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Several German states have recently moved to extend or reinforce restrictions on the conversion of rental apartments into condominiums, tightening the rules that govern urban housing markets. The measures, aimed at preventing tenant displacement and preserving affordable rental stock, continue a long-standing battle over the balance between housing regulation and property rights.
The Berlin Senate has extended its conversion ordinance for another five years, until March 2030. This regulation applies to 81 social preservation areas, covering about a third of the city’s population. Urban Development Senator Christian Gaebler justified the extension by citing the risk of increased conversion activity once the broader federal restrictions under Section 250 of the German Building Code (BauGB) expire at the end of 2025. The new rules mean that landlords will still require permission to convert rental apartments into condominiums, a measure intended to curb speculative property investment and stabilise neighbourhood demographics.
Berlin’s restrictions have already had a measurable impact. According to the latest monitoring report by the Senate Department for Urban Development, the number of approved conversions plummeted from a peak of nearly 29,000 in 2021 to just 4,475 in 2023. However, this decline came only after a rush of applications in anticipation of stricter laws. In social preservation areas alone, over 48,000 conversion applications were submitted between 2015 and mid-2024, with an approval rate of nearly 98%, suggesting that while restrictions exist, exemptions remain widely granted.
Hamburg has taken a similar approach, renewing its conversion ban in 13 designated districts for another five years, until the end of 2029. The measure has been in place since 2021, targeting areas with high tenant displacement risks, such as St. Pauli. The Hamburg Senate argues that the rules have been effective, with Urban Development Senator Karen Pein pointing to a sharp decline in conversions. Supporters, including tenant organisations, hail the extension as necessary to protect renters from being pushed out by rising property prices.
Does limiting conversions make it harder for residents to buy?
Not everyone agrees that the conversion ban is helpful. The real estate sector has criticised these policies as barriers to homeownership and obstacles to investment in housing supply. Kay Brahmst, chairman of the BFW Landesverband Nord real estate association, noted that Hamburg already has one of the lowest homeownership rates in Germany, second only to Berlin. He argues that limiting conversions only makes it harder for residents to purchase existing flats, which are often more affordable than new developments. Industry voices also warn that restricting conversions will not solve the core problem of housing shortages and could discourage investment in rental stock.
Baden-Württemberg has also opted to extend its conversion ordinance, keeping restrictions in place until 2028. Unlike Berlin and Hamburg, however, the implementation of the law is left to municipalities, meaning enforcement varies by city. The state government argues that maintaining rental stock in high-demand areas is a priority, particularly in university towns like Tübingen, where rental housing remains scarce. But the measure does allow for certain exemptions, including sales to family members or existing tenants.
The broader context is the uncertain future of the federal conversion restrictions under Section 250 BauGB, which are set to expire in 2025. These nationwide rules, introduced as part of the Land Mobilisation Act, require approval for conversions in buildings with six or more apartments, beyond just social preservation areas. Berlin is lobbying for an extension, while the federal government remains silent. The lack of clarity leaves cities and investors in limbo. If Section 250 lapses, a wave of new conversion applications is likely, potentially undermining local restrictions just as they tighten.
For investors, the landscape remains restrictive. Policymakers continue to prioritise rental market stability while sidestepping the larger issue of housing supply. Conversion bans may slow tenant displacement, but without significant efforts to boost residential construction, they do little to address the chronic shortfall. If the federal government fails to provide a clear direction on Section 250 BauGB, cities will be left managing fragmented policies while investors weigh regulatory risks. The contradiction between tightening restrictions and the need for more housing has never been starker.