustainable Foundation Repair Fund/FDF). An initial € 20 million endowment serves to kick-start the fund’s activities on a major scale.
The Fund enables homeowners – most of whom lack the financial resources to restore a dilapidated foundation or fix attendant problems such as tears in walls – to contract loans to carry out this essential work.
Unsafe living conditions
An estimated 35,000 homes across the Netherlands will be faced with foundation issues in the foreseeable future (within the next 15 years), while another one million Dutch homes are at risk of being exposed to such problems over the longer term.
In a report titled ‘Dalende bodems, stijgende kosten’ (“Subsiding Soil, Increasing Costs”), the Netherlands Environmental Assessment Agency estimates the total cost of foundation repair on Dutch homes between now and 2050 at a minimum of €16 billion. While this is obviously a substantial amount of money, it involves essential investments, as neglecting to carry out these repairs can lead to unsafe living conditions, home value loss and a decline in collateral terms for mortgage providers.
At the same time, options for private homeowners and mortgage providers to pay for repairs are rather limited owing to the strict rules in place for mortgage extension. And since most foundations are shared by multiple homeowners, it takes just one owner lacking the wherewithal to chip in to stall the renovation of an entire housing block.
Finance for all homes
As a nonprofit organization created to address these problems, the FDF provides a sustainable solution for homeowners with lack of access to the finance needed to cover the cost of repairing weakened foundations. The Fund offers a subsidized loan facility, which keeps expenses for homeowners within the maximum permitted percentage of their disposable income.
The Dutch government, meanwhile, has doubled down on its measures to tackle the problem, having relaxed laws for providing mortgage loans by introducing a temporary mortgage loan regulation. This also enables the FDF to extend loans to lower-income households.
The FDF is backed by numerous organizations, including banks, insurance companies, local authorities, the government and the Waarborgfonds Eigen Woning (Homeowners’ Guarantee Fund). In addition to being one of the largest mortgage providers, Rabobank was also actively involved over the past three years in setting up and structuring the fund. The bank benefits by facilitating the further growth of the FDF because the fund’s plans are perfectly in keeping with Rabobank’s strategy of making Dutch real estate more sustainable as part of its wider mission: “Growing a Better World Together.”
The FDF aims to eventually provide 2,000 loans altogether, totaling €100 million. The €20 million facility provided by Rabobank marks an important first step toward achieving this goal.