The Bundestag has passed a new bill on the zoning of development land (the catchy sounding Baulandmobilisierungsgesetz). The act might not include a direct ban on the conversion of rental apartments into condominiums, but is certainly designed to discourage the practice. The act marks the latest government intervention into the real estate market as politicians look to put the brakes on the recent sharp rise in conversions, particularly in Germany’s largest cities. Under the new act, the government of each federal state will be able to classify specific areas as having a “tight housing market” for a period of five years, during which it will be necessary to obtain a permit to convert a rental unit into a condominium. However, there are a number of exceptions that apply if at least two-thirds of a building’s rental apartments are sold to tenants. There is also to be a special provision for small property owners to protect their pension provision. However, the states are free to set the threshold for such exceptions at between three and 15 apartments, thereby either strengthening or weakening the law.

The Development Land Release Act will make it easier for local authorities to impose new building regulations while also giving them a right of first refusal.

In future, municipalities will have more influence in inner-city areas without existing development plans and will, for example, be able to stipulate, that developers have to include a certain proportion of subsidized housing in their plans. In addition, municipalities will be given more time to buy a building or a plot of land in order to create affordable housing themselves. What’s more, it will no longer be the seller who determines the price, but independent appraisers, who will be tasked with determining the fair market value of any property. In addition, municipalities should find it easier to zone building land on the outskirts of towns and outside cities (greenfield sites) to enable denser residential development.

What does the Development Land Release Act mean for property owners?

What impact will this change have on the housing market?

Our experts are available to advise you on these and similar questions regarding the new law and the conversion of your real estate.

Yours

David Borck Immobiliengesellschaft

Schlüterstraße 45 | 10707 Berlin | service@david-borck.de
Telefon +49 (0)30 887 742 50 | Telefax +49 (0)30 887 742 525