The costs and returns of real estate renovation

Property renovation can be a complex process, but with clear planning of your project, budget and goals, it can add significant value to your investment. Whether it’s a major remodel, a partial update or a mere refresh , the right investments increase the value of your property and speed up the leasing process. It is essential to surround yourself with reliable and experienced professionals, especially for crucial aspects such as electricity and plumbing. This guide provides you with the insights to successfully complete your renovation and maximize your profits.

Benefits and costs clarified

Benefits of real estate renovation

Renovating a property can increase profitability and provide long-term cost savings. In addition, it contributes to increased resale value.

• Improved Insulation and Energy Efficiency: Insulation improvements, such as attic insulation or double glazing, significantly reduce electricity bills and result in substantial energy savings. The installation of an efficient heating system also contributes to this.
• Less Vacancy: A modernized property with contemporary comfort appeals to tenants faster. Refurbishments lead to faster leasing and reduce vacancy rates.
• Higher Value: Renovations increase the value of your property. A renovated property increases the likelihood of profit at resale. In particular, properties with good energy performance find a buyer more easily and generate a higher price than poorly insulated properties.

Costs of a renovation in Belgium

The cost of a renovation in Belgium varies widely and depends on several factors:

• The availability of renovators.
• The type of work (e.g., refurbishing versus major remodeling).
• The general condition of the property.
• Your end goal (e.g., vacation rental or furnished rental).
• Your financing options.

It is important to know that you may be eligible for government support for renovating your property, provided you work with approved companies. This is especially true for energy-saving works or projects eligible for a reduced VAT rate.

Price per m² for houses and apartments (in 2025)

• Houses: New construction can sometimes be more economical than renovating a dilapidated house. Count on €500 to €2000 per square meter for renovation work. The renovation of a house can be more expensive than that of an apartment, because often the roof, facade and joinery work also need to be addressed. Modernizing the heating system can also involve significant costs, depending on the option chosen (heat pump or underfloor heating, for example). For just refurbishment work (painting, finishing, flooring), the cost is between €400 and €500 per square meter.
• Apartments: The renovation cost for an apartment ranges between €200 and €1,500 per square meter. The price depends on the quality of the materials. It is advisable to choose durable materials that require little maintenance. Addressing wall and floor coverings can be useful to increase rental value. Preferably choose simple colors and materials that appeal to a wide audience to facilitate rentals. Works on the exterior and common areas (elevator, entrance hall, roof) of an apartment are the responsibility of the joint owners and the cost is shared among them.

Mandatory renovation and EPC certificates

The European Union aims to make its entire property stock carbon neutral by 2050. This implies that homeowners are required to renovate their properties to improve energy performance. Each region has established its own timetable for EPC certificates to be obtained.

• Flemish Region: From January 1, 2023, homes with an EPC E, F or G that are purchased after this date must be renovated to at least an EPC D within five years of purchase. EPC obligations for owners in Flanders:

• Brussels Region: Similar EPC requirements apply in Brussels:
• Buildings must achieve at least an EPC label E by 2033.
• Buildings must achieve at least an EPC label C by 2045.
• Please note: This calendar has not yet been finally approved and is subject to change.
• Walloon Region: In Wallonia, EPC labels to be achieved vary depending on whether you are an owner-occupier or a landlord, and whether the property is already rented out. EPC obligations for owners in Wallonia:

Common renovation mistakes and how to avoid them

A successful renovation project requires a meticulous approach and good organization. Avoiding common mistakes can significantly affect the profitability of your property.

• Poor Budget Management: An accurate cost estimate is crucial to a successful renovation. Poor investment management can increase expenses, reducing profitability and leaving rental income insufficient to cover costs. Advice: Include a 20% margin of error in your estimates, as unforeseen costs can always occur.
• Complex Design: When renovating a rental property, consider the tastes of a wide audience. Sober decor allows potential tenants to imagine the property as their own. A contemporary property will rent out faster than a dated property with an old-fashioned style.
• Improper Choices: Surround yourself with skilled professionals to help you make the right decisions. Choose the most efficient heating system or the right ventilation to provide tenants with a healthy and energy-efficient home.
• Failure to Report Works: Renovation works must be reported to the land registry or you risk fines. A renovation can increase a home’s value and rental value, which impacts cadastral income. Owners who do not declare their renovation works within 30 days of completion risk an administrative fine. Since October 2023, this fine can reach €3,000, depending on cadastral income:
• €1,000 for a cadastral income lower than €745.
• €2,000 for a cadastral income between €745 and €2,500.
• €3,000 for a cadastral income higher than €2,500.
• Exception: Energy-saving work such as solar panels or roof insulation need not be declared because they do not increase the value of the property and therefore do not affect cadastral income.

Finding a contractor for renovation projects

To avoid unpleasant surprises, it is crucial to hire reliable professionals. Compare quotes from different companies. For rental apartments, electrical work must meet strict standards, so choose your partners carefully.

• Reliable Contractors: Ask contractors for references of previously completed projects to get an idea of their skills. Online reviews and word of mouth are also valuable sources for finding a suitable contractor.
• Certifications: Check what labels and technical certifications a company possesses before you put them to work. Some certifications are necessary to receive state aid and renovation grants.
• Specialized Stiles or General Contractor: You can choose specialists by stile or a general contractor. A general contractor can help maximize your budget, provide fewer contacts and coordinate the various specialties more efficiently, speeding up the process.

Reduced VAT rate of 6% for renovation (in 2025)

Although the standard VAT rate on work is 21%, under certain conditions you can take advantage of a reduced rate of 6%, resulting in significant savings on your renovation costs.

Conditions for the 6% VAT rate:

• Age of Property: The apartment or house must be at least 10 years old to qualify for the 6% VAT rate. The age of the home is determined by the first occupancy, regardless of whether the first occupant was a tenant or owner.
• Destination of the Property: The property must be a private residence. Renovation of buildings with a professional use (such as commercial establishments or warehouses) is excluded.
• Type of Works: The 6% VAT rate applies to various works, both interior and exterior. The works must be performed by a professional to qualify.
• Billing: The renovation works must be billed to the owner of the property to benefit from the reduced VAT rate of 6%.

Tips for a successful renovation

A successful renovation requires thorough preparation and finding the right specialists. Essential steps are:

• Project definitions: Clearly define the short-, medium- and long-term goals of your project.
• Cost estimate: Establish a detailed budget for each part of the work.
• Professional Search: Look for experienced craftsmen, ask for references and consult reviews.
• Compare Quotes: Request multiple quotes and compare prices from different contractors.
• Thoughtful Decisions: Analyze all your options carefully to make the best decisions.
• Monitor Progress: Closely monitor the progress of works, or consider leaving this to a professional.
• Margin for Unforeseen Circumstances: Always provide a margin for unforeseen costs and schedules.

Need software to manage your renovations or rentals?

• User-friendly
• Future-proof and business-secure
• Affordable software
• Ready-to-use solution
• Very modern
• Tailored rental
• Ready-made
• Each department
• Customizable
• Can be expanded
• Many extra apps available

Source reference:

[1] Academic Research (Real Estate Economics). Analysis of Total Cost of Ownership (TCO) of Real Estate, including Renovation Cost vs. Energy Savings. [2] McKinsey & Company. Capital Expenditures (CapEx) in Real Estate: Strategic Prioritization of Renovation Investments. [3] Deloitte or PwC (Belgium). Tax Optimization: The Distinction between Costs and Investments and the Deductibility of Renovation Expenses. [4] Flemish Energy and Climate Agency (VEKA). The Relationship between Renovation Costs, EPC Improvement and the Availability of the My Renovation Premium. [5] Journal of Property Investment. Examining the Profitability (ROI) of Most Common Renovation Projects (Bathroom, Roof, Kitchen). [6] Banking and Credit Institutions. Guide: Financing Renovation Costs through Mortgage or Green Loans for Landlords. [7] Real Estate Sector Report. Market Analysis: The Rise in Rental Value and Rapid Payback Period (Payback Period) after Quality Renovation. [8] Construction Industry Federation (e.g., Construction Confederation). Benchmark and Cost Estimation for Standard Renovation Projects in the Belgian Housing Stock. [9] European Regional Development Fund (ERDF). Analysis of Indirect Financing and Incentives for Energy Efficient Renovation. [10] Legal Advice (Belgium). The Legal Requirements in Renovation and the Impact on Current Leases (E.g. Rent Review). [11] Harvard Business Review (HBR). Strategic Cost Analysis: Using Data to Balance Maintenance (OpEx) versus Renovation (CapEx).

Discover some of our rental solutions here:

• Rental software solutions
• Business Central
• Dynamics
• Planning software
• Business Intelligence
• Document management
• Digital portals
• All Microsoft modules and apps for rental