Expropriation activists force Berlin housing referendum in September

Berlin's grassroots proposal to force major property companies to sell of thousands of their apartment back to public ownership has succeeded in gathering more than enough signatures to ensure that a referendum on the issue will be held on September 26th, the same day as Germany's national elections to the Bundestag.

The quota of 175,000 valid signatures required to force a referendum has been more than surpassed, with this number representing 7% of the city's voters. According to the Berliner Zeitung, a total of 343,000 signatures were collected, but after election officials disqualified 29.9% signatories as not having valid German citizenship, the petition had gathered 197,000 valid signatures by the end of May.

In Berlin, about 85% of residents live in rented accomodation. While in the past the city had a high degree of state ownership of housing, more than 200,000 publicly-owned apartments have been sold off since 1990 to private equity firms and hedge funds at (from today's perspective) rock-bottom prices, further fueling the anger of those struggling to find affordable accomodation.

Maren Kern, head of the Association of Berlin-Brandenburg Housing Companies (BBU), said: "Given the aggressive canvassing for signatures, the result is not surprising. As we now approach a vote on September 26th, we can only keep reminding people: expropriation won't solve the problems on Berlin's housing market."

The purpose of the petition is to 'nationalise' the holdings of housing property companies with more than 3,000 housing units in the city. However, even if the referendum results in a vote to carry out the measures, the Berlin Senate is NOT obliged to enact a law to that effect. According to Esfandiar Khorrami, partner at law firm Bottermann Khorrami. The Senate would only be required to present a bill, but is not legally bound to implement the initiative's plans.

About 240,000 apartments in Berlin would nominally be affected by the referendum outcome, if successful. The city would, of course, be obliged to pay to take ownership of the properties, with the amount to be paid differing wildly according to different estimates. The Berlin Senate estimates the cost at between €28.8bn and €36bn, while the hardest-core activists have suggested compensation of as little as €8bn, arguing that the prices are based on speculation and overpriced rental yields, rather than any real value. 

The activists are proposing paying this money in the form of reparation bonds, to be repaid over a period of 40 years, and refinanced out of rental income, based on an average net cold rent of €4.04 per sqm (per month).

Lawyer Khorrami says the chances of an expropriation law coming into being are slim - and the chances of it taking effect are even slimmer. "The law would have to be very neatly crafted to stand up in court. Berlin has little to show in this regard in the recent past", he said.

Benedikt Wolfers, another lawyer and partner at Posser Spieth Wolfers & Partners, which has represented the chief target of the petition, Deutsche Wohnen, in the past, wrote in the daily newspaper Tagesspiegel the referendum will fail on the difference between expropriation ("Enteignung") - which is the aim of the initiative's name - and socialisation ("Vergessellschaftung"), as called for in the draft law. The difference is decisive for its constitutional admissibility, in his view. The project will fail because of Berlin's state constitution, which does not even allow a socialisation.

Deutsche Wohnen itself has naturally criticized the campaign, saying “it doesn't create a single square meter of additional living space... We need more housing built to ease the market pressure, that is why we will be stepping up building in the coming years in Berlin.” The company owns around 111,000 of the estimated two million rental apartments in Berlin, and recently announced plans to merge with fellow real estate giant Vonovia, which owns about 40,000 homes in Berlin.

The Left parties and the Greens in Berlin are in favour of the initiative, while the liberal FDP and right-of-centre CDU are strongly against. Even the left-of-centre SPD have spoken out against the initiative. Still, Berlin's rental problems and the radical solutions proposed to tackle the issue will ensure that housing issues will remain front and foremost on all parties' agendas as the national campaigning heats up over the coming months.