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Milieuschutz in Berlin: Senate’s right of first refusal puts buyers under pressure

How does the right of first refusal operate in Berlin’s Milieuschutz areas? Analysis of legal limits, risks for buyers, market delays, and recent cases in the districts.

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To secure affordable housing in Berlin, the districts are intended by the Senate to continue exercising their right of first refusal in Milieuschutz areas. In practice, however, this instrument has been significantly restricted since the Federal Administrative Court ruling of November 9, 2021 (BVerwG 4 C 1.20). Since 2023, Berlin has again been using the remaining legal leeway selectively in individual cases, primarily involving problematic properties.

Housing is a scarce resource in the capital. Against the backdrop of rising rents, Milieuschutz is intended as a socially compatible urban development tool. The districts establish Milieuschutz areas by issuing a social preservation statute for specific zones. The goal is to secure affordable housing for economically disadvantaged households and thereby maintain the social mix of residential neighborhoods. The legal basis is provided by § 172 of the Federal Building Code (BauGB).

For Milieuschutz areas, the districts have a right of first refusal under § 24 BauGB. This enables acquisitions, particularly when properties are predominantly used for residential purposes and are not subdivided into condominium ownership. Whether a preemptive purchase is legally possible currently depends primarily on whether concrete urban planning deficiencies or preservation-relevant violations can be demonstrated in the individual case.

Table of Content

Strict requirements for buyers
High costs for the public sector
Uncertainty for buyers

Strict requirements for buyers

The districts have two months to exercise their right of first refusal in favor of a third party. Preference is given to Berlin housing companies, cooperatives, or nonprofit foundations when acquiring properties.

Buyers who wish to acquire properties in a Milieuschutz area without the district exercising its right of first refusal must commit to compliance with the preservation requirements in a so-called waiver declaration. If the buyer agrees, they must forgo high-end renovations, merging of apartments, and the conversion of rental units into condominiums.

Currently, there are 82 social preservation areas in Berlin. This represents a significant expansion of Milieuschutz since the political debates of 2017/18.

High costs for the public sector

The financing of preemptive purchases is now carried out on a much more case-specific basis than during the peak of the debate in 2017. After the Federal Administrative Court ruling, the number of cases eligible for review was very low. In 2023, only seven cases could be examined across Berlin, and in 2024, only five. Waiver agreements were no longer newly concluded citywide in 2024. At the same time, individual cases show that the instrument continues to be used in the presence of clear legal violations. For example, in 2023, the Neukölln district exercised its right of first refusal for Weichselstraße 52. In November 2025, Jansastraße 12 in the Reuterplatz preservation area followed, supported by the Senate in favor of STADT UND LAND.

Uncertainty for buyers

“The increased use of the right of first refusal is disadvantageous for those citizens who want to take advantage of the historic low interest rates to invest in homeownership – whether for personal use by young families or as a secure retirement investment,” says Rackham F. Schröder, Managing Director of Engel & Völkers Commercial Berlin. The regulatory instrument, intended to safeguard the general welfare, puts buyers, sellers, and renovators under pressure and creates uncertainty. Market-standard purchase processes are delayed or even blocked. Moreover, the incentive for owners and investors to invest in renovations and modernizations decreases, as the right of first refusal negatively impacts the purchase price of properties: the district regularly sets the price at the market value. “We advocate for proportionality that applies to both sides – to buyers and investors as well as to market regulation by the Senate,” emphasizes Rackham F. Schröder.