DWE
Large real estate groups CAN have their property holdings in Germany's capital city Berlin legally nationalised, according to a commission of experts appointed by the Berlin Senate. The commission was appointed following a referendum in 2021, when more than 59% of those eligible to vote in Berlin voted to impose the measure.
After more than a year's work, the 13-member commission concluded that the nationalisation of large property companies is "legally permissible, proportionate, constitutionally appropriate, and suitable for containing the explosion of rents in the German capital." The final report was handed over at the end of June by the chairwoman of the commission, Social Democrat and lawyer Herta Däubler-Gmelin, to Berlin's Governing Mayor Kai Wegner (CDU) and Building Senator Christian Gaebler (SPD).
The more than 150-page report concluded that, "It is to be expected that rents in the socialised housing stock would decrease, but certainly would no longer increase to the same extent as rents for privately held residential properties." The transfer of real estate holdings to common ownership is considered "necessary" by the commission because no means are currently apparent that would have "clearly equal effectiveness." It added, "Increased new construction is not an alternative to achieving the goal of improving the permanent supply of affordable housing." Policies that rely primarily on new housing construction have "proven to be of little effectiveness" in recent years, it said.
According to the commission, the state of Berlin has the authority to pass a law on socialization. Article 15 of the Basic Law is applicable in Berlin, it says, as long as non-profit management is of the assets is the goal. It allows "land, natural resources and means of production" to be socialised by law under certain circumstances. In the history of the Federal Republic, however, the article has never been applied.
The commission of experts had been appointed by the former red-green-red coalition under the presiding mayor, Franziska Giffey (SPD). After new elections earlier this year, Ms. Giffey was replaced as governing mayor by Kai Wegner of the CDU in a new coalition government with the SPD. The main drive to expropriate the large property companies - in a campaign known as "Expropriate Deutsche Wohnen & Co." came from the hard Left (Die Linke) and the Green Party, with some support from within the SPD.
It's not exactly clear what happens now. In the light of the overturning of the rental cap in Berlin two years ago by Germany's Constitutional Court in Karlsruhe, the CDU and SPD have taken the precaution in their coalition agreement to agree to first draft a framework law on socialisation generally, to be reviewed by the Constitutional Court as to its validity at state (i.e. Berlin) level.
In any event, should the recommendation of the commission finally make it into law, the agreement would stipulate that the relevant housing companies being expropriated would be compensated, but not at the current market value of the property assets, which would be unfeasible. Some level below this would be the target, it seems, but at the moment it's not clear exactly where.
REFIRE: It's highly unlikely that much will happen from here. The deal would in any event mainly affect the approximately twelve big private companies with more than 3,000 apartments in the city - principal among them being Deutsche Wohnen, now part of Vonovia, after whom the campaign was named. It does not affect the already Berlin-owned co-operative housing development, which themselves make up a significant part of the city's housing. The commission of experts itself was also divided, with three dissenters, reflecting the somewhat shaky legal ground on which the majority decision may yet come to grief.
The somewhat rougher economic climate might also prevent the movement to legalise socialisation of housing gathering further steam. The Left and the Greens have lost power following the recent fresh elections, and the now senior coalition partner CDU is no friend of nationalisation. The new CDU governing mayor Kai Wagner is and has always been an outspoken critic of the movement to expropriate, and extremely sensitive to the need to build thousands of new apartments in the city, and to guarantee the protection of the law to project developers
Now Economics Minister, Ms. Giffey was herself never a supporter of the expropriators - and she too will have seen how investors left the city in droves when the Mietendeckel (rent cap) briefly led to chaos, before being declared unconstitutional. The city's pressing housing shortage could only be further exacerbated were investors to take the view that Berlin is fundamentally to be avoided.
As to the question of how Berlin could even begin to raise the money to compensate those companies being expropriated, at a time of budget cutbacks, and with a city already drowning in debt - well, only the most hard-core Leftist dreamer can imagine that becoming a reality.
