Forced Land Sales

There are various reasons for the current housing crisis in major German cities.  One of those reasons often cited is the fact that open property or older vacant obsolete buildings are owned and kept in a speculation-type situation, while the owners wait for a project guy to come along.....offer more-than-fair compensation, and then sell the property to have 'something' built there.

Property speculation is totally legal.  Well....up until this week.

Focus (the German news magazine) brought up this little update today....on a medium-sized town in the south of Germany....Tubingen.  For those unfamiliar with the city, it's around 85,000 to 90,000 in population, and well known for a Green Party mayor (Boris Palmer) who often moves around the political spectrum (even to the right), and is well thought of by local residents.

Palmer, as mayor, sent out a letter to 450 residents of the city who are sitting on vacant or unused property.  Basically, he's asking them to give their intention if they intend to build property on the acreage in the next four years.  If the answer is 'no', then the city would agree to buy the property at current market value.

If the property owner does nothing, or answers 'no', but says no to selling to the city.....the mayor says he'll go to the next step of using the court system to seize the property and then compensate the owner later. 

There is a bit of text in the Basic Law (the German Constitution) that gives cities this 'right'.  But if you do seize property, it has to be reviewed by a neutral source and compensation given.

What he's doing....is challenging the speculative nature of things in Tubingen.  The effect?  It may take months to see if the property owners fall in line and sell to the city.  My humble guess is that the city really can't handle having 450 residents come in and say 'sure, buy my property' and then come to realize that the amount combined for all 450 properties....adds up to 700-million Euro.  I would suggest that this whole thing will fall apart in six months as the city finds the cost factor to be way beyond their means. 

The fairer way to have jumped into this?  I would have picked a hundred properties (the ones with real potential) and just said....the city will offer you a fair price (plus 10-percent above the going rate) for your property, if you settle in the next 60 days. 

I should caution readers....to say that land speculation is the one and only driving force for the housing crisis in major cities....would be the wrong view to take.  It's just one of probably two dozen reasons that drives this current crisis.