The Federal Ministry for Housing, Urban Development and Building (BMWSB) has presented a model contract for hereditary building rights. This publication primarily serves to provide municipalities, foundations and other public welfare-oriented property owners with a reliable template for drafting hereditary building right contracts. The initiative stems from a recommendation by the "Alliance for Affordable Housing" of the 20th legislative period and aims to support stakeholders with limited experience in the field of hereditary building rights.
The model contract is intended to ensure that the urban development and housing policy potential of hereditary building rights is fully utilised, while maintaining attractiveness for investors. A viable design for both parties is essential to make an effective contribution to the creation of affordable housing. The BMWSB presents an annotated modular system that offers guidance and concrete drafting suggestions for contract design, thereby facilitating practical application.
Focus on Affordable New-Build Rental Housing
A particular focus is placed on the specific requirements and regulatory needs in the segment of affordable new-build rental housing. The BMWSB sees hereditary building rights as an increasingly important instrument for mobilising land in the context of housing creation. An increased significance of hereditary building rights can already be observed in many municipalities, where public land is increasingly allocated or provided on this basis. The new model contract aims to simplify the application of hereditary building rights and strengthen their relevance for housing provision, in order to promote a more homogeneous and flexible contract design nationwide.
Federal Minister Verena Hubertz emphasised that in times of increasingly scarce and expensive land, new instruments are needed that balance investment, ownership and the public interest. Hereditary building rights can bridge this gap by enabling investment in much-needed housing without municipalities or public welfare-oriented actors having to permanently dispose of their land. The model contract creates planning security for municipalities, offers long-term perspectives for investors and supports the mobilisation of housing for future generations. A cooperative partnership between public authorities and private actors can create a positive situation for all involved.
Comprehensive Contract Contents and Development Process
The model hereditary building right contract was developed on behalf of the BMWSB by Prof. Dr. Dirk Löhr and Dr. Matthias Nagel and was professionally supported by the German Association for Housing, Urban Development and Spatial Planning (DV). An external advisory committee, comprising representatives from municipalities, foundations, churches, the housing and real estate industry, the Federal Ministry of Justice and Consumer Protection, the Federal Chamber of Notaries, and the financial sector, supported this process. The model contract is designed as a practice-oriented tool.
- —Regulations for determining a market-based and socially acceptable ground rent, including value indexation and adjustment.
- —Provisions for the distribution of public burdens and charges.
- —Requirements for urban development, ecological and social obligations, including construction and reconstruction obligations, as well as the use of buildings.
- —Regulations concerning sale and encumbrance, consent requirements, restrictions on disposal, and mutual rights of pre-emption.
