Renovation & construction
Renovating a Building in Phases: Schedule, Payments and Risks
A building is renovated in phases, paid by certificación; the LOE allows a 5% retention instead of a one-year guarantee. A three-month delay on 16.36 M€ of capital costs 5.5% of the works budget.
A building renovation runs in five phases after the licence: demolition and structure, envelope, building services, finishes, handover. Payments are tied to the accepted volume of work, and the LOE allows a 5% retention instead of a one-year guarantee. The timeline weighs most on the outcome: a three-month delay on 16.36 M€ of capital costs 5.5% of the works budget (worked example). The rules were checked as of 12 October 2026.
The phases of a building renovation
A licence is needed before the first piece of work: the regimes and timelines are covered in the article on permits for works in Barcelona. After that the project follows the table. Worked example, not a forecast: a works budget of 6 M€, a works period of 18 months.
| Phase | What is done | What is accepted | Payment, % | Amount, € |
|---|---|---|---|---|
| 1. Demolition and structure | Stripping out, reinforcement, fixing defects | Volume per the technician's certificación | 22 | 1,320,000 |
| 2. Envelope | Façade, roof, windows | Watertightness, records of concealed works | 20 | 1,200,000 |
| 3. Building services | Electrics, water, heating, lift | Tests and protocols | 22 | 1,320,000 |
| 4. Apartment finishes | Walls, floors, kitchens, bathrooms | Sample acceptance of apartments | 31 | 1,860,000 |
| 5. Retention | Correcting snags | 12 months after handover | 5 | 300,000 |
The percentages in the table are illustrative: in a real contract they are agreed with the contractor and the technician. Costs before works start (project, licence, surveys) are separate; in the example they are 6% of the works, that is 360,000 €.
How to tie payments to the works
A payment is tied to the certificación, that is, the certificate of work done, signed by the technical supervisor. Calendar advances without a certificate leave the client without leverage.
Two legal limits affect the schedule. Under Ley 3/2004 (the late-payment act) the default payment term in commercial transactions is 30 days, and by agreement of the parties no more than 60 (art. 4): a contract cannot stretch payment further. And under Ley 38/1999 (LOE), the Building Regulation Act, the one-year guarantee on finishing defects can be replaced by a retention of 5% of the cost of execution (art. 19.1.a). In the table this is line 5.
What the law secures after handover
The LOE divides the liability of the parties by period from the date of acceptance (art. 17): ten years for structural defects, three years for defects that breach the requirements of habitability, one year for finishes. A ten-year guarantee is mandatory for buildings whose main purpose is housing (disposición adicional 2). Whether the LOE applies to a specific renovation depends on its nature: the law covers full interventions and partial ones that substantially change the façade, volume, structural scheme or purpose of the building (art. 2.2.b). This is a question for the arquitecto and the abogado (lawyer) before the contract is signed; a general review is in the article on seguro decenal (ten-year insurance).
For buildings that have undergone a comprehensive renovation and hold a licencia de primera ocupación (first-occupation licence), the 45-year period before the ITE (mandatory building inspection) is counted again from the date of the final certificate of completion (Generalitat, ITE FAQ).
What to do about tenants during the works
A tenant must tolerate improvements that cannot reasonably be postponed: the tenant is entitled to three months' notice, the right to leave the contract within a month and a reduction in rent (art. 22 LAU). If the works make the apartment unfit for use, the tenant may suspend the contract or leave without compensation (art. 26). So the schedule depends on the contracts, not only on the contractor: see the article on a building with tenants.
What can break the schedule
Three circumstances are checked before the building contract is signed, because after demolition they cost the most. First: hidden structural defects that are visible only once the building is opened up. Second: materials that need special handling, for example asbestos. Third: separate permits for scaffolding and skips from the Ajuntament. The contingency in the example is 10% of the works budget, that is 600,000 €.
What a delay costs
A delay costs the cost of capital frozen in the building plus fixed expenses. Worked example, not a forecast: the building is bought for 10 M€, costs before works are 360,000 €, works 6 M€, cost of capital 8% a year (an assumed parameter, not a market rate). By the end of the project 16.36 M€ is tied up in the building.
Three months of delay at this stage cost 16,360,000 × 8% × 3/12 = 327,200 €. That is 5.5% of the works budget without the contingency. Each month costs 109,067 €, and this is before taxes and the upkeep of the building.
Who this renovation does not suit
It does not suit those unready for a period of a year and a half to two years, or for a schedule that depends on the licence and the tenants. It does not suit those who intend to accept the works without an independent technician either: stage payments lose their meaning without a certificate. DNPI Capital has no completed projects involving whole buildings; renovation and construction on projects are carried out by BCNYARD, SLU, an independent construction company working as a contractor under a contract. What is described here is a method.
Next step
Run your own schedule through the investor calculator, building in a delay of three and of six months.
Questions and answers
How many phases are there in a building renovation?
Most often five: structure, envelope, building services, finishes, and handover with the retention. The number depends on the building and the contract.
What percentage is held back from the contractor?
The LOE permits a retention of 5% of the cost of execution instead of a one-year guarantee on finishes (art. 19.1.a). The other percentages and payment terms are set by the contract within Ley 3/2004.
Is seguro decenal needed for a renovation?
A ten-year guarantee is mandatory for buildings whose main purpose is "housing" (disposición adicional 2 LOE). Whether a specific renovation falls under the law is determined under art. 2.2.b; the arquitecto and the abogado check it.
When is an ITE needed after a renovation?
Residential buildings go through the ITE before the building reaches 45 years. After a comprehensive renovation, if there is a licencia de primera ocupación, the period is counted from the final certificate (Generalitat).
