There is always a lot of confusion about the rules and restrictions that living in a historic home poses. Sometimes it seems unfair that one neighbor can replace their windows and another can’t. What’s the deal and what are the rules?
That’s exactly what this post is about. I want to specifically speak to the differences between national register historic districts and local historic districts because the differences can be huge.
National Register Historic Districts
There are two distinct types within this category. You can either live in a specific home or building that is itself listed on the National Registry of Historic Places or you can live in a neighborhood that is listed as a National Register Historic District.
Both have similar traits and regulations but there is a distinct difference when you are talking about a specific building versus an entire neighborhood.
One of the big advantages that requires no work from you is that homes in these districts benefits from faster appreciation of property values in good markets as well as more stable property values in bad markets compared to similar houses not in a historic district.
There have been multiple studies that have shown this over the years, but here are just a few.
- In Philadelphia, houses in National Register historic districts command a premium of 14.3% over comparable properties not in historic districts. – The Economic Impact of Historic Preservation in Philadelphia (2010)
- In Louisville, Kentucky, properties in historic districts were worth between $59,000 and $67,000 more than comparable properties not in historic districts. – Historic Preservation’s Impact on Job Creation, Property Values, and Environmental Sustainability (2009)
- In a small historic district in North Little Rock, Arkansas, houses were worth on average $31,000 more than comparable houses not in the district. – Economic Impacts of Historic Preservation in Arkansas (2006)
National register historic districts are great for property values!
The second advantage has to do with income producing properties within national register historic districts. If you have a business, that includes a B&B or even as simple as you own an investment property that you rent through AirBnb then that is a business and you property qualifies for the tax credits and money from the government.
Sadly, these funds are not available for you personal residence or vacation home, but if you structure things where the property is owned by a business and is income producing then you may qualify for many of the benefits below.
- 20% Federal Tax Credit
- 10% Federal Tax Credit
- Easement Tax Credits
Take credits work to defray the costs of rehabilitation of the building. For example, if you send $100,000 renovating a building you can qualify to get up to $20,000in tax credits over 5 years. Not bad.
You can read more about how these tax credits work on the NPS website here.
National register districts have zero downside. Seriously, there are no restrictions on what you can do to an individual landmark or a building within a historic district if it’s on the national level.
According to the National Park Service, “Under Federal Law, the listing of a property in the National Register places no restrictions on what a non-federal owner may do with their property up to and including destruction, unless the property is involved in a project that receives Federal assistance, usually funding or licensing/permitting.”
If you are trying to get federal funding then yes, you may have some regulations but other than that there are no rules for what you can do to your building. Crazy, but it’s true and that is a very common misconception.
Local Historic Districts
Things are a little different at the local level than at the federal level, as always. Local historic districts are as varied as the cultures of the cities that they reside in.
Just like national register districts the property values in local historic districts are invariably better than in comparable neighborhoods. In fact, local historic districts benefit from the largest gains in property values even when compared to national register districts.
Local historic district property values can exceed national districts by a considerable margin and it largely has to do with the districts with greater restrictions on the properties. It may seem counterintuitive but the reasoning is sound. Restrictive historic districts ensure that the neighborhood will retain its historic character and desirable feel throughout the years.
Compare that to unprotected districts that are redeveloped over the years to the point where eventually the quaint bungalows that made the area desirable have largely been replaced with McMansions. Once the old neighborhood looks just like the suburbs the property values fall into line with the suburbs instead of the historic city core.
The local level is where you begin to find the restrictions most people associate with historic districts.
For example, here in Orlando there are six local historic districts. In four districts the city regulates all sides of the building whether they can be seen from the street or not. In two districts, they only regulate the parts of the building that can be seen from the street or sidewalk. In two districts the city regulates paint colors. In the other 4 districts you’re welcome to paint any color you want without question.
Then on a bigger scale, you can’t replace your historic windows in cities like Orlando and Sanford, but in nearby cities like Lakeland, window replacement is only frowned upon but not restricted. What gives?
Each local historic district works with the residents in that district at the time of its founding to decide what regulations they would like to create. That results in a ton of inconsistencies between cities and states, but they all use the Secretary of the Interior’s Standards as a rough framework for what restrictions should be placed on the buildings in the local historic district.
Most districts have no concern for what you do inside the house, rather their focus is on the exterior envelope of the building remaining unchanged.
If you live in a local historic district then check out the regulations in your city before you make any changes. Asking forgiveness rather than permission may result in fines and all kinds of rework to bring the structure back to its original form at your own expense if you get caught. It’s best to find out what the rules are before making any changes to the building’s exterior.
Hopefully, this has given you a good sense of the differences so you’re prepared for what you’re getting into if you do decide to take the plunge and buy a historic home.
Founder & Editor-in-Chief
I love old houses, working with my hands, and teaching others the excitment of doing it yourself! Everything is teachable if you only give it the chance.