New research: Financial Instruments for Renovation of Vacant Spaces in Europe
Across Europe, millions of buildings stand empty while people struggle to find affordable places to live. HFHI conducted this research to better understand which financial mechanisms and models are most effective in converting vacant spaces into affordable housing. Looking across different European cities, the study examines how tools like loans, grants, revolving funds, and blended finance actually perform in practice - and why some approaches succeed while others fall short.
To answer this, the research draws on multiple sources of evidence. It combines a review of European and national policies, existing literature, and program data with a comparative analysis of financial instruments across six European case studies - Vienna, Barcelona, London, Athens, Kent, and Wales. It also includes interviews and input from practitioners, public authorities, and financial actors involved in these programs. All financial instruments were assessed using a common framework, looking at their impact on affordability, their financial sustainability, their ability to scale, and how well they reach vulnerable groups.
What actually works in practice
A key message is that money alone does not solve the problem. Many countries and cities already offer grants or loans to renovate empty buildings, but on their own these tools often deliver only short-term results. Homes get renovated, but they frequently return to the market at full price. The most successful examples, such as Vienna and Barcelona, show that results come from combining different financial tools with clear rules. They use a mix of public loans, grants, and recycled funding, alongside regulation that keeps rents affordable over time. This kind of coordinated approach works much better than isolated funding schemes.
One of the most important lessons is that affordability has to be built into the system from the start. In Vienna, for example, rents are based on actual costs rather than market prices, which keeps housing affordable for the long term. Where this kind of structure is missing, public investment can improve buildings without improving access. In other words, without clear conditions, financial support can end up benefiting the market more than the people who need housing.
The research also highlights the growing role of smarter financial mechanisms. Revolving funds - where money is lent, repaid, and then reused - have proven particularly effective because they stretch public resources much further. Blended finance, which combines public and private investment, can also unlock larger amounts of capital. However, these tools are not automatically socially beneficial. If they are not tied to affordability requirements, they can simply finance renovations that do not address housing need.
Another important point is that renovating empty buildings is often more cost-effective than building new ones, while also helping to reduce emissions. This makes it a strong solution for both housing and climate goals. Despite this, renovation is still underused because projects are complex, upfront costs can be high, and many cities lack the institutional capacity to manage them at scale.
Gender gap in housing finance
An important part of the research was a gender analysis, examining how financial instruments for renovating vacant spaces affect access to housing finance. The study looks at how lending practices, income structures, and financial requirements shape who can benefit from these programs.
The findings highlight several structural inequalities that shape access to housing finance. Women face greater barriers in accessing finance. They, on average, earn less, are more likely to work part-time, and may face lower credit scores or stricter lending requirements, such as a higher likelihood of needing a guarantor. In some contexts, this translates into greater difficulty in accessing mortgage finance or saving for a housing deposit. As a result, they are more likely to be excluded from market-based housing finance, despite being lower-risk borrowers.
The research also finds that gender is rarely treated as a core factor in the design of financial instruments. Only a few models - notably Vienna, Barcelona, and to some extent Athens - move beyond general equality commitments and apply a more systematic, gender-responsive approach. In these cases, gender is treated as a structural consideration in policy and design, rather than as a secondary outcome.
Overall, the analysis shows that without explicitly addressing these structural differences, financial mechanisms risk reinforcing existing inequalities, even when they are effective in delivering housing at scale.