Ban on converting rental accommodation into owner-occupied properties

The general election campaign of 2017 in part already revolved around housing policy; thus on 12 March 2018, the CDU, CSU and SPD parties of the German coalition government agreed to support municipalities in utilising building land and ensuring the availability of affordable housing.

In June 2020, a prepared draft bill was presented that was then approved by the German federal cabinet in November 2020.

The Bundestag (German parliament) debated this law for the first time on 28.01.2021. Part of the law deals with an expanded right of first refusal for municipalities and the so-called conversion ban in a strained housing market.

Content of the law 

1. Expanded right of first refusal for municipalities

Municipalities’ right of first refusal is to be expanded and would then also apply to largely undeveloped plots. However, the law would also apply to fully undeveloped plots, which could be subject to a right of first refusal if they are located within a municipality with a strained housing market.

2. Conversion ban in a strained housing market

A Germany-wide conversion ban is being planned. According to this law, an apartment building currently providing rental accommodation can only be converted into owner-occupied apartments subject to official approval and restrictions, assuming that the building stands within a strained housing market. For Berlin and other major cities, this means that a so-called reservation of official approval would be in effect for the entire metropolitan area. Based on the drafting, this reservation of official approval could be regarded as a conversion ban.

The law is currently being debated. The draft has been sharply criticised on all sides. Nobody knows when the law will face its next formal hurdles, and thus when it will come into force. However, it could come into effect at any time. As to how and in what form, we must wait and see. We will of course update you on any developments.

If you have any questions regarding the conversion ban and the best way to deal with it, please contact us at any time. We have gained in-depth experience in property conversions in the last 10 years and will also be happy to assist you in this regard.

You can reach us at:

E-mail: contact@aden-immo.com
Telephone: +49 30 61 67 51 15

Legal note: This article does not constitute tax or legal advice in individual cases. Please have the facts of your specific individual case clarified by a lawyer and/or tax advisor.

photo: © AndreyPopov/istockphoto.com

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