REALWorld Law

Sale and purchase

Real estate and public law

What are the most important areas of public law for an investor to consider when purchasing real estate?

Germany

Germany

An investor should always verify that the building complies with the relevant building permits and the zoning and building laws. Usually, the building permit will be sufficient to confirm that the building complies with zoning law but sometimes it is also helpful to check the zoning plan. This allows the investor to verify whether the proposed use of the premises is permitted.

Any change in use will require a revised permit.

Additionally, if the property is located in an area affected by environmental regulations, eg regulations regarding nature protection or water protection, investors should consider the effects of these regulations on the building and property. The location of the property in a nature or water protection area might result in building restrictions or certain obligations for the property owner. Restrictions on use can also result from public easements (öffentliche Baulasten). Therefore, the public register of easements should always be checked.

In case the property or the building are listed to be under monument protection, there will be certain additional requirements regarding the maintenance and care of the monument.

Further public-law requirements and restrictions may arise from the location of the property in special urban development areas (städtebauliche Sondergebiete; eg redevelopment areas (Sanierungsgebiet), development areas (Entwicklungsgebiet)). Hence, the location of the property in such areas should be checked and is usually checked as part of an acquisition due diligence.

Furthermore, investors should consider public law restrictions on rent increases for residential properties. In areas with a strained housing market, these restrictions cap rental increase on entering into a new lease contract at 10 % above the local reference rent, subject to certain exceptions for new or extensively modernized buildings. New restrictions also limit the sale of residential condominium properties to tenants within a certain time after the conversion of rental space. Additionally, the possibility to increase the rent during the lease is limited by public law restrictions.

For residential properties, depending on the location of the building, housing control measures taken by the municipality or the federal state are also relevant. In social-protected areas (soziales Schutzgebiet), the demolition and change of use of apartments is subject to approval. Furthermore, in certain states such as Bavaria, Baden-Württemberg, Berlin or Hamburg, statutory bans on misappropriation (gesetzliche Zweckentfremdungsverbote), laws against vacancies (Gesetze gegen Leerstand) or approval requirements for the conversion of living space into vacation apartments (Genehmigungspflichten für die Umwandlung von Wohnraum in Ferienwohnungen) exist.