What to do if there is a renovation backlog?

Burst water pipes due to corrosion, a leaky roof, excessive energy consumption due to inadequate insulation - a backlog of renovation work can have serious consequences. These include more than just the cost of repairs. The property can also lose significant value. Under certain circumstances, there is even a risk of losing insurance cover. A field report.

Nils H. (75) owned an apartment building in a medium-sized German town. He inherited it from his father many years ago. Nils took care of everything he could. If something was broken, he had it repaired immediately. He always had an open ear for the concerns of his tenants. There was only one thing he neglected: the renovation.

When the repairs pile up

Repairs have become increasingly frequent in recent years. The roof had to be patched more often. Some doors and windows had warped over the years, making them difficult to close. Some of his tenants were heating with 25-year-old gas boilers. Water had to be refilled in the individual heaters almost once a quarter. In the end, his insurance company even threatened to cancel his insurance cover.

What needs to be renovated?

Forced to do so, Nils decided to tackle the renovation. He sought advice from a refurbishment expert. The expert inspected the property and listed all the defects and backlogs for Nils. Nils had read that, according to the EU directive, the "Fit for 55" program stipulates that the buildings with the worst energy performance in energy efficiency class G or H should be renovated by 2030. As this was the case with his house, a deep renovation was also to be carried out in order to achieve the low-energy standard of an existing residential property.

Will the financing work?

The costs for all of the renovation measures were quite high. So much renovation work had accumulated in the meantime, plus the comprehensive energy-efficient renovation, that the costs significantly exceeded the maintenance reserves he had conscientiously saved up over the years. So Nils went to the bank to take out a loan for the upcoming renovation work. Due to his advanced age, the bank did not grant him the loan.

If the renovation doesn't work

Nils was at a loss and thought about selling the house. He turned to us. We gave him comprehensive advice on his property. At first, he was shocked at how much his house had lost in value due to the renovation backlog. A buyer would include these renovation measures in the purchase price. We advised him to carry out refurbishment and modernization measures with a sense of proportion. These increased the value of his property before the sale. Nils' reserves were also sufficient for this. Through our network, we also found an investor experienced in renovation issues who bought Nils' apartment building at a fair market price. In the end, Nils was happy with the solution he found with us.

Are you unsure whether a refurbishment will increase the value of your property? Get in touch with us! We will be happy to advise you.

Notes

For reasons of better readability, the generic masculine is used in this text. Female and other gender identities are explicitly included where this is necessary for the statement.

Legal notice: This article does not constitute tax or legal advice in individual cases. Please consult a lawyer and/or tax advisor to clarify the facts of your specific individual case.

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