Traditional building codes present significant obstacles to rehabilitation of existing buildings largely through enforcement of two principles: the 25/50 percent rule and the change of occupancy requirement.

25/50 Percent Rule

The 25/50 percent rule refers to project cost thresholds that are used in traditional rehab codes to determine the extent of required code compliance. In general, the rule establishes the following:

If the proposed rehab work costs 50 percent or more of the building's value or replacement cost, developers have to bring the entire building up to current code standards for new construction If project costs fall between 25 and 50 percent of the building's value or replacement cost, only the parts of the building undergoing renovation have to be brought to code For proposed rehab projects that cost less than 25 percent of the building's value or replacement cost, local officials and contractors can negotiate standards for compliance

Using this system, even a moderate rehab project could trigger the need to undertake substantial renovation in a modest home with a relatively low cost of replacement. The required scope of changes may not be proportionate to the planned project.

In addition, methods of calculating the cost of replacement vary by community making it difficult for developers or building owners to accurately estimate costs. Finally, when the level of compliance required is left to a code official's discretion (for projects costing less than 25 percent of the building's value or replacement cost) the ability of the building owner or developer to predict total project costs can be compromised.

Although these provisions were taken out of the model building codes decades ago, studies show that communities continue to rely on the 25/50 percent rule, as an informal benchmarking tool or as part of the current regulatory system. [1] Current rehab codes now base requirements on the type and extent of work being done, rather than the cost.


Change of Occupancy Requirement

The change of occupancy requirement stipulates that any time a building undergoes a change in use, the entire structure must be brought into compliance with current requirements for the new use. For example, if a proposed project converts an old school into apartments, the structure must comply with all requirements for new residential construction. The change of occupancy requirement may present an obstacle to the adaptive reuse of older commercial or industrial buildings for affordable housing, with the costs of compliance too high to make rehabilitation feasible.

Go back to learn more about rehab codes that facilitate renovation of existing homes.



[1] Innovative Rehabilitation Provisions: A Demonstration of the Nationally Applicable Recommended Rehabilitation Provisions. 1999. Prepared by the National Association of Home Builders Research Center for the U.S. Department of Housing and Urban Development, Office of Policy Development & Research.