Low-cost housing advocates in the German capital are launching a grassroots campaign to force the Berlin state government into taking over nearly 250,000 apartments worth billions from corporate owners.
BERLIN — Low-cost housing advocates are launching a grassroots campaign to force Berlin’s state government into taking over nearly 250,000 apartments worth billions from corporate owners to fight rising rents in one of Germany’s hottest real estate markets.
The fight pits two philosophies against one another: free-market companies that see real estate as a means to profit, and housing activists who see affordable rent not only as a necessity but as central to the city’s character. Its prospects are uncertain at this early stage and a resolution will take years, but the successes of other such campaigns have shown the strength of social activists.
“There need to be some rules here for the game — it’s a city, not just open land for people to do what they want,” said Thomas McGath, a representative of the group behind the campaign, known as Expropriate Deutsche Wohnen & Co. “It’s not something that can be completely determined by the market.”
The city had been a low-rent mecca after the fall of the Berlin Wall in 1989 opened the gates to the economically depressed former communist east of the city. That gave rise to an influx of artists and others seeking a more bohemian existence and prompted a former mayor to label it “poor, but sexy.”
With the return of the government to the city from the West German capital of Bonn, and its growing popularity as a high-tech and startup hub, the population has been increasing since 2004 from 3.39 million to 3.6 million.
Rents have been steadily rising at the same time, and even though the prices still lag behind other major German cities and European capitals, growing gentrification has been forcing many out of the very neighborhoods whose trendy vibe they created.
“The asset companies are coming in, making a good extremely scarce by buying it up when it’s available and then raising the rents,” McGath said. “We’re running out of space where we want to live our lives and we can’t live in the city anymore. If they come to the city, they should follow the rules of the city.”
Still, according to the average monthly prices from the fourth quarter of 2018, 1,000 euros ($1,120) could get you an apartment of more than 80 square meters (860 square feet) in Berlin, but less than 60 square meters in Munich, Germany’s most expensive city for rents.
The campaigning group’s argument invokes Article 15 of the German Constitution, which provides for the “socialization” of “land, natural resources and means of production” by transferring it to public ownership. It’s never been used before, but in principle should apply, said Christian Pestalozza, a constitutional and public law professor at Berlin’s Free University.
“With Article 15, I would say the path is probably open,” he said.
The group has introduced a resolution calling for the city to purchase the apartments of any corporation that owns more than 3,000, arguing the price should be “determined with due consideration of the interests of the general public” instead of market value.
The idea is they’d then be used as affordable homes administered by tenants and elected members of the public, and profits would be put back into maintaining and modernizing them, as well as constructing new housing.
The group’s main target is Berlin’s biggest landlord, Deutsche Wohnen, a publicly traded company that has 111,500 apartments in Berlin with an estimated market value of about 15.2 billion euros ($17 billion) — the majority of which were acquired from the city over the last decade or so as the capital struggled with debt. With those and the properties of several other companies, a total of about 243,000 apartments worth more than 36 billion euros ($40 billion) could be affected.
Deutsche Wohnen suggested the initiative was misguided, noting that its apartments average 60 square meters and rent for a modest 580 euros, and that even if they were sold to the city, it wouldn’t solve the housing crisis.
“Expropriation is creating a lot of emotions right now, but it won’t create a single apartment,” CEO Michael Zahn told The Associated Press in an emailed statement. “An expropriation will bring no relief to the worryingly tight housing market in the capital.”
He added that already, half of rental income is reinvested in Deutsche Wohnen properties, 5 percent of new apartments are offered at lower rents or rent-free for “social purposes” such as housing for refugees or battered women looking to start new lives. He said the company also follows government regulations like the “mietspiegel,” or “rent mirror,” which is used to calculate allowable rent increases by reflecting neighborhood averages.
The group behind the movement argues, however, that Deutsche Wohnen and others are so big that they can drive up an entire neighborhood’s rent calculations, and perpetually justify further increases.
“There needs to be a limit at some point, because there are just too many big players coming into the market and completely screwing it up,” McGath said.
Although radical, it’s not just a pie-in-the-sky dream. As recently as 2014, activists were able to successfully use a referendum to block plans to develop a big part of the former Tempelhof airport and instead turned it into a massive park.
But just because it’s possible doesn’t mean it will happen anytime soon.
The first phase begins Saturday with the group setting out to collect 20,000 signatures needed to bring its proposal to Berlin’s government for consideration. It’s joining other groups demonstrating for rent controls for a rally expected to attract 25,000, and believes it will have the necessary signatures in a few weeks at most, McGath said.
Then, if the government fails to come up with a proposal to the satisfaction of Expropriate Deutsche Wohnen & Co., the group will then need to collect 170,000 more signatures to trigger a referendum in the city-state of Berlin. Then it goes to a ballot, and a majority is needed to pass it.
Each step takes time, and there will inevitably be domestic legal action as well, Pestalozza said. Some have also suggested it could violate international laws regarding the expropriation of property.
“There could be a lot of conflict,” he said. “It could be a decade until it’s all said and done.”