Building land mobilization act comes into force: consequences for property owners

The building land mobilization act came into force throughout Germany on June 23, 2021. First and foremost, it expands state regulation with regard to project development of residential properties. A new addition is the so-called "conversion ban" of § 250 BauGB. In the future, anyone wishing to convert rental apartments into condominiums will need a permit to do so. (Update from 30.06.21)

The law does not apply directly to the Federal State of Berlin. Rather, Berlin could issue a corresponding ordinance under this law – similar to a social environment protection ordinance.

Berlin is not the only city suffering from a shortage of housing. Around the country, the topic is certainly on all political parties’ agendas shortly before the national election. Since 2018, the coalition partners have been discussing how to ensure support for municipalities in obtaining building land and how to secure affordable housing. We have summarized for you below the consequences that could arise for property owners.

The Building Land Mobilisation Act at a glance

1. The granting of building permits will be simplified

One of the aims is to simplify the granting of building permits. To this end, the Act essentially provides for three possibilities:

• Possible exemption from the provisions of a development plan

• The modification of a residential building or the change of use of a building for residential purposes with the possibility of deviating from required integration into the immediate surroundings, if no development plan exists

• Simplified granting of permits for the conversion of agricultural buildings into residential buildings in what is known as the “outskirt area” 

2. A general ban on conversion of rental flats

Until now, in most cases, no permit has been required to subdivide existing real estate into condominiums. This has now been changed with the new law.

In areas with a tight housing market, the subdivision of existing real estate into condominiums will now require a permit, which will only be granted under the strictest of conditions. In essence, the amendment is effectively equivalent to a “ban on conversion”. In this way, lawmakers hope to prevent the displacement of existing tenants through the conversion of existing rental flats into condominiums.

In particular, a permit will only to be granted if there are no more than five flats in the residential building. The law provides the respective regulator, e.g. the Federal State of Berlin, with the leeway of three to fifteen flats, which in turn should make it more difficult to issue the permit. Furthermore, approval is to be granted if at least two-thirds of the flats in a building are sold to the tenants. An exception, and thus the possibility of granting a permit, would be considered if heirs would like to use the flats in a building themselves, as well as in cases of personal use by the owner or his or her family members, or in cases of particular economic hardship. This regulation does not apply to new buildings.

3. Easier preparation of development plans

Certain building projects can often get underway without a permit if the project complies with the provisions of the applicable development plan whose infrastructure provision has been secured. By drawing up development plans, lengthy individual approval procedures can therefore be avoided. However, preparing a development plan has proven to be a difficult and often lengthy process. 

A new type of development plan is intended to remedy this situation. It provides municipalities with a new planning instrument to draw up a land-use plan specifically for residential construction. 

In the future, it will be easier for building permit authorities to grant exemptions from existing development plans in favour of residential construction. The municipalities will be given more flexibility to facilitate attic storey conversions and extensions. To this end, existing upper limits for the degree of building and land use have become “guide values”.

4. Expansion of building regulations

In order to facilitate the development and structural utilisation of unused plots and fill gaps between buildings, building regulations in areas with a tight housing market have been expanded. In the future, it will be possible to require an owner to undertake a residential development. At the same time, however, rights of disposal in favour of the immediate family circle will be preserved.

5. Municipal right of first refusal tightened

The amendment to the law further tightens the municipal right of first refusal. However, exercising a right of first refusal must be justified by the municipality.

The law provides for the introduction of a right of first refusal for planned and unplanned properties in what is known as the “inner area”, if these properties represent a drawback in terms of urban or facility development, i.e. so-called “problem properties”. Furthermore, municipalities are authorised to create their own statutes governing rights of first refusal for undeveloped, marginally developed and derelict plots in municipalities with a tight housing market.

In the future, municipalities will be able to acquire such properties more easily at market value.