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US News Rent to property: Ministry plans higher hurdles for converting apartments

09:50  30 october  2020
09:50  30 october  2020 Source:   ksta.de

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Rules for converting rental property into a primary residence, including after a 1031 exchange, and claiming the IRC This effectively creates an incentive for property that has rapidly appreciated during its rental period to be converted into a primary residence, even if the appreciation rate will slow.

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After protests by the SPD, Federal Building Minister Horst Seehofer (CSU) is now planning higher hurdles for converting rental apartments into condominiums. This provides for a new draft for the building land mobilization law, which is available to the German Press Agency in Berlin. According to current plans, it is to be passed by the cabinet next Wednesday. Then the Bundestag has to give its approval.

In Gebieten mit „angespanntem Wohnungsmarkt“, wie in Köln, soll es laut dem Gesetzesentwurf einer Genehmigung der Behörden bedürfen, damit Mietwohnungen zu Eigentumswohnungen werden dürfen. © Michael Bause In areas with a “tight housing market”, such as Cologne, the draft law requires approval from the authorities so that rental apartments can become owner-occupied apartments.

In areas with a “tight housing market”, approval from the authorities should be required so that rental apartments can become owner-occupied apartments. The state governments should be responsible for designating these areas for a period of up to five years.

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Places come into question where, for example, rents are rising at an above-average rate or where the growing demand for apartments cannot be met by new buildings. Exceptions are provided: For example, the approval for conversion must be granted if the owner wants to sell the apartment to relatives for his own use. This can also be the case with an estate.

Draft law provides for difficulties in converting apartments

The Federal Ministry of the Interior had already provided for difficulties in converting apartments into condominiums in a first draft of the law. According to the ministry, this met with resistance from the federal states, which is why the regulation was canceled again - which in turn brought the SPD on the barricades. Group vice Sören Bartol tied the approval of his group to concessions on this point and to tightening the building regulations.

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In the case of a building bid, the municipality can, among other things, oblige the owner to build on land within a certain period. According to the latest draft, the possibilities for this are also to be expanded, also in areas with a tight housing market. Here, too, Seehofer is planning exceptions, for example if the property is to be used as a retirement provision for the owner.

Bartol applauded the “good new bill”. "This is great news for both tenants and the municipalities in Germany," he told the dpa. “With the Building Land Mobilization Act, we are giving municipalities the tools they need to respond to the dramatic situation in many cities and create more affordable housing. In the future, tenants will no longer have to worry about their apartment being converted into a condominium against their will. ”

With the planned expansion of the building law, Seehofer has made a recommendation from the building land commission with representatives from the federal, state, local authorities and the housing industry from the summer 2019 at. At the housing summit in September 2018, the federal, state and local governments agreed on the difficult conversion of rental apartments into condominiums. (dpa)

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