The issue of misappropriation of housing has been occupying the serviced apartment sector in Berlin for some time. Partly as a reaction to the growth of peer-to-peer platforms, such as Airbnb, and in order to counteract the housing shortage in Berlin by returning "owner-occupied" flats to the regular rental market, since May 2014 the use of residential space in Berlin for purposes other than residential has been subject to approval according to the Zweckentfremdungsverbotsgesetz (Prohibition of Use for Other Purposes Act) if
- The use of residential premises for repeated, remunerated letting on a daily or weekly basis as a holiday home, for tourist accommodation or as part of a commercial letting of rooms.
- The residential property is to be used for commercial or professional purposes.
- Residential premises are vacant for longer than six months.
- Housing is structurally altered in such a way that it can no longer be used for residential purposes.
- Residential space is completely removed.
The law already came into force on 1 May 2014, but offered a two-year transitional period for the use of residential space that had already been offered as holiday accommodation or lodging before the law came into force, which now ends on 30 April 2016 - however, without all issues being satisfactorily clarified or a solution acceptable to all providers concerned being reached. The consequence: providers of holiday apartments will change from legal providers to illegal ones without a permit at the turn of the month.
This causes unrest and a lot of movement. According to media reports, Airbnb, for example, recently terminated many hosts of holiday flats and overall the number of holiday apartments on offer in Berlin has been greatly reduced since March 2016 from 11,000 to 6,500 (source: Zeit online, 27.04.2016). Properties affected by the ban on misappropriation have also formed an alliance to jointly draw attention to the situation of the affected apartment buildings. ApartmentAllianz Berlin e.V. unites the interests of 62 members.
We asked Stephan la Barré, chairman of ApartmentAllianz Berlin e.V. and managing director of berlinlofts, to answer a few questions on this current topic, which we have summarised here.
How many apartments are affected and what are the dimensions?
The ApartmentAllianz Berlin currently consists of 62 members offering more than 700 apartments in the city. All of these members are affected by the law on the misappropriation of residential space and are now faced with the question: What happens next? All providers who still offer holiday apartments after 30 April 2016 will theoretically be considered illegal from then on. Whether these apartments close then depends entirely on the operators. Many are hoping for a moratorium - a postponement that will give the landlords time to fight for protection in court. After all, this is not only about a few accommodation options for visitors to Berlin, but ultimately also about jobs and livelihoods. According to the ApartmentAllianz, at least 3,500 jobs are affected throughout Berlin, which will of course also have an impact on downstream industries.
What alternatives are there to closing the flats?
One alternative is probably to rent out the flats on a more long-term basis. According to legal assessment, furnished apartments that are rented out to guests for longer than two months fall through the cracks of the misappropriation prohibition law and are thus tolerated. Some providers of the current flats are already renting them out furnished on a long-term basis to await the court proceedings.
What are the biggest points of friction preventing an agreement?
This is certainly the fact that the City of Berlin passed the misappropriation prohibition law on 29 November 2013, but is not working with the apartment agencies concerned, but with the Berlin Hotel and Restaurant Association (DEHOGA). This approach is not the right way to go in the case of holiday apartment providers and is therefore not very effective. What is missing is communication between the affected properties and the city of Berlin.
What does the future look like?
What the future looks like remains to be seen. At the moment, there are about 6,500 serviced apartments, supposedly used for other purposes, compared to a total housing stock of 1.9 million flats. Thus, only a vanishingly small part of the flats is used for apartment purposes; however, the operators of official apartment buildings, like hotels or other accommodation providers, pay the local city tax of 5 per cent as well as several million euros in sales and income tax.
In addition, Berlin has to grow with its possibilities and adapt to the dynamics on the market. Berlin, the capital, which is chasing one visitor record after the next, needs alternatives on the market besides hotels. Holiday apartments and serviced apartments are individual, more in demand than ever in times of the sharing economy and offer guests a special experience. This is a strongly booming segment.
1 May 2016 and the following weeks will show which solution will be reached. After all, this issue is about more than just holiday apartments. On 15 April 2016, ApartmentAllianz, together with Wimdu, an online portal for holiday apartments, filed a lawsuit against the misappropriation prohibition law in Berlin.
We see the law as unfair: Operators of furnished apartments have to close their shops and dismiss employees on 1 May. All other misappropriators get unlimited grandfathering and may continue to use flats commercially. This is unconstitutional! We therefore demand equal rights for all!
We thank Stephan la Barré for his time and detailed answers to the questions and are looking forward to the next developments.