Around 82 areas in Berlin are under Milieuschutz. Anyone selling an apartment or a building in one of them will sooner or later hear the sentence: "the district has a right of first refusal." That is true — but it now means something different from five years ago.
Legally these are social preservation areas under § 172 of the German Building Code. The aim is to preserve the composition of the resident population — to stop a Kiez losing its inhabitants through modernisation and conversion. A district designates such an area by ordinance, after a social study has demonstrated a threat of displacement.
What the right of first refusal used to be
Between 2017 and 2021 the municipal right of first refusal under § 24(1) No. 4 BauGB was the sharpest instrument in the Milieuschutz toolkit. The figures are clear: Berlin's districts examined more than 800 cases. In 90 they actually exercised the right. In a further 376 the buyer signed an Abwendungsvereinbarung — an avoidance agreement — to prevent it.
For sellers the process was uncomfortable. After notarisation the district has two months to decide. If it exercises the right, a state-owned housing company steps into the buyer's place on identical terms. The seller gets the money but loses the buyer they negotiated with.
The judgment that changed everything
On 9 November 2021 the Federal Administrative Court (BVerwG 4 C 1.20) ruled on an apartment building in Friedrichshain-Kreuzberg. The district had exercised the right in favour of a state-owned company. The court declared that practice unlawful.
The heart of the decision: under § 26 No. 4 BauGB the right is excluded where the property is built and used in line with the aims of the preservation ordinance and shows no structural defects. Put plainly — a district may not buy because it fears what a purchaser might do in future. It may only buy where something is wrong with the property now.
The effect was immediate. In 2023 only seven cases across Berlin could be examined; in 2024 only five. From 800 to five is not a weakening — it is a different state of affairs.
What has applied again since 2024
The legislature responded. A 2024 amendment made the instrument applicable again, but under markedly narrower conditions. A pre-emptive purchase is now permissible where concrete urban planning deficiencies or a demonstrable threat of displacement can be evidenced. The burden of proof sits with the district, and it is a real burden.
The 2025 "BauGB upgrade" strengthened the municipal right further, particularly for vacant or neglected properties. Berlin is preparing renewed application in selected areas.
The right is back, but it has not regained its former force. For a well-maintained, occupied apartment building in good condition, the probability of a pre-emptive purchase is low. For a vacant, neglected or evidently speculative holding, it is not.
Avoidance agreements — and why they bind
Where a district intends to exercise the right, the buyer can prevent it by signing an avoidance agreement, undertaking to observe the aims of the ordinance: typically no creation of condominium ownership for twenty years, no merging of apartments, no high-end modernisation.
After the 2021 judgment some owners tried to escape such agreements, arguing the underlying right had been unlawful. The Berlin Administrative Court decided this in five cases in March 2026: the agreements remain binding. Owners in Mitte, Neukölln and Tempelhof-Schöneberg who signed between 2018 and 2021 are still bound by them.
So anyone buying a property encumbered by an avoidance agreement buys the obligation with it. That belongs in due diligence, not in the surprises after notarisation.
What matters more in practice
Consent requirements for building work
In a preservation area, modernisation, demolition, structural alteration and change of use all require consent. Since December 2024 uniform administrative rules have applied across Berlin for the first time — previously each district handled it differently. In practice: a second bathroom, adding a balcony, merging two apartments all need permission, and it is not granted automatically.
Even during preliminary investigation a district can adopt a resolution that suspends building applications and modernisations for twelve months.
The conversion ban under § 250 BauGB
Converting rental apartments into condominiums is no longer governed primarily through Milieuschutz but through § 250 BauGB — a federal provision running to 2030 with higher requirements than the old regime. It covers the large majority of Berlin residential buildings, whether or not they sit in a preservation area.
What this means for a sale
| Situation | Practical consequence |
|---|---|
| Maintained, occupied building | Pre-emption unlikely. Still budget for the two-month period. |
| Vacancy or defects | Pre-emption possible. Speak to the district before marketing. |
| Existing avoidance agreement | Passes to the buyer. Disclose it — it binds. |
| Buyer plans modernisation | Clarify consent early, not after notarisation. |
| Buyer plans to subdivide | Check § 250 BauGB — in force until 2030. |
The two months after notarisation are where sales in preservation areas fail — not because of the pre-emption itself, but because nobody planned for the wait. A buyer expecting to move in within four weeks becomes anxious. A seller who names the period from the outset does not have the problem.
This article describes the legal position as we understand it in July 2026 and is not legal advice. Milieuschutz is in motion — the governing rules have changed twice since 2021. For a specific project it is worth checking the current ordinance of the relevant district.
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