The Berlin Senate’s Proposed Budget Excludes Funds for District First Refusals

The Berlin Senate apparently does not expect a comeback of the right of first refusal in the districts. The proposed budget for 2024 and 2025 does not include funds to support district first refusals.

Since the sum of 70 million euros currently earmarked for this in the “special fund for the growing city” has been fully spent or planned according to the tax authorities, this could make it significantly more difficult to exercise the right of first refusal in the future.

The application is not completely ruled out by this. In a response from the Senate Department for Urban Development to a written request from Green Party member Katrin Schmidberger, it is said that additional funds can be made available “in the context of setting priorities and if further funding commitments are necessary”.

A current example from Neukölln shows how reticent the Senate is. As reported, the Neukölln city councilor for construction, Jochen Biedermann (Greens), wants to use the right of first refusal for two properties at Weichselstraße 52 and Hermannstraße 123 in favor of a state-owned or public welfare housing company. The houses should actually be sold to the investor “Hansereal”.

Senate: Exercising the right of first refusal “economically challenging”

It would be the first time after a ruling by the Federal Administrative Court in 2021 that a district would apply the right of first refusal regulated in Section 24 of the Building Code. At that time, the judges decided that communities could only exercise their right of first refusal if there were significant grievances in the apartments.

In Berlin, the instrument was previously used primarily to prevent people from being pushed out of their neighborhoods and to maintain the social mix. The Federal Administrative Court ruled that this procedure was not covered by the law.

The city development administration confirms that there are grievances that justify a right of first refusal in the two Neukölln properties. However, she points out that this is precisely why exercising the right of first refusal is “particularly challenging from an economic point of view”. In addition to the purchase price, money would also have to be spent on the renovation of the buildings.

“In the end, it also depends on the political will”

Neukölln’s building councilor, Jochen Biedermannabout the possibility of exercising the right of first refusal.

It is unclear whether the Senate is willing to do this – for example by granting a corresponding subsidy to a state-owned housing company. “We are still in intensive consultations with the Senate,” said Neukölln City Councilor Jochen Biedermann to the Tagesspiegel. “In the end, that also depends on the political will.” The decision could show whether the Senate considers the right of first refusal to be sensible in principle.

“Even if the cases won’t reach the extent they used to, I think it’s important that we continue to use the instrument,” said Biedermann. “The last few years have shown that the market does not regulate it. In this respect, I hope that there will be political and sufficient financial support for this.”

Schmidberger, spokeswoman for housing policy for the Greens, argues the same way. “The municipal right of first refusal is the only instrument that districts have to protect tenants, in addition to milieu protection,” she told the Tagesspiegel. “Even if it is very narrowly defined, it is an important lever in order to oblige potential buyers to deal responsibly with the inventory and not to force tenants out.” The highest possible sales of residential buildings for profit purposes are not investments – they damage the city.