It could soon become more difficult to convert rental apartments into condominiums. According to housing market observers, a number of ministries are working on new draft legislation, which they hope to add to upcoming amendments to the Federal Building Code (BauGB). If the draft legislation is adopted, the BauGB’s new Section 22a will allow planning authorities to extend existing bans on the conversion of rental units into condominiums, which have so far only banned conversions in specially designated neighborhood protection areas, to all “tense” housing markets. In future, any owner who wants to convert rental apartments into condominiums will first need approval from the competent local authorities. The draft legislation does contain a number of exceptions, for example, if the apartment building belongs to a community of heirs, or if an owner wants to sell a majority of apartments to in-place tenants. The new legislation is designed to protect tenants from being driven out of central neighborhoods by sky-rocketing rents after a conversion or lease terminations because owners want to use the apartments themselves. However, under existing legislation, tenants are well protected if the apartment they are living in is converted into a condominium. High hurdles also already exist for landlords who want to terminate evict an in-place tenant so that they can use an apartment themselves or their family.

Will the law change?

Of course, the new law has not yet been passed and there is also opposition to overcome: the magazine Focus has reported resistance to the federal government’s plans from within the ranks of Angela Merkel’s governing CDU/CSU group. In a joint letter to the Federal Construction Minister, Horst Seehofer, members of parliament have supposedly already expressed grave reservations and described the amendment as a serious infringement of established property rights. In a recent interview with the newspaper Welt am Sonntag, however, Seehofer expressed his clear support for the new paragraph. Right now, there is at least one source of hope – the draft law only applies for an initial five years. Thus, there is a small chance that this law, just like the rental price brake, could be abolished rather than extended.

We see a need for action

Whatever the timescale, we are advising our customers not to waste time and run the risk of falling foul of the new legislation at a later date. Now is the time for owners to take action and make sure they divide their properties into condominiums before politicians do pass the law and make the conversion process even more difficult. We are specialists in the sale of condominiums and experts in the conversion of rental apartments into condominiums. If you are considering converting rental apartments into condominiums, or are not even sure how the process works in Germany, our dedicated team of real estate professionals is ready and waiting to help you every step of the way.

We look forward to hearing from you!

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David Borck Immobiliengesellschaft
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