The mayors of Berlin, Hamburg and Munich join forces to strengthen tenant protection tools

Аdvocates for more robust municipal rights of first refusal for German cities

Last Friday, Berlin Mayor Franziska Giffey, Hamburg Mayor Peter Tschentscher and Munich Mayor Dieter Reiter agreed to band together on a joint initiative to strengthen the municipal right of first refusal.

Following a court decision from the start of November 2021, municipalities have lost a lot of power when it comes to preventing speculative real estate sales. This is what the new initiative is aimed to reverse on a federal level, by pushing for an expansion of pre-emptive tools on the local level.

A court decision affecting all of Germany  

Pre-emptive rights, also known as rights of first refusal, in this case, refer to the right of the local government to refuse certain real estate sales if they are made with speculative reasons. This practice is most reverent when large companies buy or sell rental buildings.

More specifically, these large German cities want to prevent realtors from selling rental units, jacking up the rents and kicking out the tenants. This is a major concern in Berlin, Munich and Hamburg, according to a statement by the mayors from yesterday.

However, according to a Federal Administrative Court decision in a Berlin case from November of last year, cities did not have the power to refuse a sale if the property’s status was intended to be preserved at the time of sale. In layman’s terms, this means that if the buyers have not explicitly declared their intentions to change the status of the building, the city cannot intervene.

The Mayors’ response

The mayors of the three largest German cities have decided to band together and work on the state and federal level to gather support to change the legislation on the rights of first refusal. Largely, this is because the Federal Administrative Court decision negates state and local legislation, meaning that federal amendments to the current laws are needed.

Franziska Giffey explained that during times when the housing market is particularly tight, cities need effective tools to protect vulnerable tenants. She also said that this new initiative is an important building block in the current tenant protection policies in Berlin.

Peter Tschentscher, Mayor of Hamburg, emphasized the role of local administrations in making cities livable and affordable. According to him, the right of first refusal is a vital tool to protect tenants from speculation and eviction.

That opinion was seconded by Munich Mayor, Dieter Reiter. He also explained that through the right of first refusal, local authorities across Germany have been able to ensure housing affordability. Otherwise, he said that a lot of units would have been converted into luxury apartments.

He continued: “For many tenants, the current situation means, above all, great uncertainty as to whether their apartment will still be affordable tomorrow. Together with the cities of Berlin and Hamburg, I want to ensure that the concerns of Munich tenants are heard nationwide.”