Berlin voters sent a clear message to corporate landlords: public housing matters more than corporate shareholders. A city-wide referendum to expropriate rental properties belonging to large landlords and turn them into public housing passed with 56% of the vote on Sept. 26.
The referendum is non-binding, but if the government chooses to act, as it’s now being pressed to do, it could mean the city government purchasing more than 240,000 apartments for billions of euros, and turning them into socialized housing run by the city as a public entity. These units are currently owned by a handful of real estate giants in Germany and across Europe. The leader among this group is Deutsche Wohnen SE which currently owns more than 100,000 units in the city.
If the city attempts to seize the properties, it is sure to be a lengthy—and costly—process challenged in court. But the referendum reflects the drastic measures that most Berliners are willing to take to address a housing crisis that has seen rents more than double in a decade. It’s a radical approach that doesn’t just seek to create more affordable housing, but fundamentally transform the corporate housing market from one that treats housing primarily as an asset to one that priorities it as a government benefit.
Why Berliners are betting on expropriation
The passage of the referendum on Sept. 26 was the last stop in a multi-year grassroots campaign by advocacy group Deutsche Wohnen & Co. Enteignen. Since 2019, it has targeted the city’s largest corporate landlords for expropriation. About a third of the city’s public housing has been privatized in the three decades since the reunification of Berlin. Today, investor groups now own 16.5% of the city’s housing stock, according to a study (link in German) by the left-wing Rosa Luxemburg Foundation.
At the same time, rents have gone up steadily in Berlin, particularly over the last decade. The average price per square meter for an apartment in Berlin increased by more than 70% between 2012 and 2021. This has been driven in part by rising demand for housing as more people have migrated to the city, but also by upgrading and modernizing of apartment blocks owned by corporate landlords.
While these improvements have attracted new tenants and increased Berlin’s profile on the international stage, they’ve also shut out some longtime residents who can no longer afford them. Supporters of expropriation see the financialization of housing as inextricably linked to gentrification. “These financial operators are using this housing to speculate with on the financial market,” says Dr. Joanna Kusiak, a researcher and activist with Deutsche Wohnen & Co. Enteignen. “They differ from regular landlords because their client is not the tenant, it’s the shareholder.”
Berlin’s left-wing coalition government tried to curb skyrocketing rents with a rent cap in early 2020, but it was quickly overturned in the courts. Now, spurred in part by this loss of protection for renters, (who make up 84% of the population in Berlin), voters see expropriation as the best way to get a handle on runaway rents.
To take over these properties, the measure invokes an obscure article in Germany’s constitution that allows for land and property to be transferred to public ownership. The government would purchase these properties below market rate, but could still spend upwards of € 30 billion ($35 billion USD) according to city parliament estimates.
That’s money some critics say could be better spent on social services or to build more badly-needed housing. The work of creating affordable housing falls to the public sector in Berlin. In 2018, the city government committed to 200,000 building units of housing by 2030, half of them affordable. But in practice, progress is much slower; fewer than 1,000 units of affordable housing were constructed between 2014 and 2018.
Still, advocates for expropriation say it could set up an avenue for further housing construction. Deutsche Wohnen & Co. Enteignen proposes financing the purchase of buildings through bonds that would be repaid using rental income. Kusiak suggests that this rent money could then also be invested in future housing construction projects.
“We want to use this profit that is now being transferred away from the city to shareholders to build new apartments,” says Kusiak.
Expropriation faces an uncertain future
It remains to be seen whether politicians will heed voters’ demands in the non-binding referendum supported by more than 1 million Berlin voters.
The next steps will be for the city legislature to debate the expropriation measure. Non-binding referenda have been effective in the past, such as a 2014 measure that stopped development on an abandoned airfield, but this one faces an especially difficult challenge.
The city’s next mayor, Social Democrat Fanziska Giffey, has come out against expropriation, saying that she believes it will not create more affordable housing. Real estate corporations have come out against expropriation as well. Any expropriation law would also likely face a legal challenge in the courts, like the rent cap law did last year. Deutsche Wohnen has said it believes that expropriation will be blocked on constitutional grounds.
For now, activists have said that they intend to keep putting pressure on politicians, while Social Democratic leading Berlin’s coalition government are unlikely to take any swift action to make expropriation a reality.