BERLIN—Housing activists suffered a setback last month after Germany’s constitutional court overturned a five-year rent freeze that was introduced last year. For about 1.5 million affected households in the capital, the decision could mean drastic rent increases or even paying back the money saved while the freeze was in place. The big winner from the court’s decision was Deutsche Wohnen, a private housing company whose shares, traded on the Frankfurt stock exchange, saw a boost of nearly 3 percent after the decision was announced. The company’s shares had been trending downward since the rent freeze went into effect last November.
Now, tenants in the city are hoping to turn the tables on their landlords. For many in Berlin, there’s only one solution left: expropriate.
A campaign to expropriate private housing companies that own more than 3,000 apartments—including Deutsche Wohnen, which is Berlin’s largest private landlord—by transferring the existing housing stock into public ownership in exchange for compensation has been bubbling under the surface for the past couple of years. But in recent months, the idea has caught mainstream attention.
At the end of February, a campaign organized by local housing and right-to-the-city activists began collecting signatures in an effort to force a citywide referendum on the question. The group was given four months to collect signatures from 7 percent of eligible voters in the city—or around 175,000 people—to trigger a referendum in September.
Organizers say they are confident they will reach the required number by the end of June. After two months of collecting signatures, they had already collected 130,000 names, the campaign announced on April 26. Seventy-five percent of the signatures verified by the city have been declared valid.
According to a recent survey, about 47 percent of Berliners support the idea of expropriating major housing companies. Nearly 44 percent of Berliners oppose the idea, and just over 9 percent are undecided.
Berlin is a city of tenants, with about 85 percent of people renting their homes. And while it has long been fairly affordable compared with other world cities, that’s starting to change.
Berlin has been hit hard by financialization and speculation in the housing sector, campaign organizer Jenny Stupka explains. Last year, a report by the left-wing Rosa Luxemburg Foundation revealed that half the properties in the city are owned by a few thousand multimillionaires. After the 2008 financial crisis, Stupka says, investors were looking for a place to put their money, and a lot of them turned to Berlin. “There was a lot of profit to be realized because rents were quite low,” she says.
Since then, the German capital has been one of the fastest-growing housing markets in the world. In 2018, it topped the list, with average prices rising more than 20 percent over the previous year.
Data from Guthmann Estate, a real estate company in Berlin, shows that the median rent in the city rose by more than 70 percent between 2012 and 2021.
This has meant that many Berliners have been forced out of the neighborhoods where they used to live.
“It started in neighborhoods like Kreuzberg and Prenzlauer Berg,” says Stupka, referring to two trendy neighborhoods in the city that have experienced rapid gentrification since the fall of the Berlin Wall. “At first, it’s always people who have very, very little money. But now it’s bourgeois people who can’t afford the apartments where they used to live, so obviously then it quickly gains more attention.”
Stupka says the idea to expropriate housing companies goes back about three years, to meetings of right-to-the-city activists, political organizers, and tenants of Deutsche Wohnen.
The housing company has a “really, really bad reputation” in Berlin, says Stupka. She says it is known for failing to fix broken heating systems or elevators for weeks at a time and for neglecting routine maintenance until it can justify a major renovation, after which it can raise the rent.
“Many of the tenants had been joking around and saying, ‘Maybe they should actually be expropriated because of what they’re doing to us and our lives,’ ” she says. Then someone realized that there are actually two articles in the German Constitution that could make that a reality.
The first, Article 14, says that expropriation of private property may occur for the common good, if proper compensation is paid.
This article has been used countless times. Right now, the German state is building a controversial autobahn through the Neukölln and Treptow neighbourhoods of Berlin on land that was expropriated. In 2015, the project forced out six households that were still fighting for proper compensation as of last year.
In 2018, whole villages were expropriated in the German state of North Rhine Westphalia to make way for coal mines.
The second article, No. 15, which has never before been used, states that “land, natural resources, and means of production can be transferred to common property or other forms of public economy for the purpose of socialization.”
In this context, socialization would mean seizing the property of Berlin’s largest private housing companies in exchange for compensation. These properties would then be placed under public ownership.
“In socializing these flats, we aim at three things,” Stupka says. “One is to turn them into community property. Second is to run them without trying to make a profit. Third is to democratize how they are looked after and how decisions regarding the flats are made.”
It’s worth noting that the city of Berlin already owns six housing companies that manage hundreds of thousands of properties—about 16 percent of apartments in the city, according to the same Rosa Luxemburg Foundation report. However, rather than creating a seventh housing company owned by the city, Stupka imagines creating a separate kind of public institution—in German, Anstalt des öffentlichen Rechts—that would take into account the desires and needs of tenants, employees of this institution, and other residents of the city when making any decision. Existing examples of this kind of public institution include public broadcasters, the German National Library, and some public transit companies.
Although the exact mechanics of how this would work when it comes to housing won’t be ironed out until the state of Berlin drafts an expropriation law if the referendum is successful, the state’s six existing housing companies might provide a road map for certain aspects, such as how much it could cost to live in the newly socialized buildings. Apartments built by these companies as social housing are priced at 6.50 euros per square meter—nearly half the median rent of apartments in existing buildings and less than a third of the median rent in new buildings, according to Guthmann.
A representative from Deutsche Wohnen declined a request for an interview. However, spokesperson Marko Rosteck said in an email that he does not think expropriation will solve the challenges in Berlin’s housing market.
“On the contrary, funds and resources would be tied up for decades in compensation payments and thus be lost to the construction of urgently needed housing,” he wrote. “Moreover, we are convinced that expropriation is not even possible, as it would be neither constitutional nor financially viable for Berliners.”
“It can be assumed that there will be a legal battle in court,” says Sebastian Bartels, a lawyer and deputy managing director of the Berlin Tenants’ Association. However, he says that most constitutional lawyers who have reviewed the expropriation proposal have given it the green light. Importantly, he says they have agreed that living space should also be included in Article 15.
The fact that this article has never been used before may actually work in their favor. Berlin’s rent freeze was determined to be unconstitutional because rent legislation already exists at the federal level. In the case of expropriating housing companies, there has been no precedent.
“The question here is not whether the state is allowed to do this,” says Bartels. “We know it is legally possible for the state to expropriate, but there are still many legal questions about the process.”
One of the biggest questions is about the compensation that Deutsche Wohnen and other major landlords will receive for their properties.
In a statement released in September, the Berlin Senate said the referendum question would apply to more than 226,000 apartments in the city.
While the estimated market value of these properties is about 36 billion euros, this number has been criticized as overinflated. Berlin’s finance senator has suggested an alternative price tag of 20 billion euros, while the campaign is suggesting only 8 billion euros.
The German Constitution says that compensation should reflect a balance between the interests of the public and those of other stakeholders.
“Our point is to say that it definitely has to be below market value because market value right now, on the one hand, is the result of a lot of speculation,” Stupka says. “On the other hand, it’s because the city of Berlin is an attractive place for people to live. That’s not the result of any of the work of Deutsche Wohnen—it’s because of the nice community and cultural life and political life that we have here.”
Despite the complicated legal and political issues at play, the campaign is an efficient, well-oiled machine. Nearly 2,000 activists volunteer across the city in a growing number of working groups, ranging from Kiezteams collecting signatures in neighborhoods, to legal experts already drafting proposals for an expropriation law, to groups creating graphics and videos to explain some of the more complicated ideas.
After the signature collection period began in February, the campaign swiftly put up posters and stickers across the city. Now it’s hard to walk to the bakery, take the U-Bahn, or grab a beer at the corner store without seeing its recognizable purple-and-yellow logo or bumping into one of its teams collecting signatures. And the campaign is not just confined to the city’s urban core, where people might be more sympathetic to its demands.
On a recent Saturday after the constitutional court’s rent freeze decision, a group of volunteers set up camp in Tegel, a district in the northwest of the city that has traditionally sent members of the conservative Christian Democratic Union to the Berlin House of Representatives. Even here, many were eager to sign, especially after the defeat of the rent freeze.
Others were not as convinced. Some echoed Rosteck’s concern that expropriation will do nothing to solve the shortage of housing, blaming the city for not building new housing sooner. Others wondered how the city would afford the compensation.
Stupka insists the costs won’t be offloaded onto taxpayers. “The idea is that the money for the compensation only comes from the money that we get from the rents,” she explains. Once that has been paid off, she says these rents could go toward building more housing.
But Berlin is a long way from seeing apartments built from the rents of expropriated housing. Even if Berliners do vote in favor of expropriating major private landlords in September, the fight is far from over. The referendum is not legally binding, so, Stupka says, they will have to continue putting pressure on local politicians.
And in order for any expropriation to actually happen, the state government would have to pass a law outlining how it would take place and the amount of compensation the housing companies would receive.
“We just don’t know what will become of it,” says Bartels. “But we have to try and take some risks. Who risks nothing, wins nothing.”