All perfect praise be to Allah, the Lord of the worlds. I testify that there is none worthy of worship except Allah and that Muhammad is His slave and Messenger.
The scholars of Fiqh determined that a wife has the right upon her husband to provide her with an independent residence that is suitable for women of the same social status like her provided that such residence has independent utilities and that she does not face any inconvenience in it.
The Fiqh Encyclopedia, when clarifying the meaning of an independent residence, reads, “It is an independent, particular, separate place for the wife that no one shares with her from the family of her husband who have reached the age of distinction. It should have a door that can be locked and utilities whether inside it or inside the larger family dwelling, on condition that no one else shares it with her except with her consent.”
According to what you mentioned, it appears that the above description does not apply to it; so if your wife is not pleased to reside in it in that condition, then she has the right upon you to provide her with a separate residence.
Allah knows best.