Why buying an unrenovated property can be worthwhile now

In Germany, a kind of two-tier system is emerging: between renovated and unrenovated properties. Unrenovated properties are finding it increasingly difficult to sell, as buyers are obligated to carry out energy-efficient renovations within two years. Many sellers have had to respond with significant price reductions. Those who plan carefully now can snag a bargain on a property purchase with government subsidies. Here's what you should keep in mind.

If a purchased or inherited property does not meet the required energy efficiency class, the new owner is obligated to renovate it. This was regulated in 2020 by the then-applicable Building Energy Act (GEG).

While this may initially seem like a disadvantage, it presents opportunities for prospective buyers. Prices for unrenovated properties have fallen sharply in many areas. At the same time, government subsidies can save money on renovations.

Opportunities regarding the purchase price

As mentioned earlier, an unrenovated property is cheaper. After all, you can deduct the cost of the necessary renovations from the purchase price. It's advisable to seek advice from a reputable local real estate agent. They will determine a realistic property value. They possess extensive market knowledge and understand how the amount of necessary renovations and the associated costs affect the property's value. Furthermore, they will know at least one energy consultant who can advise on which renovation measures are necessary and worthwhile.

Opportunities through government funding

The government offers subsidies for energy-efficient renovations. These can include allowances, tax breaks, lower interest rates, or grants that don't need to be repaid. Subsidies are offered, for example, by the KfW Development Bank or the Federal Office for Economic Affairs and Export Control (BAFA) . Some federal states also offer additional subsidies. In any case, you should consult an independent energy expert. A professional real estate agent can recommend one.

Opportunities in negotiation

"Location, location, location" is a thing of the past. A property's energy efficiency rating has now become almost equally important to its location as a criterion for its value. Properties now sell less well not only because of an unfavorable location, but also because of low energy efficiency. This offers room for negotiation. However, it's best to leave this to an experienced real estate agent. They know how to negotiate with owners and can explain price reductions.

If you're on a tight budget, buying an unrenovated property can be an option. Seek advice from a reputable local real estate agent. They can show you the advantages and challenges and help you find a property that fits your budget and lifestyle.

Would you like to know how the value of a property changes if it is not renovated? Or would you like assistance with your property search? Contact us! We would be happy to advise you.

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