The coalition government has agreed a compromise on the Building Land Mobilisation Act. This draft legislation came into force on 23 June 2021. This marked the introduction of the controversial ban on converting rental accommodation into owner-occupied apartments in regions with a strained housing market. The individual state governments are empowered to designate regions as ‘strained housing markets’. In these regions, rental accommodation can only be converted into owner-occupied accommodation with the authorisation of the local authorities. This authorisation requirement is initially set to remain in place until 31 December 2025.
The conversion ban is being described as a tool for the provision of affordable housing. However, owners with few and/or small apartment buildings will continue to have the opportunity to convert their rental apartments into owner-occupied apartments without the need for authorisation. This exception applies for landlords who own three to 15 apartments – the figure varies according to the respective federal state. An additional exemption to the conversion ban exists in cases of inheritance where the heirs wish to use the apartments themselves or where members of the owner’s family wish to move into the apartments themselves. Conversions are also permitted when at least two-thirds of the current tenants wish to purchase the owner-occupied apartments. For the owners, this means that they are permitted to sell the apartments to their tenants for a period of seven years. Only once the seven-year grace period following a partitioning has expired can owners offer the apartments for sale to other parties.
Critics feel that the conversion ban has nothing at all to do with any kind of building land mobilisation and is akin to a Trojan horse within the new legislation. According to insiders, this kind of market regulation will achieve the exact opposite to its intended effect. The price of owner-occupied apartments will continue to rise throughout Germany – and so too will rents on apartments.
For Berlin, this national legislation serves as a direct expansion of the already existing social conservation areas, which are already subject to a right of first refusal and reservation of official approval. In the opinion of the law firm Bethge & Partner, which specialises in property law, this regulation represents a major infringement of fundamental property rights. Anyone who owns a property in a sought-after residential area should now act quickly.
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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: © Montero, ADEN Immobilien