Building Land Mobilization Act: amendment to building law to create more living space
Building Land Mobilization Act: amendment to building law to create more living space
The new Building Land Mobilization Act, which came into force on 23 June 2021 (source: BMWSB), aims to create new living space, enable affordable housing and protect tenants from displacement. The amendment gives municipalities comprehensive intervention options to enforce housing construction in areas with a tight housing market as defined by statute. The amendment to the Building Code (BauGB) provides for the following changes:
1. simplified granting of building permits
The aim is to make it easier for developers to obtain planning permission in order to speed up the construction of housing. Exemptions from the stipulations of a development plan in favor of residential construction in areas with a tight housing market are promised and the use of options to deviate from the requirement to blend in with the immediate surroundings is made easier. In outdoor areas, there are again simplifications with regard to the granting of permits for the conversion of buildings formerly used for agricultural purposes into residential buildings.
2. compulsion to build
In future, owners may be obliged to build on their properties. According to the newly included provision of Section 176 (1) No. 3 BauGB, a municipality may order that a property must be built on with one or more residential units if residential use is permitted in the development plan. This is also possible if the development plan permits other uses in addition to residential use, i.e. in urban areas in accordance with Section 6a BauNVO and in mixed-use areas in accordance with Section 6 BauNVO. However, there are exceptions, for example if a property is to be kept free for a family member. Hamburg has already taken action: On 13.7.2021, the Hanseatic city was the first federal state to issue a legal ordinance according to which the Hamburg Senate will in future rely on building bids (Section 201a BauGB), among other things, which specifically order residential construction.
3. areas with a tight housing market
The new law introduces the term “tight housing market” into the Building Code. This applies if the supply of rental apartments in a municipality is at risk. The criteria for determining a tight housing market in accordance with Section 201a BauGB are a significantly higher increase in rents and an above-average rent burden than the national average, population growth without simultaneous creation of the necessary living space and a low vacancy rate with high demand. The Berlin Senate considers these criteria to be fulfilled for the capital and passed a legal ordinance at the beginning of August 2021 designating the entire city as an area with a tight housing market.
4. conversion of rental apartments into owner-occupied apartments
The original intention was to improve tenants’ protection against terminations for personal use. Although this improvement would have been possible with comparatively simple adjustments to the existing regulations, a major sweeping change was created.
In future, the conversion of residential properties into condominiums will be significantly more difficult, if not no longer possible. In Berlin, official approval will be required in future for the creation of condominiums in existing buildings with five or more apartments. The reason given for this is that the conversion of rental apartments into condominiums would allegedly lead to a loss of rental housing in line with demand throughout the city. Previously, this approval requirement only existed in the capital for the numerous milieu protection areas. Although the new regulation also provides for exceptions, at least 2/3 of the apartments must be sold to their tenants
5. pre-emptive rights of the municipalities
A municipality is entitled to give priority to acquiring an undeveloped plot of land if it claims that this will meet the municipality’s housing needs.
If a private individual or company sells a plot of land and it is located in a specific area, for example within the scope of a development plan or in a redevelopment area, the municipality can assert a right of first refusal under certain conditions in accordance with Section 24 BauGB and thereby conclude a purchase agreement with the seller instead of the buyer on essentially the same terms that were previously negotiated between the seller and buyer. However, the municipality must demonstrate in a comprehensible manner and with the help of an urban development concept that a property is actually suitable for targeted development.
6. social housing promotion
Municipalities will be given the opportunity to designate certain areas as binding at the planning stage, on which buildings with apartments at low rents will later be constructed. This means that municipalities can designate areas for residential development within the scope of the newly introduced sectoral development plans and can also stipulate that new apartments must meet the structural requirements and funding conditions of social housing promotion, such as rent and occupancy restrictions. Building permits may then also be made dependent on corresponding proof of compliance with the regulations.
The amendment is intended to create a new legal basis for certain areas and thus facilitate housing construction. Whether this is the much-vaunted “milestone” is questionable. What is certain, however, is that the legislator is once again relying on state regulation rather than a sensible revision of the framework conditions that are crucial for the housing industry.
Critics of the law therefore fear, among other things, that there will be a shift as a result of the measures and that other asset classes will miss out, with the office real estate market likely to be particularly affected.
There are also fears that the continuing high demand for residential property will cause prices, which are already high in some places, to explode. In Germany, a country of tenants (55% of people live in rented accommodation), but especially in the capital Berlin (approx. 85%), many people will be denied the opportunity to own their own home. Ultimately, rising prices for owner-occupied apartments will also have an effect on rental prices.
Finally, it is foreseeable that the new law will lead to numerous legal disputes between owners and local authorities, right up to the Federal Constitutional Court – after all, the amendment involves considerable encroachments on fundamental rights and property rights. In this context, it is questionable whether the Building Land Mobilization Act will lead to faster activation of building land and the creation of more affordable housing and will not primarily keep lawyers and courts busy.
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