The Most Expensive Mistake a Condominium Association Can Make is Postponing Home Renovation

​​Apartment building renovations are discussed a lot in Estonia, but action often comes too late. People wait for the building community to reach agreement, for construction prices to fall, or for a new support measure to open. But while the building's residents deliberate and discuss when the right time to act would be, the building continues to deteriorate, problems deepen, and necessary work becomes increasingly more expensive.

At some point, renovating an apartment building becomes inevitable. The main question could be whether to do the work thoughtfully and comprehensively or piece by piece and ultimately much more expensively. For this reason, in most cases it is worth not waiting for the right moment, but viewing building renovation similarly to buying a home – it is a long-term investment.

The biggest obstacle to renovation is not always money

Caution is human when making big decisions. Apartment building renovation affects all residents for years. The cost of renovation is reflected in utility bills – as an additional loan payment for decades. In addition, for at least some time residents must deal with construction noise, dust, and workers outside the windows. So it is also natural that this requires discussions, sensible mapping of the real situation, and allaying residents' fears.

One should not confuse reasonable caution with inaction. If a building's technical condition worsens and the list of necessary work grows, it is clear that investment becomes inevitable at some point. Excessive waiting can drive up costs and deprive the building community of the flexibility to find the best time to carry out the work.

Nor should we forget that the experience of many building communities shows: well-prepared renovation ultimately benefits everyone. Energy consumption decreases, indoor climate improves, and with it so does residents' quality of life. In most cases, each building community member's apartment value also increases, and overall it is a profitable decision. Even if renovation costs may seem large at first glance, they do not appear so from a 5-10 year perspective, because inflation works in favor of the bold investor.

Renovation work cannot be dragged out indefinitely

Just as it is important to reach a renovation decision at the right time, it is also important how the project is planned. For example, many building communities do not want to start major work until it is clear whether and when an appropriate state support measure will open. To a certain extent this is logical, as support can be an important part of the financing model. But a building community should not tie up its entire schedule and decision-making power to an external factor over which it has no control. 

Currently, a situation has developed where obtaining support seems more like a lottery win – recent rounds have shown that actual demand has been 4–5 times greater than the support amount. Looking to the future, there is currently no information about any major support measure opening or detailed information about various European support measures and financing.

In any case, building communities should stay informed about support measure prospects in order to assess how realistic it is for that particular building community in that location to receive support. From the bank's perspective, a visible trend is that many building communities in larger cities are giving up on support altogether and carrying out their projects with loans. The difference in payment burden is not nearly as large as one might think.

The preparation of renovation itself usually takes more time than it may initially seem. One might get the impression that once the principal decision to renovate has been made, construction can begin immediately. In reality, launching a well-thought-out project usually takes one to three years. This time includes discussions, preparation of the technical solution, design, budget clarification, general assembly decisions, financing, procurement, and contracts. If any of these steps are delayed, the delay carries over to the entire process.

When planning, one also cannot ignore the fact that final decisions are often reached only in summer, when the best time to start construction has already passed. This means greater pressure on prices, tighter deadlines, and discomfort for both builders and residents. In an ideal timeline, the project could be ready by winter, loan offers requested, and owner decisions made. Then procurements can be organized at the start of the year and construction can begin in spring or early summer.

It's worth talking to the bank as soon as a plan emerges

Even when planning, it is important to pay attention to the proper sequence of activities. The financier, or bank, should be contacted as soon as a more serious plan emerges and there is agreement to begin the renovation process.

Early communication with the bank helps create the necessary clarity for building community members regarding everything related to financing. Otherwise, financing information may be outdated or incomplete. A project discussed with the bank helps building community leaders explain the plan better to residents and in turn affects how open residents are to moving forward with the renovation project.

But a bank is not merely a financier in the renovation process. As a good partner, the bank helps a building community assess early on whether the planned budget is realistic, what risks should be prevented, and how necessary decisions should be made. The sooner this discussion begins, the less likely it is that previously made plans will need to be redone later or that some important detail will be discovered to have been overlooked.

Ultimately, every building ages and nothing survives without maintenance. Sooner or later, every building community must decide whether to deal with a leaking roof and walls that let wind through anew each season or take a decisive step and give the entire building a new, future-proof and healthy breathing. Although both approaches may work, often only one is cost-effective.