New building regulations, more data protection – what will change in the real estate industry in 2018?

The new year brings several important changes for the real estate industry. Since January 1st, there has been a right of withdrawal for construction contracts, and real estate agents and property managers are legally required to participate in regular professional development starting August 1st. The General Data Protection Regulation (GDPR) comes into effect on May 25th. And a reform of property tax is currently under discussion.

The most prominent change is the new law on contracts for work and construction, which came into effect on January 1st. This new law, which affects all companies in the construction industry, strengthens consumer protection and provides private clients with greater planning certainty. Key aspects of the new regulations include:

The right of withdrawal grants consumers a 14-day cancellation period for construction contracts, provided these are not notarized. Homeowners are entitled to a detailed building specification, which can also become part of the construction contract. This specification includes a description of services, building data, room and area plans, floor plans, and a description of the building structure. This right is contingent upon neither you nor any third parties commissioned by you having performed significant planning services.

Fixed construction periods: Since January 1st, the parties involved in the construction must specify the implementation period for construction work in the construction contract, or state an expected duration.

The right to issue instructions allows the client to request changes during the construction process. If the client cannot reach an agreement with the contractor within 30 days, they may order the changes – provided these are reasonable for the contractor.
"We welcome the fact that the new construction law provides greater security for building owners and property buyers," says IVD President Jürgen Michael Schick. "Partners involved in contracts, such as real estate agents, also benefit. Furthermore, the right of withdrawal protects customers from making bad purchases."

Continuing education requirements and new professional licensing regulations

From August 1, 2018, real estate agents and property managers are legally required to complete 20 hours of continuing education every three years. Another new requirement is that condominium owners' association (WEG) and rental property managers (like real estate agents) will now need to apply for a license to practice. According to the German Real Estate Association (IVD), this license will be granted if the applicant is reliable, has a stable financial background, and can provide proof of professional liability insurance covering financial losses with an annual coverage limit of €500,000.
"The law is intended not only to provide stronger consumer protection but also to help improve quality, professionalism, and thus the reputation of our profession," explains Schick. "In that respect, it's a step in the right direction, albeit a small one. Our goal remains the introduction of a substantial certificate of competence. We will continue to push this project forward during this legislative period."

New EU General Data Protection Regulation

From May 25th, the EU General Data Protection Regulation (GDPR) will standardize data protection law within the European Union. The obligation to provide information when collecting personal data will be significantly expanded.
This means that data subjects have a stronger right to know what is done with their data, where it is stored, and how it is shared. Companies (including real estate agents) will then be required to store their customers' data separately to protect their privacy. Customer data must be kept secure and may only be shared with written consent – ​​and even then, only if the data is necessary for fulfilling the contract. IT security is a crucial aspect of this.
Violations of the GDPR can result in fines of up to €20 million or up to four percent of annual turnover.

Federal Constitutional Court reviews property tax reform

The Federal Constitutional Court is currently examining whether the property tax in its current form is unconstitutional. The judges in Karlsruhe criticize the fact that the standard assessed values ​​for land, houses, and condominiums in western Germany have not been adjusted since 1964. A reassessment of the more than 35 million properties based on their actual value could lead to a tenfold increase in the tax in prime locations and major cities. A decision on the redistribution of the nearly 13 billion euros that municipalities collect through the property tax is not expected for several months.

Sources: ivd.net, asscompact.de, praxistipps.chip.de, e-recht24.de, news.immowelt.de, tagesschau.de