Engel & Völkers Licence Partner South Africa > Blog > Monument protection - how historically significant architecture finds its way into the modern age

Monument protection - how historically significant architecture finds its way into the modern age

Standing in awe and admiration in front of a castle rebuilt according to historical models and feeling the spirit of the past, or strolling through a lively old town and admiring the charm of proud merchants' houses from the times of the Hanseatic League - this is something we have probably all experienced at least once.

All this is made possible by the willingness and the associated commitment of the actors involved to preserve culturally and historically relevant buildings for posterity. The protection of historical monuments is of great importance here. It ensures that the framework conditions for the protection of architectural cultural assets, which are laid down in the law for the protection of historic buildings and monuments and administered by the monument protection authority, are observed.

The most important criterion for obtaining the status of "listed building" is an overriding public interest. The age alone is not decisive. The classification protects the building from demolition and structural alterations. In Germany, for example, the definition of individual measures and their implementation are the responsibility of the individual federal states. Other countries, such as Spain, Portugal, Italy or France, as well as the USA, have their own regulations, which may differ.

 South Africa
- Buying a listed property has advantages and disadvantages. You will find the most important information and facts in our new blog post!

The significance of monument protection for the real estate market

Buildings that are often subject to monument protection include castles, fortresses and monasteries, old manor houses and half-timbered houses, windmills and water towers, as well as epochal residential or commercial buildings. Anyone thinking of acquiring such a building should inform themselves in advance about the implications of doing so. This is because protection is associated with all kinds of requirements and regulations regarding renovation and use, but in return also with interesting tax opportunities and benefits. The purchase is also subject to an obligation to maintain the building, which can be demanded by the municipal monument protection authority.

What monument protection means for renovation measures

No renovation, modernisation, extension or conversion work may be carried out on listed buildings without official permission. The appearance and historical design of the building must be preserved. The requirements for this are very detailed and prescribe the building materials and colours to be used as well as the craftsmanship techniques. Often, this calls for specialised craftsmen to carry out the work professionally.

Similar regulations apply to the exterior area surrounding the building, and the consent of the monument protection authority is also required for any planned alterations. Guidelines also exist for the interior design, but these are not quite as strict. However, the alterations may not change the character of the building.

As far as energy-related renovations are concerned, listed properties are special cases. They do not require an energy certificate and can be exempted from the regulations of the Energy Saving Ordinance. It should be borne in mind that maintenance costs may be higher because of this.

Tax incentives for investors and private users

The purchase of a listed property can be prompted by a variety of reasons. One possible reason could be the desire to own a truly special, unique building and to restore it to its former splendour through renovation. Passion and idealism play a role here, as do the financial resources. But investors are also on the lookout for these special properties in attractive locations in order to rent them out profitably in the long term after refurbishment.

The costs for the renovation of a listed property, which are often significantly higher than for normal renovations, are rewarded by the state with sometimes considerable tax breaks. Anyone who invests in renovation in order to then let out the property can write off the costs over twelve years as income-related expenses. In this way, a complete recoupment of the maintenance costs can be achieved through the tax benefits.

If the new owner wants to occupy his listed property himself, nine percent of the renovation and maintenance costs can be written off over a period of ten years. Ultimately, that's ninety percent of the investment.

The acquisition costs, incidentally of all rental properties, can also be deducted with different depreciation periods depending on the year of construction.

Can the purchase of a listed property be worthwhile?

The tax breaks explained above are attractive for buyers and investors. However, anyone looking to resell the refurbished property at a profit after only a short period of time should be cautious. Since the next buyer cannot benefit from the tax breaks, he will be guided by the market price, which could mean selling at a loss. To prevent this, the property should be held for at least fifteen years.

The appeal of listed rental properties is high in most cases. Therefore, higher rental income can also be achieved in the right location. In attractive cities, the demand for living space remains high and the chances of finding solvent tenants who are looking for something special are good.

Listed houses are also often found in structurally weak regions. Due to the low house and land prices, a profitable sale can hardly be achieved there, despite value stability. The increase in value to be expected at economically more attractive locations will probably not occur to the same extent here either.

Can monument protection be revoked?

The status of listed building is not irrevocable. If the original reasons for the listing fall away, or if the maintenance of the building is economically unreasonable, the owner can apply for a revocation. The decision is then up to the monument protection authority after reviewing the circumstances.

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