Here in Ontario, Canada in a medium-sized city, the downtown core is littered with heritage properties. My friends own a home built around 1900 and they cannot alter the front in any significant way, and the interior woodwork of the front room is deemed heritage-signicant and has to be preserved as well. They got permission from the city to rebuild the front deck (a later addition anyway) as long as they literally just rebuilt it as-is. They knew that going in, and it is a beautiful majestic old building. I believe there are laws like that throughout Canada and the USA, though our town may be more aggressive than some places. It does sometimes lead to the kind of disrepair you speak of.
I think this is the same everywhere there is some history. In Italy if they find art during renovation, like a mosaic from a roman bathroom that was hidden beneath the floor, they have to stop work and call specialists. Then there are 1500s villas that are UNESCO assets that you can live in, but have to go through a lot of pricey work to maintain.
I don't think they provide funds directly in the US, but often you can get tax breaks and incentives from federal and state governments. This often applies to annual taxes as well as money used to restore the property.
I've looked at the specifics of some of the tax breaks (roughly: no taxes on the increased value of the property for some number of years), but they mostly seem oriented towards speculators or commercial, rather than residental.
The primary impediment to residential renovation is typically cash on hand to initiate the project.
Which, if true, seems like something like providing a loan facility, borrowed against the future tax credit, maybe with the tax credit packaged for resale on the open market to offset the cost?
Presumably nobody (the homeowner, the neighborhood, the city) wants a house that's falling apart to stay that way.
