The purpose of this paper is to explore the challenges of an old low-standard urban district with a strong historical and cultural heritage and propose more sustainable renovation solutions, acceptable for the residents and municipality. The challenges of physical renovation or refurbishment are complex due to poor condition of the buildings, municipal ownership and governance, mixed management with community and low rents, which are insufficient to cover the costs. The paper discusses the proposed solutions of living standards, supported by the research in two directions: (i) available resources and reuse of materials, (ii) developing a renovation guidance for inhabitants from the building physics perspective, including indoor environment quality. Challenges related to energy efficiency are addressed from the decision-making perspective to overcome the barrier of lack of motivation to invest in energy-efficient measures at the individual and community level. The interdisciplinary approach complements engineering-focused studies with a focus on the comfort conditions and the influence of occupant habits in sustainable buildings. The methods used were literature review, case studies with observations and survey, looking to cover all technical, social, and historical aspects of sustainable renovation of cultural heritage buildings with the same level of importance. Results show that to keep a sustainable, low-cost urban living model, instructions for self-renovation are a valuable guidance for non-professional actors to make more sustainable choices. In conclusion, we can emphasize that inhabitants are accustomed to lower living standards, so the project is aimed to present the proper solutions for improvement as a balance between new sustainable technical solutions, personal self-renovation skills, habits, and health.