For years, people living in Castelnuovo di Porto, a medieval village close to Rome, had put off doing maintenance jobs on their homes, whether it be fixing the roof or cracks in walls caused by earthquakes, because they could not afford it. So when the Italian government said it would foot the entire bill for a range of renovation works, on the sole proviso of rendering buildings energy efficient and earthquake-proof, they could not believe their luck.
“When I first heard about the government getting all this money from the EU, I didn’t think it would affect me in the slightest,” said Chris Warde-Jones, a British photographer born in Italy. “But when people in the village started talking about doing up houses – and there are a lot that need doing up here, quite a few are showing their age – our ears pricked up and we thought: hold on, can we do this too?”
Thousands of Italian and foreign homeowners have flocked to access Italy’s generous superbonus 110% scheme, which has so far cost the government about €21bn (£17.5bn) since launching in July 2020 as part of the country’s post-pandemic recovery strategy.
As the name suggests, homeowners are entitled to a tax credit of up to 110% on the cost of upgrading their home, such as installing insulation systems, heat pumps and solar panels or replacing an old boiler, or undertaking works that reduce the risk of damage from seismic activity.
People can claim the subsidy by subtracting the costs of the works from their tax returns over a five-year period, or pass the onus on to the building contractor, who subtracts it from their taxes or sells the credit to a bank, which in turn is refunded by the government. The extra 10% covers bank interest.
The scheme applies to works on either single houses or buildings that contain more than one home, although in these cases the permission of the other homeowners is needed.
Warde-Jones has come together with four shared homeowners to do several jobs on their 18th-century tufa stone house totalling more than €200,000, including replacing the roof.
“It’s been a bit of a nightmare from the point of view of organising four different families, but we’re getting there,” said Warde-Jones. “Work has not yet started, but the bureaucratic side of things is well on its way.”
Several other EU countries have subsidy schemes for home improvements as they work towards carbon emission reduction goals, but none are as bountiful as Italy’s. Some say the subsidies, the vast majority of the money coming from the EU’s post-Covid recovery fund, are too generous, describing the move as a “shock tactic” to get the system going in a country with a huge stock of old or poorly constructed buildings.
It certainly achieved that. As of 1 March, more than 122,000 applications had been approved.
“The EU said we need to become a zero-emission society by 2050, and to do that, the entire property stock, private or public, needs to be restructured,” said Riccardo Fraccaro, the deputy and senior member of the Five Star Movement who first proposed the superbonus. “This was a way to incentivise people and companies to do it.”
Fraccaro points to the scheme’s success so far, such as an immediate boost for the construction sector, GDP and the creation of more than 150,000 new jobs.
However, soaring demand also pushed up the cost of building services, although Fraccaro said the government had now put price caps on raw materials, and left the limited supply of contractors capable of doing the works booked up to the hilt for at least a year. And even though the initiative impedes illegal activity as the credit can only be claimed via tax returns, Italy’s tax agency found €950m worth of fraud connected to the superbonus and other home improvements schemes late last year.
“As with everything, there are always those who try to be crafty, but the fraud within the superbonus was minimal, things like people creating fake building sites,” said Fraccaro. “We are making the system more rigid, although it is very difficult to defraud the superbonus as so many requirements and technical checks are needed before the subsidy is approved.”
Another issue is the time constraint – the initiative will be gradually reduced in size before ending in 2025. However, the main question is whether the superbonus is having the desired effects.
Michele Governatori, from the climate and energy thinktank Ecco, said the scheme was commendable and most definitely needed, especially with buildings in Italy consuming an enormous amount of energy. “It will definitely lead to improvements, although how much is too early to say,” he said.
His main criticism is that the subsidy allows for new gas boilers, ultimately continuing use of fossil fuels. “If you replace your old boiler, adding certain efficiency parameters, with a gas one, you can also get a tax rebate. But this is a mistake that needs to be rectified immediately, we need to be using electric heat pumps and detaching from gas.”
Fraccaro said many households had already detached from gas and in the long-run the initiative would significantly reduce dependence on the fuel, especially in light of Russia’s invasion of Ukraine.
Italy is heavily reliant on gas imports from Russia and, like other European countries, is now scrambling for alternatives.
In Castelnuovo di Porto, Sergio Iaquinta, a co-founder of Aiku Srl, an alliance of architects, is busy working on 13 superbonus renovation projects, including the home of Warde-Jones and his neighbours. Iaquinta is also benefiting from the scheme on his own property. He said it was chaotically executed, more so at the beginning, but believes the chaos will be worth it.
“We have already seen results of insulation works, with clients calling us to say they noticed the difference straight away,” he said. “And it is helping raise awareness about the climate crisis and environmental needs, which is one of the most important things.”
This article was amended on 13 April 2022 to make clear that the superbonus scheme operates as a tax credit, rather than a deduction.