What's next for Berliners who voted 'yes' for property expropriation?

A majority of Berliners voted in favour of expropriating thousands of housing units of major landlords, such as Deutsche Wohnen and Vonovia, on Sunday to help reduce rents in the German capital.

Around 56 percent voted 'yes' for the nationalisation of properties owned by big realtors while 39 percent of Berliners voted against the motion, according to provisional results of the referendum which was held alongside elections for the city government and the national parliament.

Public anger has been growing in recent years against increasing housing prices which became a major issue in the election campaign in the German capital.

The land-owning companies, with more than 3,000 apartments each, are accused of squeezing out lower-income with high rents.

DW and Co. Enteignen (Expropriate Deutsche Wohnen and Company), a group that initiated the referendum, declared victory and called on the city senate to draft a law to expropriate and socialize large housing groups. The campaigners hope the city gıvernment will expropriate some 240,000 apartments which belong to real-estate companies. 

"Ignoring the referendum would be a political scandal. We will not give up until the socialization of housing groups is implemented," Kalle Kunkel, spokesman for the initiative, said in a statement.

Fabio Braun Carrasco, one of the representatives of the DW and Co. Enteignen initiative, told TRT World that it would be “very cynical to ignore such a clear result in a democratic process.”

Now, the initiative and Carrasco expect passing the law from the Berlin Senate by regulating the terms and conditions of the expropriation, such as the time frame and the compensation the real estate companies will receive.

Regarding compensation, Carrasco said that it has to be paid for land that is expropriated, “but the compensation is not dictated by the market value of the property, but needs to be determined through a consideration of the interests of all parties involved.”

“This means that the tenants' interest in affordable housing can be seen as more pressing than the companies' interest in generating profits, allowing for a compensation way below market value,” he added.

Legal status

The campaigners justify the proposed legislation with Germany's Basic Law Article 15, that has never been used before. The law states: “Land, natural resources and means of production may, for the purpose of nationalization, be transferred to public ownership or other forms of public enterprise by a law that determines the nature and extent of compensation."

There is uncertainty to enforce the expropriation referendum and it is likely to face some legal challenges.

In April 2021, the German constitutional court overturned the Berlin state government's decision to impose a rent cap, which was proposed to freeze rents for 90 percent of Berlin apartments for five years at their June 2019 level.

The ruling said that as of November 2020, any existing rents that were still above that level had to be reduced.

The ruling found out that the state government can’t impose its own law over the federal government’s law regulating rents. So, it decided Berlin’s rent cap legislation is null and void.

For now, Carrasco said: “it is quite unlikely that the federal court would block the expropriation altogether, as the possibility is clearly given in the German constitution.” He underlined the amount of the compensation will much rather be contested in court.

What is causing the housing crisis in Berlin? 

Berlin is attracting people from across the world, making the city attractive for real estate investments. 

While the supply of houses remains tight the demand has been rising over the last decade. Despite the pandemic, the housing boom continued like never before. 

A decade ago, the median price of flats in Berlin per square meter was under 1,700 euros($ 2009.) Now, seller's demand 5,000 euros(($5909) per square metre which increased around 200 percent after 10 years.

This constant raising of house prices makes sure buyers or investors that the values will continue to increase in the future.

The rent of existing buildings has increased around 39 percent while the price for recently constructed ones has risen about 63 percent. 

The migration and lack of new constructions are believed to further deepen the housing crisis for 86 percent of Berliners rent a house.

What is next?

Carrasco claimed that Deutsche Wohnen and Vonovia, two big real estate companies, have started trying to freeze rents in Berlin for the next five years.

“Overall, this means that the referendum has been successful in putting housing back on the political map and even corporations have already been forced to make concessions.”

The campaigners next step will be to observe the process in the state parliament of Berlin very closely and to remind the elected politicians that they have a very clear mission, which the people of Berlin have conferred to them.

In order to achieve this, “we will continue to build political pressure at every step of the way to ensure that the decision of the electorate is respected” Carrasco added.

He also thinks that the successful referendum “clearly gives a lot of hope to housing and tenant movements all over the world,” by proving organisation of people with common interests can be effective, even against powerful corporations.

While the rents are skyrocketing around the world, especially during the coronavirus pandemic, affordable and fair housing could be obtained through political mobilisation.

 Right after the referendum, DW and Co. Enteignen has received a massive amount of supportive messages from all around the world. They also asked for concrete tips in organising and building networks for their aims.

Carrasco and his team are exhausted but they are also happy, hopeful and relieved. 

“We'll need a couple of days to rest, after having knocked on thousands of doors and having spoken to, e-mailed, and phoned tens of thousands of Berliners to share our vision of a future Berlin with them,” he said.

Most Berliners, who were thrilled by what the campaign proposed, are so enthusiastic for the near future.

“We'll do everything we can to make this vision become a reality sooner than later,” Carrasco added.