Our Magazine for Investment Real Estate

Editorial

Dear Reader,

The issue of the municipalities’ powers of pre-emptive purchase is once again making waves throughout the industry. At the end of 2021, the Federal Administrative Court in Leipzig ruled that authorities may only exercise their right if there is actually a deficit or defect within the meaning of the German Building Code – and not merely the presumption that the future owner might want to increase the rent, for example, after an energy efficiency upgrade.

However, it was always unlikely that the ruling would restore peace in this matter. In February, parliamentarians from the left-wing Die Linke party introduced their own, admittedly futile, bill to more clearly define municipalities’ pre-emptive purchase rights. The draft that followed three months later from the Federal Ministry of Construction went even further than the proposal from Die Linke: The public good should provide sufficient grounds for a pre-emptive purchase. This issue will therefore continue to preoccupy housing investors for a long time after the Leipzig ruling – presumably in an even more extreme form than before. By contrast, the programme to upgrade buildings to make them more energy-efficient is expected to be dealt a real blow as a result of the many so-called avoidance agreements that are expected to be concluded in order to avoid pre-emptive purchases.

We hope you enjoy reading this latest edition of our newsletter.

Jürgen Michael Schick and Holger Friedrichs