Construction costs are currently skyrocketing

Well, presumably one commits an administrative offense and the corresponding authority imposes fines. Then one can choose whether to take out a loan or sell in time. If the decision is continually postponed, it will probably eventually lead to insolvency and thereby also to a forced auction.

One more question - and if not? Not financially feasible? Will forced expropriation and demolition by the state then follow?

Fines are certainly the first step. At some point, it was also considered that rental properties may no longer be rented out if they are not renovated. Harsh measures against Grandma Erna are certainly far down the list, as they are politically unpopular and elderly people are the largest voter group. However, "not financially feasible" is a strange consideration for people who, by owning a home, sit on a net worth of several hundred thousand. Therefore, as a politician, I would accompany the renovation obligation with subsidized loans that are somewhat easier for retirees to access than a normal bank loan.

Unfortunately, the low pension is no longer sufficient for loans ;)

Please try to think a bit outside the usual lines. This is a different category than purchase financing. Let’s say Grandma Erna (80) gets a subsidized loan of 100k with a 10-year term for energy-efficient renovation at 3%. Interest only, no repayment, the loan should be redeemed by the heirs. That makes 250€ per month, most of which should be covered by the lower heating costs. This solution would be socially acceptable, affordable, and would allow savings in the existing building stock. Those who cannot afford the remaining few euros would have to sell and rent from the proceeds. The state cannot finance everyone the luxury of a life without capital consumption.

To clarify what I mean: Those who live off their assets (e.g., a securities account) usually plan a withdrawal with capital consumption. This results in safe withdrawal rates of usually 3-4%, but the exact value is not important here. Inheriting a debt-free owner-occupied property is calculated without capital consumption. That is a luxury that greatly increases the required capital stock. Those who can afford it, fine. But it is not the task of the state to enable heirs to have a debt-free, renovated property.

My grandma Erna (83) has more than enough financial reserves to renovate her ancient property, but she doesn’t want to. In her opinion, she lives in a dream luxury property with running (hot) water, (oil) central heating, a toilet in the house, washing machine and dryer, an electric stove and oven, sealed windows and shutters. There’s no ceramic as good as the puke-green toilet bowl from the 60s anymore, and her windows were so expensive back in the 80s and are of such good quality that basically nothing has to be done to them yet! Besides, she’s going to die soon anyway, so why should she spend any money on it.
But my grandma Erna also grew up with an outhouse at the end of the street, an outhouse in the yard, without electric light, without central heating, and with “one family per room,” from that perspective this is all luxury....

Twenty years ago we wanted to install a new sink in her 60s kitchen once, it’s still unused in the basement today because nothing new is needed there...

Tell your grandma at 80 times that she should sell and move into a nursing home or rent... You'll be disinherited faster than you can say the sentence.