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Just a few days after the annual rent cap, there is renewed unrest on the Berlin housing market.

A referendum began on Friday to expropriate and socialize large private housing companies.

The initiative “expropriate Deutsche Wohnen & Co.” aims to collect at least 175,000 signatures from eligible voters over the next four months.

If that succeeds, the Berlin voters would probably vote together with the Bundestag and House of Representatives election on September 26th in a referendum on whether the holdings of companies with more than 3,000 apartments should be expropriated and transferred to an institution under public law.

The companies - such as Deutsche Wohnen or Vonovia - would then receive billions in compensation.

There is no specific legal text to be voted on, but rather an appeal to the Berlin Senate to “initiate all measures that are necessary for the transfer of real estate and land into common ownership for the purpose of socialization in accordance with Art. 15 of the Basic Law”.

As with the rent cap, the capital is entering new legal and political territory.

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Real estate expropriation is quite common and provided for in the Basic Law.

But this happens primarily in infrastructure projects or in mining - in projects of overriding social interest.

But this is exactly what the expropriation initiative considers to be the case on the rental housing market.

“It's a historical situation,” says the initiative's spokesman, Rouzbeh Taheri.

"We can decide this year in Berlin to withdraw a considerable number of apartments from the profit-oriented housing market and bring them under democratic control," he said.

"It is time for us to put an end to the speculation with our apartments and thereby create affordable rents for all Berliners."

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The initiative envisions that the companies concerned will be expropriated by law and receive compensation.

As with mining projects, the amount is not based on the market value, but on the lower market value.

Taheri and his colleagues come up with an amount of eight to 13 billion euros.

The money should not flow from the Berlin budget, but should be taken out as a loan by a new state-owned company and repaid.

Investor deterrence

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It is likely that the activists will get the required number of signatures.

They are well organized and have support from other organizations such as change.org, from trade unions, the tenants' association and other groups.

Of the parties in the Berlin House of Representatives, only the left actively supports the initiative.

But Taheri is certain: "What is starting here today is a mass movement." When the first signatures were collected a year and a half ago, it was found that a large number of citizens are "open to the project."

The real estate industry faces the project quite differently.

"Expropriations do not create a single one of the new apartments that the growing Berlin needs so urgently," says Maren Kern, board member of the Berlin-Brandenburg Housing Association, in which state-owned companies and cooperatives, but also Deutsche Wohnen, are organized.

"The tension on the housing market can only be eliminated through faster construction and investments," says Kern.

“If the request is successful, the state of Berlin and its citizens will inevitably face considerable damage.

No investor will take the risk of investing in socialist Berlin anymore, ”said the President of the Real Estate Association Germany, Jürgen Michael Schick, a few weeks ago.

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"It is not in our interest to fuel the political debate," it says a little more cautiously at the Dax group Vonovia.

“Housing has become a social issue.

We cannot see what an expropriation should improve. "

Deutsche Wohnen, which is also listed in the Dax, reports: “Funds and resources would be tied up for decades for expropriations and the construction of urgently needed apartments would be lacking.

In addition, we are convinced that expropriations are not even possible because they are neither constitutional nor financially viable for Berliners. "

Deutsche Wohnen, listed in the German share index, has a portfolio of 163,000 apartments across Germany, around 111,000 of which are in Berlin.

This makes the company by far the largest provider in the capital.

Most of the apartments belong to the Deutsche Wohnen subsidiary GSW - a former state-owned company.

Many apartments have been privatized

From the point of view of tenant initiatives, this is precisely where one of the central housing construction policy mistakes of the past lies.

Too many apartments have been privatized in the time of tight budgets.

“In 1990 Berlin had around 500,000 municipal apartments.

Around another 250,000 apartments were owned by other public service providers, ”says Reiner Wild, managing director of the Berlin tenants' association.

“Protection against excessive rent increases, terminations and displacement was given for at least 45 percent of all tenant households.

But the housing market has changed massively, also due to the wrong privatization of communal property. ”A turnaround is necessary, which is why the tenants' association supports the initiative.

The Senate itself is holding back on the expropriation initiative.

In an earlier statement, the administration estimated the number of affected apartments at 226,000 units.

Their expropriation can only be achieved “only through a politically and specifically legally controversial socialization law”.

"I still see the plebiscite petition critically," said Governing Mayor Michael Müller (SPD).

Berlin needs more communal apartments again, and that is why the stock would be increased from 300,000 to around 400,000 by 2026 through new construction and purchases.

But “excluding private engagement through expropriations is not my way,” said Müller.

You need the private companies for the new building.

The majority of Berlin citizens see it in a similar way to their head of government.

In a survey from May 2019, 61 percent of those questioned spoke out against expropriations.

However, this proportion has shrunk, as a new representative survey on behalf of the Berlin CDU shows: Only 51 percent are against expropriations, 36 percent clearly in favor.

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In the end, the whole action could have a similar outcome to the referendum reached by the CDU and FDP on keeping Tegel Airport open in September 2017. A majority of those eligible to vote had voted in favor.

But here too, for legal reasons, the initiators could only appeal to the Senate to vote.

The Berlin government then stated succinctly that keeping it open was not possible for legal reasons, too.

And left it at that.

The airport closed last November.

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