The Building Land Mobilization Act –
everything you need to know now.

What is the Building Land Mobilization Act about?

One of the aims of the law is to promote housing construction. To this end, it expands the building requirement and opens up the possibility to prescribe a certain use (residential development) to the owner of a plot of land in an area with a tight housing market. However, the right of disposal in favor of the immediate family circle is preserved.

In addition, the previous upper limits for the extent of building use in accordance with the BauNVO will be changed to orientation values. Furthermore, the extension of the municipal rights of first refusal makes it easier for municipalities to acquire land at the current market value.

However, the most controversial point in the real estate industry is the restriction on the conversion of rental apartments into owner-occupied apartments in apartment buildings with more than five apartments. In so-called areas with tight housing markets, which are defined by the state government, conversions of rental apartments into owner-occupied apartments (in MFH with more than five apartments) now require approval. This approval requirement is to apply until December 31, 2025 at the latest.

Source and further information: https://www.bmi.bund.de/DE/themen/bauen-wohnen/stadt-wohnen/wohnungswirtschaft/baulandmobilisierung/baulandmobilisierung-artikel.html

What does the law mean for you?

As a tenant: If you have been toying with the idea of buying your rental apartment in an area with a “tight housing market”, for example Berlin, you are now deprived of the opportunity to do so by this law. Only if 2/3 of the tenants of a multi-family house want to buy their apartment themselves and are able to do so, a division will be approved.

As an owner: Are you the owner of an apartment or an already divided apartment building? Then you can benefit from large price increases. Due to the restrictions, the market of condominiums will be strongly limited and consequently, if the demand remains the same, as expected, the price will increase.  As an owner of a non-subdivided apartment building, you are the loser of the law, since the demand and therefore the price will decrease sharply.

As a prospective buyer: as already mentioned, the “ban on subdivision” will greatly reduce the supply of condominiums and consequently increase prices. You will now have to spend even more money to buy an apartment.

 

Commentary on the Building Land Mobilization:

In the following video, Achim Amann, CEO of Black Label, has once again summarized all the important information about the Building Land Mobilization Act for you:

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