SUBSIDIES FOR MODERNIZATION AND RENOVATION

A visual or practical upgrade of residential properties provides more comfort. But what are the differences between renovation and refurbishment? When do we even talk about modernization? Who pays for which measures and what subsidies are available?

Definition of renovation, refurbishment and modernization

Renovation involves cosmetic repairs to rectify minor defects that do not noticeably reduce the living comfort of a property. The costs for such measures can be transferred to the tenant in the case of rental property. The only exception is if certain areas of the apartment can no longer be used as agreed in the tenancy agreement. In this case, refurbishment is required. In this case, specific damage to the building is repaired in order to restore the original living quality. The landlord is responsible for the project and for bearing the costs.

Modernization is clearly different from this: the aim here is to achieve structural and visual improvements that increase living comfort. In rental properties, it must be announced to the tenant concerned at least three months before the start of the construction work. It is also possible to transfer at least a certain percentage of the costs [as of 2021: up to eight percent] to the tenant.

Subsidies and loans for various measures

While renovation costs are generally excluded from subsidies, you can hope for subsidies for energy-efficient or age-appropriate renovations and modernizations. For example, there is the option of claiming KfW subsidies for individual measures or complete renovations. In addition, the “IBB Altersgerecht Wohnen” and “IBB Energetische Gebäudesanierung” programs from Berlin provide support with favorable financing methods.

Tips for landlords and tenants

Even if the subsidies only cover a small part of the costs, the renovation or modernization can pay off for you as a landlord or homeowner. This will maintain your living comfort in the long term. You can also deduct the costs incurred from your taxes. Measures that reduce the energy costs of the property or make it barrier-free are particularly suitable for maintaining or increasing its value.

As a tenant, you should know that you are responsible for the costs of minor renovation work and the repair of damage caused by yourself. Modernization costs can only be transferred to you up to a certain percentage – and only if the measure is announced in good time. Although you are not entitled to a replacement apartment during the construction work, you can reduce the rent for the period, provided it is not an energy-related modernization.

Do you have any further questions on this topic? Feel free to contact us, the Victor Investment team is here for you.