Largest German cities make case for right of first refusal

Germany's largest cities, Berlin, Hamburg and Munich, want to jointly strengthen the municipal right of first refusal and thus better protect residents from displacement.

New nationwide legal regulation sought

The cities announced on Wednesday (Jan. 27, 2022) that the goal was a legal reorganization at the federal level. Only in this way could a legally secure exercise of the municipal right of first refusal to protect the residential population be guaranteed. There is an urgent need for action. Berlin's Governing Mayor Franziska Giffey, Hamburg's First Mayor Peter Tschentscher, and Munich's Lord Mayor Dieter Reiter (all SPD) appealed to the federal and state governments to cooperate on a nationwide solution.

According to the information provided, the background to the joint initiative is a ruling by the Federal Administrative Court of November 9, 2021. At that time, the judges had ruled that the exercise of the right of first refusal is excluded if the property is being used regularly in accordance with the social preservation statutes at the time of exercise. The Federal Administrative Court had thus interpreted the statutory provision in such a way that only takes into account the condition at the time of the sale and not the future intentions of the buyer.

Important instrument in tight housing markets

From the perspective of the cities, however, this means that the municipal right of first refusal cannot be exercised in neighborhoods with social preservation ordinances and that no declarations of refusal can be concluded with the purchasers if the purchasers' only justification is that they intend to use the property in the future to the detriment of residents. The right of first refusal is an important instrument for protecting established structures, preserving affordable rental housing and counteracting real estate transactions with speculative intent, especially in tight housing markets in areas with social preservation ordinances.

"Housing in the city must remain affordable."

"Wherever housing markets are tight, we need effective and legally secure instruments to protect tenants," said Berlin's Governing Mayor Franziska Giffey. For this reason, Berlin, Hamburg and Munich have set out to appeal to the federal and state governments to allow municipalities to have rights of first refusal and averting agreements. "Housing in the city must remain affordable," stressed Hamburg's mayor Peter Tschentscher. The right of first refusal is an important instrument for this. Munich's mayor Dieter Reiter pointed out that local authorities had few options to effectively protect tenants anyway. The current situation without a right of first refusal "means above all great uncertainty for many tenants as to whether their apartments will remain affordable tomorrow."