Just like all consumer goods, real estate is also subject to a certain aging process. Naturally, this process does not happen overnight for long-lasting objects such as houses and apartments. Nevertheless, homeowners should periodically undertake modernization or renovation of their own four walls. In this blog post, we will provide information on the options available for modernization loans.
Renovate, Refurbish, Modernize – What's the Difference?
Renovate = Beautify and Repair
Renovation is clearly about visual improvement and meeting aesthetic needs. It aims to fix minor issues that arise from daily use, and a fresh design can bring variety to your living space.
Typical examples of renovation measures include:
Wallpapering or whitewashing walls
Painting windows and doors
Replacing flooring
Modernize = Improve and Upgrade
Modernization also includes – due to common usage – energy-efficient refurbishment. Modernization aims to sustainably bring a property up to the latest standards. Many homeowners modernize their homes to reduce their long-term energy and water costs. Modernization increases both living comfort and the value of your home.
Typical examples of modernization measures include:
Insulating the roof or exterior walls
Installing insulated glass windows
Acquiring a modern heating system
Refurbish = Repair and Remedy
Unlike renovation, the reason for a thorough refurbishment is always a serious defect. You undertake refurbishment when you need to fix a problem or make the property usable again.
Typical examples of refurbishment measures include:
Removing mold and leaks
Drying out damp basements
Repairing a leaking roof
Why Building Modernization is Important
Modernizing buildings is an essential step in increasing both the value and lifespan of a property. It goes far beyond simple cosmetic changes and addresses crucial aspects such as energy efficiency, comfort, and safety. In an era where sustainability and resource conservation are becoming increasingly important, modernization plays a key role in adapting buildings to modern standards and requirements.
What Does Modernization Include?
A new exterior paint job or the replacement of downspouts falls under the category of maintenance. For those living in a condominium with a corresponding homeowners' association, necessary reserves are usually set aside through the monthly service charges. In a typical single-family or two-family home, the owners themselves must ensure reserves are available.
However, if you carry out measures as part of a modernization, there are, under certain conditions, subsidies or grants available. Being aware of these is important, as modernization can be quite costly. There are therefore government funding programs primarily aimed at the following goals:
Energy-Efficient Renovation Typical modernization work includes insulating the roof or exterior walls, replacing the heating system, installing new windows or doors, or setting up a solar power system. In these cases, parts of the building are improved or replaced. This is also relevant because, with a view toward the 2030 climate targets, the government requires a certain energy standard. This was regulated by the Energy Saving Ordinance (EnEV) until the end of 2020. Since 2021, the Building Energy Act (GEG) has been in force, which sets energy requirements for heated or air-conditioned buildings.
Age-Appropriate Living Converting a property to be barrier-free creates significant added value—not only on a personal level for the people living in such a home but also in terms of the property's value. The Federal Statistical Office determined that as of 2019, only 2% of all apartments and single-family homes in Germany were nearly barrier-free. Meanwhile, society is aging—by 2040, one in four Germans could be over 67 years old.
What Should Be Done?
1. Modernize the Building Envelope
The exterior envelope is relentlessly exposed to the elements, which inevitably affects the facade, doors, and windows. The first modernization measures are typically necessary after about five to ten years.
Facade: An exterior facade generally lasts between 30 and 50 years. If no insulation is present, renovation may be necessary much earlier. Learn more about facade insulation here. It’s recommended to refresh the facade paint, preferably with durable silicate or siloxane products, every five to ten years.
Windows and Doors: With high energy costs, installing new, modern windows can pay off after just ten years; otherwise, they last around 20 years. Regularly check for airtightness. Front doors usually last at least 20 years before needing modernization.
Insulation: The insulation of the building envelope should be renewed after approximately 30 years.
2. Modernize the Roof of a Property
The roof is one of the most important components when it comes to the energy efficiency of a property. Generally, a roof renovation is needed every 40 to 60 years.
Roof Covering: Depending on the material used—tiles, slate, thatch, etc.—a roof covering replacement is necessary every 20 to 50 years.
Roof Insulation: Roof insulation should be addressed every 40 years at the latest. In some cases, a renovation may be required much earlier.
Gutters: Depending on how much wear and tear the gutters endure, replacing them every 20 to 30 years may be advisable.
Roof Structure: In most cases, the roof structure requires attention only after 80 to 100 years.
3. Modernization of Building Systems
Building systems primarily include heating and electrical systems. They are essential for supplying your property with heat, water, and electricity. Therefore, you should not delay modernization if individual components have worn out.
Heating: The lifespan of heating systems varies, and often a renewal is necessary after 15 to 20 years. Most old oil and gas heating systems (standard and constant temperature boilers) must be replaced after 30 years of operation.
Pipes: The plumbing system in a house usually lasts 30 years or more. Earlier renovation may be necessary if heating and hot water pipes or fixtures in unheated rooms are not insulated, or if lead pipes are still installed. Drinking water pipes must meet specific requirements, and lead pipes usually do not comply with these standards.
Electrical: Electrical systems generally need renewal every 30 to 40 years. You should address this sooner if fuses are faulty, protective switches are missing, the wiring is undersized, or two-wire systems without a ground are still in use. Another reason to modernize the electrical system could be upgrading the house to a smart home.
Photovoltaic System: PV systems typically last 30 to 40 years. It is important to have the system regularly maintained to extend its lifespan.
4. Modernize Interior Furnishings
With proper care, the interior of a house can last many decades without needing renovation. However, if you have grown tired of a room, want to adapt it for age-appropriate living, or upgrade to a smart home, modernization may be more appropriate.
Modernizing the furnishings certainly helps maintain or even increase the value of your property.
Flooring: Floors generally last between 10 and 40 years, depending on the material and quality.
Built-in Kitchen: Kitchen modernization is advisable every 15 to 20 years. Electrical appliances may need to be replaced sooner.
Sanitary Installations: Modernizing sanitary installations often involves installing more modern and comfortable technology or enabling barrier-free living. The lifespan of sanitary installations is typically 20 to 30 years.
Wall Finishes: Cosmetic repairs to the walls (plaster, wallpaper, paint) are needed approximately every five years. Energy-Efficient Renovation: The Foundation of Every Modernization
Cost Savings on Heating, Cooling, and Electricity
Those who undertake energy-efficient renovations will pay less for heating, electricity, and gas in the long run by simply preventing unnecessary consumption. For example, in houses with thin insulation, a significant portion of heating energy is lost, essentially heating the outdoors.
Comprehensive insulation and other measures, such as photovoltaic systems on the roof, updated ventilation systems, and airtight windows, can significantly reduce consumption. For example, a solar thermal system on the roof can heat up to 60% of the water, and facade insulation can save about 21% on heating costs. Path A can provide detailed advice on this. These lower operating costs contribute to increased property values after energy-efficient renovation. This results in an indirect increase in value during ownership and a direct price increase during a future sale.
The Future of Energy-Efficient Building Renovation and Potential Value Increases In general, the efficiency of energy-efficient measures is increasing. Photovoltaic systems, as well as heat pumps, are becoming more effective, potentially allowing passive energy generation and even achieving complete climate neutrality for homeowners.
Insulation materials are also improving over time. Nowadays, they have a long lifespan and are no longer prone to mold or fire as they once were. Thus, safety, economic benefits, and ecology go hand in hand with energy-efficient building renovation. Those who invest in such energy-efficient renovations now can expect early increases in property values. Buyers are increasingly interested in buildings that already meet the latest standards and are willing to pay more for such properties.
Step-by-Step Guide to Building Modernization
When renovating your house, you must be prepared to invest both time and money. To ensure that the effort pays off, it's crucial to follow the correct sequence from the start.
1. Inform
You are most familiar with your residential building and your preferences. Therefore, the first step is to gather information on effective renovation options.
2. Consult
The success of a renovation project heavily depends on whether you receive expert advice. Always rely on qualified professionals for guidance.
3. Plan
In a typical energy consultation, financing should be a key topic. An energy consultant will generally advise you on which measures are suitable for your building and estimate their costs. The important point is to take enough time to have all your questions answered.
4. Implement
Once you have completed the previous steps, you can search for a suitable professional contractor. Recommendations from friends or your energy consultant can be helpful here. Once the contractor is found and the work is underway, ensure that you have professional oversight. The KfW (Kreditanstalt für Wiederaufbau) also provides a 50 percent subsidy for construction supervision by an energy expert. As the project owner, you should, if possible, be present regularly and definitely attend all interim and final inspections.
5. Monitor/Optimize
Once all construction work is completed and approved, energy savings truly begin. To ensure that the projected savings are actually achieved, monitoring is essential. Regularly check your energy consumption and compare it with the pre-renovation levels. The free energy savings account can assist you with this. Monitoring software continuously shows how your energy consumption evolves, allowing you to make adjustments if needed.
KfW Loans, Subsidies, and Grants
For the modernization of your home, there are funding options available from KfW Bank. However, there are also other opportunities, some of which can be combined. Here is an overview.
KfW Loan
Whether for energy-efficient renovation or barrier-free living: Many projects related to your home are supported by KfW. This is particularly interesting because state-supported KfW loans can significantly reduce the financial burden of modernizing your property due to their favorable interest rates. KfW loan rates are generally well below market rates. The focus of the funding is on energy efficiency, but other renovation and modernization projects are also supported, especially those aimed at age-appropriate living.
The various KfW modernization loans can be used as follows:
Energy-Efficient Modernization: For example, you can use the KfW Credit 261. The condition is that you carry out a complete renovation of your property to achieve Efficiency House Level 85 or better. Depending on the level, loans of up to €120,000 are possible. If your property meets the criteria for a Renewable Energy Class, the maximum loan amount increases to €150,000 per residential unit.
Interior Modernization: The "Age-Appropriate Conversion" program (KfW Credit 159) applies here. The €50,000 loan fully covers the financing of this aspect.
Photovoltaics: You can finance the system through the "Renewable Energy - Standard" program (KfW Credit 270) at 100%. With a ten-year interest rate lock and a three-year repayment-free period, the effective annual interest rate is currently an average of 4.75%. The interest rate lock can be extended to 20 years if desired.
BAFA Grant
For those who do not need a KfW loan, the grants from the Federal Office for Economic Affairs and Export Control (BAFA) might be of interest. This funding is also part of the Federal Funding for Efficient Buildings (BEG), which has been consolidated since 2021. BAFA grants are available for individual measures such as replacing an oil heating system or new insulation for energy-efficient building renovation.
Regional Funding Programs
You can also combine several programs to make the most of available public funding. This includes specific funding programs from the federal states. State programs are often subject to income limits. Additionally, there are various local funding options provided by municipalities, districts, or energy suppliers.
Conclusion
Modernization is always an investment in residential quality and climate protection. To enhance residential quality, age-appropriate renovation of homes is a key component, especially in light of an aging population. In terms of climate protection, the German government supports energy-efficient modernization measures with favorable KfW loans and generous BAFA grants.
Although modernization involves certain costs, these expenses are worthwhile over the long term. Energy-efficient renovation can pay off within about 7 to 15 years and also increase the property value. This is because the house will then meet the latest ecological and legal standards. Additionally, residents and owners can save significantly on heating, gas, and electricity. This results in a passive increase in value.