Older property in need of renovation – is modernization worthwhile?

Climate regulations for buildings are becoming more concrete. While there is no blanket obligation at the EU level for individual homeowners to renovate, Germany must transpose the new building directive into national law by May 29, 2026. At the same time, the building sector remains under pressure due to Germany's climate target of a 65 percent reduction in emissions by 2030 and recent increases in emissions. For owners of unrenovated houses, an honest comparison is therefore worthwhile now: modernize or sell.

Which obligations are already relevant for old buildings today?

Owners of older houses today are not automatically required to renovate everything immediately. However, the Building Energy Act stipulates specific retrofits: Under certain conditions, insulation of the top floor ceiling or roof is mandatory, with a U-value of 0.24 W/(m²K) for the ceiling. Many old oil and gas boilers may no longer be operated after 30 years; low-temperature and condensing boilers are specifically exempt. In owner-occupied single-family and two-family homes, some obligations often only apply after a change of ownership, then usually with a two-year grace period. At the same time, existing heating systems may generally continue to operate and be repaired.

When the investment in modernization still pays off

Whether modernization pays off depends primarily on the holding period, available liquidity, and the building's condition. co2online estimates the cost of a complete renovation of a 130-square-meter detached house at roughly €130,000 to €146,000, depending on the heating system. However, subsidies can significantly reduce the financial burden: KfW offers loans of up to €150,000 per residential unit with repayment subsidies of 5 to 45 percent, and subsidies of up to 70 percent are available for climate-friendly heating systems. BAFA subsidies for the building envelope start at 15 percent and increase to up to 20 percent with an individual renovation plan; energy consulting services are also subsidized by 50 percent. For owners who intend to keep their house long-term, a phased renovation plan can therefore be a sensible option.

Why the market is evaluating unrenovated houses more critically

Energy efficiency now plays a noticeable role in property sales. ImmoScout24 shows a 13 percent increase in prices for condominiums in energy efficiency class A and a 12 percent decrease in classes G and H from 2021 to the end of 2025; the effect is more moderate for single-family homes, but prices in the lowest energy efficiency classes have also been declining since 2023. The Kiel Institute estimates the price difference between condominiums in energy efficiency classes A+/A and D/E at around €650 per square meter. Even though houses and apartments react differently on the market, one conclusion is obvious: For those planning only a short holding period, shying away from high investments, or owning a property with significant deferred maintenance, selling in a timely manner can be more economically sensible than an expensive complete renovation.

Are you unsure whether modernization or selling is the better option for your house? We will provide a realistic valuation of your property and show you which decision best suits your financial situation.

Notes

For the sake of readability, this text uses the generic masculine form. Female and other gender identities are explicitly included where relevant to the statement.

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

Photo: © Wordliner/Image created with OpenAI's Dall-E

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