Protest banners on Berlin apartment buildings
Photo: Odd Andersen / AFP
The Berlin state government has once again suffered a severe setback in the area of housing policy.
In the spring, the former flagship project in the fight against rising rents - the so-called rent cap - was collected by the Federal Constitutional Court, now the Federal Administrative Court is again thwarting the red-red-green Senate: The judges stopped the pre-emptive practice often used in Berlin in environmental protection areas.
What are the consequences of the judgment - also beyond Berlin?
To what extent are tenants affected?
Answers to the most important questions.
What are pre-purchases and how do you apply them?
In many cities, rents have been rising rapidly for years.
Local politicians are therefore increasingly relying on the so-called right of first refusal.
It enables a community to buy a house or land away from investors in areas with tight housing markets.
Because then the usual method of many investors no longer works: modernize and then significantly increase the rent.
The only way the original buyers can prevent pre-sale is by signing strict avoidance agreements, which in particular exclude luxury renovations and sharp rent increases.
Especially Florian Schmidt (Die Grünen), City Councilor in the trendy Friedrichshain-Kreuzberg district, has consistently implemented the method in his district in recent years and has caused a stir.
According to his own statements, his district exercised the right of first refusal for around 800 apartments, with the aim of "avoiding the displacement of the resident population."
The pre-purchases are part of a larger strategy to increase the district's municipal inventory - and thus to curb the overall increase in rents.
A number of other districts copied the process, but more and more such advance purchases are also being used in other large cities.
Munich, for example, bought real estate more often than ever in the past 20 years.
The city let the 21 deals cost around 146 million euros.
In Hamburg, the Altona train station is a prominent example of such a procedure.
The property has belonged to the city since July.
She snatched it from the originally intended buyer, Volksbank Braunschweig Wolfsburg.
New apartments are to be built on the track areas that will become available.
How does the court justify its judgment?
In the specific case of Berlin, the district office and the responsible city councilor Schmidt had exercised the right of first refusal on a tenement house in Kreuzberg's Bergmannkiez with 20 rented apartments.
Instead of going to a real estate company, the property was owned by a state-owned housing association.
For the house there was a fixed rental price until 2026 due to former subsidies. The company rejected the avoidance agreement demanded by the district, which would have excluded rent increases.
The district feared that the company could increase rents after the end of price maintenance, convert apartments into private property and thus displace old residents from the neighborhood.
The company sued the pre-emption.
The plaintiff was initially unsuccessful before the administrative and higher administrative courts.
The public interest, expected conversions and rent increases justified the intervention, judged the lower courts.
But now the court ruled that the fear that an apartment building could be divided into condominiums is not enough to justify a right of first refusal.
In the view of the judges, the yardstick for the right of first refusal should not be the mere expectation of how a future buyer will deal with the property.
Rather, it is about the actual conditions on the property.
What are the consequences of the judgment?
The ruling hits all districts hard, which have made the right of first refusal a powerful instrument of their housing policy.
Because such advance purchases should no longer be possible in the future.
Investors can now refer to the judgment of the Federal Administrative Court.
However, pre-purchases that have already been made do not have to be reversed.
Tenants keep their municipal owners there.
What are the reactions to the judgment?
As expected, building city councilor Florian Schmidt sees the judgment as very critical.
He describes it as a "severe blow in the fight against speculation with housing and against the displacement of people from their neighborhood".
Berlin's Senator for Urban Development and Housing, Sebastian Scheel (left), called the decision a “catastrophe” for tenants in Berlin and nationwide.
"Today's decision by the Federal Administrative Court leaves me stunned," he said.
The court almost completely deprives the municipalities of the option of exercising the right of first refusal in environmental protection areas.
The Bundestag must quickly intervene to clarify this.
Scheel said that his house would immediately work out a proposal for a Federal Council initiative.
Schmidt calls on the future federal government to adapt the laws in order to also reflect threatened exploitation on the part of investors. In the spring, the federal government had strengthened the right of first refusal in the so-called building land mobilization law, in which the period for exercising was extended from two to three months.
The real estate industry believes changes to the law are the wrong way to go.
“That is the usual reaction in Berlin politics.
Instead of apologizing to the Berliners that you have to be caught again and again by the courts, you want to keep your head through the wall and then change the laws, "said IVD Vice President Dirk Wohltorf.
Berlin politicians should put their "socialist fantasies" aside and instead finally take care of the new housing construction.
"That's the only thing that really helps tenants in Berlin."
