Apartments: Minister of Construction presents draft for right of first refusal – policy

Federal Building Minister Klara Geywitz (SPD) wants to restore the municipal right of first refusal in a modified form and thus strengthen the protection of tenants. The SPD politician gave a first draft law on the right of first refusal on Friday, which also Süddeutsche Zeitung is available, in coordination with other ministries of the federal government. The draft envisages giving cities and municipalities a comprehensive right of first refusal in so-called milieu protection areas, i.e. in districts where the housing market is considered to be particularly tight.

This right of first refusal can therefore only be averted in the future if a buyer expressly commits to the goals of the environmental protection statute in an averting agreement. The waiver agreement should be valid for a maximum of 20 years. In concrete terms, a buyer can, for example, be obliged not to carry out any luxury renovations or conversions into condominiums during this period.

The background to the coalition plans is a judgment by the Federal Administrative Court in November. This had overturned the previous practice of many municipalities of buying apartment buildings if there was a fear that the residents would be pushed out by private investors. Since then, municipalities have only been able to exercise this right of first refusal if a building is largely empty or has fallen into disrepair, but no longer if a city expects sharp rent increases. Until then, investors could only prevent the municipalities from gaining access through a waiver agreement.

As a result, according to the widespread assessment of experts, the cities have been deprived of a powerful tool against speculators and the displacement of residents from popular districts. While the SPD and the Greens are pushing for the right of first refusal to be restored quickly, the FDP is putting the brakes on it. She sees the right of first refusal as a questionable encroachment on property rights and insisted on a thorough examination of the instrument.

Berlin, Hamburg and Munich are in a hurry

Compared to the previous regulation, the draft law contains new exceptions. So there should be no restrictions for buyers if a legally prescribed renovation is due – the owner can pass on the costs for this to the tenants. There should also be special regulations for transactions with family members. Elsewhere, the agreements between the municipality and the buyer should also be able to be drawn up more precisely. For example, the previous option to prescribe that apartments may only be sold to tenants for seven years should be allowed for a longer period of time.

This type of right of first refusal is used by large cities or university towns such as Berlin, Frankfurt, Munich or Leipzig, where the housing market is particularly tight, at least in some quarters. The three mayors of Berlin, Hamburg and Munich, Franziska Giffey, Peter Tschentscher and Dieter Reiter (all SPD), had urged the federal government in a joint statement at the end of January that the cities “must be able to continue using this important instrument” – and quickly.

In recent years, Munich has spent around 500 million euros on the right of first refusal by entering into a purchase agreement that has already been concluded between two private parties. This is possible if the property is located in a so-called conservation statute area. These are primarily inner-city districts in which the traditional population is to be protected. The city transferred 1,049 apartments to the portfolio of its housing companies by means of a right of first refusal.

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