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Condominium Conversion Ban – Background and Latest Developments

The so-called condominium conversion ban of 1998 that made it unlawful to turn rental flats into condominiums has become part of Article 172, German Federal Building Code (BauGB). The amendment of the Building Code authorises the German states to zone preservation statute areas where the creation of condominiums or commonhold units in residential buildings requires a license. A condominium conversion ordinance of this sort can only be effective for five years or less, and must be re-enacted if it is to extended.

The amendment of the German Building Code to include the passage was initiated by the city state of Hamburg, which immediately passed a condominium conversion ordinance that remains in force to this day. This means specifically that the conversion of rental apartments into condominiums in urban conservation areas such as St. Pauli or St. Georg is requires a license from the respective borough council office. The latter office will generally withhold the license whenever the conversion project appears to disrupt the social composition of the resident population. Exemption granted under the German Building Code include cases of inherited property or the owner's self-obligation to limit apartment sales to incumbent tenants for the first seven years after the partitioning. On the whole, the licensing is highly restrictive, and it would be no exaggeration to speak of a de facto conversion ban. In Hamburg's three zoned conservation areas, for instance, just one single house was cleared for partitioning into condominiums in 2012.

In November 2013, a condominium conversion ordinance went into effect in Baden-Württemberg making it mandatory to obtain a municipal permit for condo conversions in historic district protection areas in the the cities of Freiburg and Stuttgart. In February 2013, Bavaria became the third German state to ratify a condominium conversion ordinance, which became effective on 01 March, and which will remain in force for an initial term ending in 2019. As a result, projects seeking to convert rental flats into condos in any of Munich's 17 preservation statute areas or two such areas in Erding near Munich Airport requires a corresponding license. For the time being, no other German states have passed a similar ordinance. However, several boroughs in Berlin have called for the introduction of a condominium conversion ban, and Berlin's Senate Department for Urban Development and Environment, which is headed by a Social Democrat, is working on a condominium conversion ordinance. The Christian Democrat partner of Berlin's coalition government opposes the legislation, though, making it anybody's guess whether and when Berlin's Senate might pass such an ordinance.

No other German states are known to seek introduction of a condominium conversion ordinance, but it should be added that tenant representatives in many major cities have repeatedly requested it.