“Expropriating Deutsche Wohnen and Co.” The radical consequences of the Berlin expropriation debate

“Expropriating Deutsche Wohnen and Co.” The radical consequences of the Berlin expropriation debate

“Expropriating Deutsche Wohnen and Co.” The radical consequences of the Berlin expropriation debate

It is the culmination of a long struggle for the time being: For years, the citizens’ initiative “Expropriate Deutsche Wohnen und Co.” has mobilized residents of the capital and railed against rising rents and housing shortages. “Deutsche Wohnen & Co are primarily responsible for the rent madness,” says the initiative that wants to radically change housing policy.

Such a referendum is so far unique in the Federal Republic. Critics see the expropriation debate. Property rights are being challenged. The initiative and large parts of the roughly four million Berliners see the referendum as the only way to solve what is probably the greatest social question of our time.

The initiative “Expropriate Deutsche Wohnen und Co.” wants to move the apartments of private real estate groups into the hands of the state. What consequences would this socialization have for companies and tenants? The most important questions and answers.

What is the goal of the referendum?

The biggest goal is. Tenants should not have to spend more than 30 percent of their income on warm rent. So that low-wage earners can also afford this, the initiative sets a rental price of 4.04 euros per square meter. For comparison: the average rent excluding bills for newly advertised apartments is currently around 11 euros per square meter, according to figures from Immowelt.

The number one enemy of the citizens’ initiative is. The capital is extremely important for the Berlin housing group. He owns a good 113,000 apartments there. That is around 73 percent of Deutsche Wohnen’s total housing stock (almost 155,000 apartments).

But not only -group, is in the sights. According to the initiative, more than 200,000 of the 1.5 million Berlin apartments are to be socialized and placed under the responsibility of the Berlin Senate.

The initiators demand that real estate companies with more than 3000 apartments should be expropriated. All? Not all, claims the initiative: “Cooperatives should not be expropriated.” But the cooperatives themselves are concerned. Has an impact: Even then, they could not be left out of the measure because such unequal treatment was not legally possible.

“Expropriating Deutsche Wohnen and Co.”: Is expropriation legally possible at all?

Theoretically yes. The Basic Law regulates in Article 15: “Land, natural resources and means of production can be transferred into common ownership or other forms of public economy for the purpose of socialization through a law that regulates the type and extent of compensation.” In the history of the Federal Republic was the article has never been applied.

The referendum will primarily have a symbolic effect. The Senate does not necessarily have to follow the result. Whether the Senate will draft a law on this depends on the balance of power after the election to the Berlin House of Representatives. The current coalition partners from the Left and the Greens are not yet in agreement. The governing mayor Michael Müller (SPD) strictly rejects the socialization, the left are in favor. And the greens keep it open.

Legal experts note, however, that even after a possible agreement in the Senate, there will be uncertainty for a long time and the courts will ultimately have to make a decision as to whether the measure is appropriate. Expropriations are only allowed if the social well-being cannot be achieved in other ways – for example by creating more living space.

What would the expropriation of Deutsche Wohnen and Co. cost?

The Basic Law regulates that those affected by the expropriation – i.e. the real estate companies – must be compensated. In principle, the country is buying back the apartments. It is difficult to quantify the costs. In an estimate from last year, the Berlin Senate is assuming charges of 29 to 39 billion euros. There are also other costs, such as the real estate transfer tax. A lot of money for the chronically bare state of Berlin.

The citizens’ initiative wants to compensate the affected companies “well below market value”. Accordingly, it puts the compensation costs at 10 to 11 billion euros significantly lower. The compensation is to be paid from rental income over a period of 40 years.

What consequences would the expropriation have for the housing market?

It would be a hard blow for the Berlin real estate industry. lose most of his apartments. would have to give up about a tenth of its more than 400,000 apartments. The two Dax companies had already made concessions and recently sold 14,750 apartments to Berlin. They also promised to limit rent increases to one percent per year for the next three years. In the next two years, rents are not expected to rise faster than the inflation rate.

The referendum could completely reorganize the housing market in the capital. Critics fear that private landlords would be pushed out of the market. In addition, it would be much more difficult for Berlin to attract investors. The new residential construction could come to a standstill even more.

“Expropriating Deutsche Wohnen and Co.”: What consequences would the expropriation have for tenants?

For tenants of the apartments affected by the expropriations, the referendum could result in lower price increases. If the initiative “Expropriate Deutsche Wohnen und Co.” prevails with their ideas, the existing rents could even fall significantly.

But the housing shortage in the capital is unlikely to solve the expropriation, on the contrary. Because businesses there are becoming unattractive for investors, it is likely that tenants will find it more difficult to find an apartment. Because with the expropriation not a single new apartment is built.

On September 26th, Berlin will vote on the multi-billion dollar expropriation of housing corporations. Bills are already ready.