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New building land mobilization law: large landlords will find it more difficult to get expensive apartments in the future

2021-05-05T02:35:42.295Z

It is a popular business model in many cities: buy apartment buildings, knock out residents and then offer the apartments for sale. Now the federal government has decided to make this practice much more difficult.



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Demonstration against high rents on May 1st in Berlin

Photo: Michael Kappeler / dpa

For many tenants, the real estate boom has two unpleasant consequences: On the one hand, rents are rising and, on the other hand, many are threatened with being pushed out of their apartments altogether.

Because in many large cities, it is a popular business model for real estate companies to buy a rental house, pull out the tenants, then renovate the apartments and sell them individually at a profit.

At least the latter is now being made drastically more difficult by the Federal Government with its amendment to the Building Code (BauGB). The legislative project with the awkward name of the »Building Land Mobilization Act« is the largest housing policy project from the building ministry led by Horst Seehofer (CSU). The grand coalition was at odds over this for months. But on Tuesday the parliamentary groups of the grand coalition approved the amendment. SPD parliamentary group vice-president Sören Bartol speaks of a "very good negotiating success". Parts of the Union have tried to the last to weaken or even prevent the law - against their own minister.

Although the project does not provide for a direct conversion ban, it is likely to make this practice much more difficult. The law that has now been formulated could close an important loophole that many sellers and buyers use. So far there have been exceptions in the Building Code, for example if the owner undertakes to sell apartments only to the tenants within seven years. The owner can therefore honestly declare that he only wants to sell to the current tenants, enter the conversion in the land register and then try to get rid of the residents apartment by apartment. Then he can sell to anyone who is interested.

It is now planned that the federal states can designate areas with a “tight housing market”, in which approval may only be granted in a few exceptional cases until 2025.

For example, if at least two thirds of the apartments in a building are sold to tenants.

From the point of view of the SPD, this comes close to a de facto ban, because hardly any owner is likely to succeed in convincing so many tenants to buy in larger apartment buildings.

"We are thereby preventing the business model of investors who aim to divide up and resell apartments," said Bernhard Daldrup, spokesman for housing policy for the SPD parliamentary group, to SPIEGEL.

However, buildings with no more than five apartments are to be excluded from the regulation.

This is intended to protect small owners who convert their homes in order to finance their retirement provisions.

According to the negotiating circles, the Union had initially even insisted that the permit requirement only applies to more than 15 apartments.

However, the federal states can adjust the number upwards and downwards and thus make the law either stronger or weaker: The number of apartments can vary between three and 15.

The SPD assumes that left-wing governments like in Berlin will quickly commit to the lowest limit.

"The conversion practice there should de facto come to an end, because there are hardly any apartment buildings in Berlin with fewer than three apartments," says Daldrup.

In Berlin in particular, the conversion of rental apartments into condominiums rose to a record high last year.

The Senate Department for Urban Development and Housing recently announced that around 18,800 apartments were affected.

A year earlier there were just 12,689 cases.

On the other hand, conservatively governed federal states could only prohibit conversions if there are more than 15 apartments.

Even in tight housing markets, medium-sized landlords could continue to convert apartments there.

Communities can buy a house away from investors

In addition to making the conversions more difficult, the federal government wants to ensure that more land is available for living space in the future.

Because land is the main problem: there is too little and it is getting more and more expensive.

In unplanned inner city areas, municipalities have so far practically no influence on what is built and for whom. It is precisely in these areas that luxury apartments are usually built. Now there is to be a so-called sectoral development plan in the future, with which the communities in these areas can determine that at least a certain proportion of subsidized apartments must be built there - as is already the case today outside of these unplanned inner-city areas.

The so-called right of first refusal - i.e. the possibility of a municipality to buy a house or land under the nose of investors - is to be strengthened.

If there is a shortage of living space, the respective federal state will in future be entitled to use the instrument more easily.

Cities can also proceed with the right of first refusal in the future against neglected properties.

In the future, the municipalities will be able to buy the properties "at market value", according to the independent appraiser.

In the past, communities often had to pay the high prices that sellers had asked.

Many municipalities' purchase projects failed because of this.

"The new regulation is a milestone because we are slowing the land price spiral overall," said Klaus Mindrup, SPD building expert in the Bundestag, the SPIEGEL.

The Union was able to assert itself with building projects in the outdoor area

to facilitate, for example outside the cities in the country.

The SPD takes a critical view of this, as it could further increase land consumption per capita.

Source: spiegel

All business articles on 2021-05-05

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