Housing renovation is a common concern to owners, tenants and to society at large. In addition to the high economic costs, the implementation of housing renovation usually have a long-term impact on the society and the built environment. This is a theoretical paper that develops a system model for understanding sustainable housing renovation as a system phenomenon which has multiple sustainability goals, complicated dynamic processes, diverse actors, and a sophisticated institutional environment. It identifies the key challenges of a sustainable housing renovation system, namely the conflicting sustainability goals and the conflicting stakeholder interests