Social Preservation Areas („Milieuschutzgebiete“) in Berlin: New Risks for “Temporary Housing”

With the administrative regulations “VV Approval Criteria for Social Preservation Areas” (Official Gazette Berlin No. 16/2026), which came into force on April 18, 2026, the State of Berlin has once again significantly tightened its regulatory practice in so-called Milieuschutz areas (social preservation areas). This time, the focus is on so-called “temporary housing” (“Wohnen auf Zeit”). For investors, project developers, and property owners, the question of permissible residential use in social preservation areas is therefore becoming increasingly important.

According to Section 2.10 of the new administrative regulations, temporary furnished short-term rentals in Berlin’s currently 82 Milieuschutz areas will no longer be regarded as regular residential use in the future. District authorities are instructed to generally classify such models as a change of use requiring approval and to regularly deny such approvals.

Indicators for assessing whether a change of use exists in individual cases include in particular:

• duration of the rental agreement, 
• furnishing, 
• use or intended use/housing need of the tenant, 
• pre-formulated tenant-side limitation clauses in the rental agreement, 
• short-term ordinary termination rights, 
• extension options after expiry of the fixed term, 
• rental amount, 
• registration with local authorities, 
• additional services (e.g., laundry service, gym access). 

This particularly affects “temporary housing” concepts, which until now were often classified as standard residential use. The Senate Department now takes the view that the temporary rental or subletting of previously permanently rented residential space undermines the protective purpose of social preservation regulations.

However, whether this restrictive administrative practice will withstand legal scrutiny remains questionable. In particular, the blanket classification of temporary residential use as a change of use requiring approval will likely require review by the administrative courts.

Under the administrative regulations, only two categories are generally considered eligible for approval:

• so-called genuine fixed-term tenancy agreements pursuant to Section 575 German Civil Code (BGB), 
• temporary subletting of a natural person’s primary or secondary residence. 

A valid fixed-term tenancy agreement requires that a legally recognized reason for the limitation is communicated in writing at the time the contract is concluded. These include:

• future owner occupation by the landlord or relatives, 
• planned substantial construction works or modernization measures, 
• rental to a person obliged to provide services. 

The latter includes cases where, after expiry of the fixed term, the apartment is intended to be provided to an employee on the basis of an employment or service agreement.

For institutional landlords, serviced apartment concepts, and investor-driven rental models, these exceptions are unlikely to apply in practice.

The Senate Department justifies this step by citing the increasing spread of furnished short-term rentals on the Berlin housing market. According to the Senate, the proportion of such housing offers has increased significantly in recent years. At the same time, achievable rents in this segment have risen considerably. From the perspective of the State of Berlin, this development withdraws housing from the regular rental market in the long term and thereby jeopardizes the objectives of social preservation law.

The administrative regulations are therefore part of an overall trend toward increasing regulation of the Berlin housing market. For investors and project developers, this means in particular:

• increased approval risks for flex-living and serviced-living concepts, 
• greater uncertainty regarding rental strategies, 
• increased review requirements during due diligence processes, 
• potential impacts on profitability calculations and usage concepts. 

Particularly in the context of forward deals, restructuring of existing portfolios, or mixed-use developments, closer examination will now be required to determine whether planned rental models in Milieuschutz areas are capable of approval.

The new administrative regulations mark another tightening of Berlin’s Milieuschutz regime. Furnished temporary housing concepts in particular are increasingly becoming the focus of district authorities. As a result, the regulatory complexity surrounding the acquisition, development, and management of residential real estate in Berlin is increasing significantly for investors, property owners, and project developers.

Given the partly questionable legal basis of this new administrative practice, it is also expected that the administrative courts will soon address the issue of approval requirements for temporary rental models.