Berliners face radical housing referendum in bid to slow overheated market

Rosie moved from Dublin to Berlin five years ago but, by last Christmas, her landlord’s ambitious renovation plans had transformed her apartment block into a squalid squat.

One by one her neighbours moved out, but Rosie – not her real name – and her partner stayed. Their fear of not finding a new flat in Berlin’s overheated rental market trumped their anxiety of facing a post-renovation rent increase. Soon they were living with dust everywhere, rubble and cement mixers in the hallway and an “awful smell”.

“Because we were the only tenants left, the builders were knocking out random walls and hitting through pipes willy-nilly,” says the 29-year-old from Churchtown.

During the cold war and two subsequent decades, Berlin was the city that market economics forgot – until the euro crisis struck. The residential housing market took off a decade ago, as anxious investors piled into Berlin, confident that property in the German capital was, literally and figuratively, as safe as houses.

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Around the same time, tech companies took root in the capital and began attracting large numbers of young employees, reversing years of population decline. In just 10 years rents in some districts have risen by up to 146 per cent. Given this is a city with an 80 per cent tenancy rate, housing is now Berlin’s number one political question.

And on Sunday, that question will be on the ballot paper in Berlin. Alongside federal and state elections, a citizens’ action group has forced a referendum demanding the city government take over the holdings of corporate landlords with more than 3,000 housing units. About 240,000 apartments could be handed over to public housing authorities, campaigners say, to be administered “democratically, transparently and in the public interest”.

Controversial sale

The campaign is called Expropriate Deutsche Wohnen & Co, named after Deutsche Wohnen, a listed company that owns 111,000 housing units. In effect the campaign is an attempt to reverse a controversial decision by Berlin’s city-state government in 2004 to offload 65,000 public housing units to Deutsche Wohnen and other corporate investors for €405 million – or €6,164 per flat.

The city’s Social Democratic Party (SPD), in power then as now, says the 2004 sale was justified at the time given the city had 150,000 empty flats and a declining population.

Today, Berlin’s outgoing governing mayor, Michael Müller, concedes the sale was a mistake but, given the city needs 20,000 new apartments annually, he says the city cannot afford to scare off potential property investors.

Unsurprisingly, Deutsche Wohnen agrees. The company in the campaigners’ crosshairs says the plan “won’t create a single square metre 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,” said a spokesman.

Polls suggest a narrow majority of Berliners will back the campaign on Sunday, but it’s not at all clear what – if anything – will happen next.

The result is consultative rather than binding and, if successful, the current owners could demand market rates for the forced sale of their apartments – up to €39 billion. Beyond the question of cost, German legal experts cannot agree on whether the move is even constitutional.

Legal uncertainty

Expropriation campaigners point to article 15 of Germany’s postwar Basic Law, stipulating that “land, natural resources and means of production may ... be transferred to public ownership” in the public interest in return for compensation.

This constitutional clause has never been activated, say campaign opponents, unlike article 14’s robust property guarantees. It was drafted as a safeguard against widespread property seizures in the Nazi era, which are regularly cited by courts.

Regardless of the outcome, Berlin’s expropriation campaigners say they are determined to shift how city politicians view housing, from product back to public good. Even before Sunday’s vote, they see a shift in official thinking. Last week Berlin agreed to pay €2.46 billion to buy back 14,750 apartments from Deutsche Wohnen and Vonovia, the city’s two biggest landlords.

So is relief coming for Berlin’s beleaguered tenants? Five months after Germany’s constitutional court struck down the city’s rent cap, a political attempt to control spiralling housing costs, Rosie and her partner are not holding their breath.

“The situation here’s still better than Dublin,” says Rosie, who moved into a new flat in January, “but that’s not saying a lot.”