Berliners to vote for public ownership of major realtors' properties

Berliners will go vote on September 26 for a referendum that proposes Berlin’s city government to expropriate around 240,000 housing units of Germany’s biggest publicly listed landlords.

DW and Co. Enteignen (Expropriate Deutsche Wohnen and Company), a group behind the expropriation campaign, calls for people to say “yes” with the slogan of “So that Berlin remains our home” which is written in various languages.

The land-owning companies, with more than 3,000 apartments each, are accused of squeezing out lower income with high rents.

The campaigners collected more than 350,000 signatures for the proposal of a local referendum to force the big companies to sell their properties to the local government at “well below market value.”

They justify the proposed legislation with Germany's Basic Law Article 15, that has never been used before, which states: “Land, natural resources and means of production may, for the purpose of nationalization, be transferred to public ownership or other forms of public enterprise by a law that determines the nature and extent of compensation."

As the name of the campaign indicates, Deutsche Wohnen is the main target as it has around 113,000 properties across Berlin.

On the other hand, other companies would be affected too.

On September 26, the same day as the federal election in Germany, it needed to collect 175,000 valid, handwritten and fully verified signatures of citizens, who are eligible to vote in Berlin, to enforce legislation in local government.

However, there are some legal difficulties to fully enforce the proposal.

Legal status

There is uncertainty to enforce the expropriation referendum, it would face some court challenges.

In April 2021, the German constitutional court overturned the Berlin state government decision to impose a rent cap, which was proposed to freeze rents for 90 percent of Berlin apartments for five years at their June 2019 level.

Berlin's rent cap meant that rents for 90% of Berlin's apartments were frozen for five years at their June 2019 level. New rents could not go above that level, and as of November 2020, any existing rents that were still above that level had to be reduced.

The ruling found out that the state government can’t impose its own law over the federal government’s law regulating rents. So, it decided Berlin’s rent cap legislation is null and void.

Although the decision of the constitutional court was protested by thousands of people in Berlin, they could not achieve their demand.

Jakob Hans Hien, a lawyer at one of Berlin’s leading real estate law firms, told DW that the campaign has no objective basis.

"Compensation 'well below the market value' would be unconstitutional," he said.

"Otherwise the companies would not only be deprived of their property, but would also suffer direct economic damage. The state must not enrich itself through expropriation."

He also thinks that the federal government would legislate its own law, if a law is prepared by the Berlin state government.

What is the housing crisis in Berlin? 

Berlin’s attracting people across the world, from students to professional workers, makes it attractive to invest in the real estate sector for the companies.

While the supply of houses remains tight the demand has been rising over the last decade and still going on even in the coronavirus pandemic.

A decade ago, the median price of flats in Berlin per square meter was under 1,700 euros($ 2009.) Now, seller's demand 5,000 euros(($5909) per square metre which increased around 200 percent after 10 years.

This constant raising of house prices makes sure buyers or investors that the values will continue to increase in the future.

The rent of existing buildings has increased around 39 percent while the price for recently constructed ones has risen about 63 percent. 

The migration and lack of new constructions are believed to further deepen the housing crisis for 86 percent of Berliners rent a house.