The misuse of residential space is a catchphrase on everyone’s lips. Since the end of the transitional period of the Prohibition of Misuse of Residential Space Act (Zweckentfremdungsverbot-Gesetz (ZwVbG)) on 1 May 2016 the owners and tenants of main and secondary residences as well as the owners of holiday apartments in Berlin have feared high fines if they rent out their apartment to tourists.
Initially, the legal situation was so unclear that many providers withdrew their holiday offer from platforms like airbnb or Wimdu to be on the safe side. However, the relevant case law is developing, providing legal certainty to the affected persons.
Still no Decision regarding the Constitutionality of the Act
The highly questioned constitutionality of the ZwVbG has not been reviewed yet by the Constitutional Court of Berlin. For this court to be invoked for a decision in the matter, the appellant should have first sought redress at the lower courts in the hierarchy, i.e. the Administrative Court in the first instance, the Higher Administrative Court in the second instance and the Federal Supreme Administrative Court as the court of appeal.
Such constitutional complaints were not successful in the past: The Federal Constitutional Court already affirmed the constitutionality of a similar act in 1975 and declined a violation of the constitutional property guarantee in art. 14 of the German Constitution (Federal Constitutional Court, decision of 4 February 1975 – 2 BvL 5/74). Two decades later, the Constitutional Court of Berlin rejected the constitutional complaint against the Regulation of the Prohibition of Misuse of Residential Space (old version). The Constitutional Court of Berlin considered the enabling provision for the adoption of the Regulation, which was examined by the Federal Constitutional Court in 1975, as constitutional (Constitutional Court of Berlin, decision of 20 November 1996 – VerfGH 51/96).
Furthermore, the Federal Constitutional Court referred to its decision from 1975 in the course of its current decision of 13 February 2015 (1 BvR 3332/14) and did not indicate any changes regarding this issue.
Administrative Court of Berlin: No Approval for the Renting of Holiday Apartments
Several owners of residential apartments requested the grant of a so-called negative certificate to rent their apartments to tourists on a commercial basis without an approval for the misuse of residential space. They already rented their apartments to tourists before the Act came into force. They claimed that their business, which they operate in those apartments, deserves legal protection.
The Administrative Court disagreed with the claimants. The commercial use of holiday apartments requires an approval pursuant to sec. 3 ZwVbG because this kind of business is a misuse of residential space within the meaning of sec. 2 (1) No. 1 ZwVbG. The commercial renting of holiday apartments does not deserve any protection under sec. 2 (2) No. 2 ZwVbG. According to the court, this provision applies only for residential space that had already been used for commercial or other professional purposes before the Prohibition of Misuse of Residential Space Regulation came into force on 1 May 2014. But it only applies if the established and operating business is continued. The renting of holiday apartments to tourists is covered by another transitional provision, namely, sec. 2 (2) No. 1 ZwVbG. Pursuant to this transitional provision the apartments which had already been commercially used as holiday apartments for tourists could continue to be used for such purposes for the next two years after the Regulation came into force in 2014. This period expired on 30 April 2016. Thus, the renting of holiday apartments to tourists has to be approved by the competent authorities.
According to the Court, the infringement of the fundamental right of freedom to choose and practice a profession in art. 12 of the German Constitution is justified because the statutory approval requirement is based on reasonable and appropriate public considerations and is proportionate. The legitimate purpose of the Act is the reduction of the lack of residential space. The freedom to choose and practice a profession is only restricted by a condition of exercise. The commercial renting of holiday apartments to tourists remains legally permissible as long as no protected residential space is concerned.
Moreover, the constitutional property guarantee in art. 14 of the German Constitution remains safeguarded. The ZwVbG does not violate this guarantee but only defines its content due to the current shortage of residential space. The constitutional property guarantee does not include the right to use a property with the greatest possible benefit.
The Court stated that the constitutional principle of equality is not violated by the different treatment of residential space which is rented as holiday apartments and residential space which is used for operating other businesses or for professional purposes. Both kinds of commercial use of residential space will be equally prohibited in future. The privilege of other businesses is appropriate since the renting of holiday apartments takes place for a short period of time and aims to reach changing holiday guests. In comparison, the use of residential space for other commercial or professional purposes is based on permanent business relations and a constant group of users.
However, the judgments are not legally binding yet. It remains to be seen how the Higher Administrative Court will decide in the second instance.
“Real” Secondary Residences: Renting as a Holiday Apartment is permissible
The situation is different for secondary residences:
The Administrative Court of Berlin decided in its judgments of 9 August 2016 (VG 6 K 91.16, VG 6 K 151.16 and VG 6 K 153.16) that the district authorities of Berlin are obliged to grant approvals for the renting of secondary residences as holiday apartments to tourists.
Owners of secondary residences in the Berlin districts of Friedrichshain and Pankow filed a law suit against the rejection of the district authorities to grant an approval for the renting of their secondary residences to tourists. The claimants had their main residences in Denmark, Italy and Rostock. They used their secondary residences for occasional stays in Berlin for business or vacations and financed their purchase with long-term loans.
The Administrative Court decided in their favor: although the renting of a secondary residence to tourists is a misuse of residential space that has to be approved by the competent authorities, it does not cause a loss of residential space. It does not matter whether the apartment is left vacant during the absence of the owner or whether it is rented out to tourists. In both cases the space has been already permanently removed from the housing market by using the apartment as a secondary residence.
The Prohibition of Misuse of Residential Space Act is not meant to combat the use of secondary residences. Pursuant to sec. 2 (2) No. 6 ZwVbG a secondary residence is a residence where the owner or the tenant does not have his/her social and professional life focus and which is used for occasional stays for residential purposes. Due to the protection of secondary residences, district authorities do not have any discretion and are obliged to grant an approval for the renting of secondary residences to tourists.
The judges had no concerns about the risk of abuse of this case law because the statement that the apartment is only used as a secondary residence is hardly verifiable. The risk of abuse might be prevented by a diligent examination, controls or official requirements.
On the same day the Court clarified the term “secondary residence” in another judgment (judgment of 9 August 2016 – VG 6 K 112.16). In this case, the owners of several apartments in one house, in which they also resided, requested the grant of approval for the renting of one of the apartments to tourists. The difference in this case was that they claimed that this apartment was used as a secondary residence for overnight stays of friends and family or for one of the spouses if that person was too loud during the night. The Court ruled that this is not enough for the classification as a secondary residence. The protection of secondary residences is no longer applicable if the use for residential purposes has only minor importance or is even fictitious. The occasional stay of private persons for private purposes does not constitute the use for residential purposes. At least one room has to be available for the whole day and should give the opportunity to conduct such activities, or to be used in a way which is, typical for living. A mere overnight stay is not sufficient.
These judgments are not legally binding either.
The same Line of Argumentation for Main Residences
It has not been decided yet how to handle such situations in which the owners and tenants live permanently (main residence) in the apartments and they serve as their center of lives, but they rent single rooms or the whole apartments to tourists or to business travelers.
According to the wording of the Act, the occasional renting of single rooms or of the whole apartment would also violate the Prohibition of Misuse of Residential Space Act and has to be approved by the district authorities. The Administrative Court mentioned briefly in its judgments of 9 August 2016 that it does not matter whether a secondary or a main residence is occasionally rented to tourists as a holiday apartment. The argument remains the same. If such cases are treated similar to the cases with secondary residences, this kind of use has to be approved by the authorities. Due to the fact that the owner or tenant is living in the same apartment at the same time, the apartment is not removed from the housing market by renting it to tourists. There is even less public interest to maintain this type of residential space than there is in cases involving secondary residences.
Renting of Commercial Spaces to Tourists?
There is still no final conclusion on business that involves commercial spaces being rented to tourists after a reconstruction and a refurbishment. The Administrative Court commented briefly in its judgments of 8 June 2016 (VG 6 K 160.16, VG 6 K 103.16, VG 6 K 108.16 and VG 6 K 243.16) upon the business models of so-called “serviced apartments”, in which non-residential spaces are reshaped and redesigned as apartments. Then such apartments are offered to tourists in connection with the typical hotel services. According to the Court, this kind of business model does not violate the statutory Prohibition of Misuse of Residential Space. It can be assumed that in case of a legal dispute at least the Administrative Court would approve this kind of concept.
This is consistent: By refurbishing and renting of commercial spaces no loss of residential space can occur because the residential space has never existed before. The decisive factor here is that the commercial spaces had been built for commercial purposes and had been used for such purposes as the Prohibition of Misappropriation of Residential Space Regulation came into force on 1 May 2014 (sec. 1 (3) ZwVbG).
(28 September 2016)