Pre-emption rights in Berlin 2022: a comeback after the court ruling?

Barely a year after the Federal Administrative Court ruled against Berlin's pre-emption practice, the Federal Ministry of Housing is working on a new version. For property owners and buyers in Berlin, this means renewed uncertainty around transactions.

Brief recap: why pre-emption rights were struck down

For years, Berlin boroughs used pre-emption rights in social preservation areas (Milieuschutzgebiete) to intervene in ongoing property sales. Friedrichshain-Kreuzberg, Pankow and Neukoelln made particularly frequent use of this. The reasoning was usually the same: the new owner might displace tenants through renovations or conversions.

The Federal Administrative Court ended this practice in November 2021 (case 4 C 1.20). The judges were clear: mere assumptions about a buyer's future intentions are not sufficient. Only the actual condition and use of the property at the time of sale is relevant.

The Ministry of Housing wants to change the law

The ministry under Klara Geywitz (SPD) submitted a draft bill at the end of April to amend the Building Code (BauGB). The goal: to give municipalities a legally sound pre-emption right again. Support comes from state secretaries Soeren Bartol and Cansel Kiziltepe (both SPD), who advocated for state interventions such as the rent cap during the previous legislative period.

The draft has been temporarily blocked by Federal Justice Minister Marco Buschmann (FDP). He is reviewing whether a legislative change is even permissible after the court's landmark ruling.

What reintroduction would mean for owners

If pre-emption rights were reinstated, every sale of an apartment or apartment building in a social preservation area would again carry additional risks:

• Purchase contracts could only be finalised after the borough's review period expires.
• Boroughs could step in as buyers and influence the agreed price.
• Waiver agreements with costly concessions could return.

Political calculation and market conditions

There is also an economic calculation behind the push: should the market development actually lead to falling prices, boroughs and the state could acquire housing stock more cheaply than before. Whether and when prices in Berlin will actually decline remains unclear.

Expert hearings are planned as the next step. The composition of the panels, including representatives of the Left Party and tenant associations, suggests that political pressure for reintroduction is more likely to grow.