The Berlin Senate has agreed internally on the structure and composition of the expert commission, which is to deal with the consequences of the referendum on the socialization of large private housing companies in September 2021.

A spokeswoman for the Senate Department for Urban Development, Building and Housing said on request that final talks were still to be held with representatives of the "Expropriate German Housing and Co." initiative.

In its 100-day program, the red-green-red Berlin Senate had set itself the task of convening, commissioning and filling the commission by the end of March.

The activists from “Deutsche Wohnen & Co. expropriate” viewed these plans with suspicion from the start.

They demand a dominant role in the body, but felt they were not sufficiently involved in the preparatory work.

Katja Gelinsky

Business correspondent in Berlin

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According to the Senate's plans, the first step is for the commission to examine the constitutional conformity of an association, as envisaged in the referendum.

Possible legally secure ways of a company association should also be named and legally evaluated.

In September 2021, the Berliners voted with a majority of 56.4 percent of the votes cast for the socialization of private housing companies with more than 3000 apartments.

The initiators of the referendum want to activate the socialization article in the Basic Law;

this would be a novelty in the history of the Basic Law.

According to Article 15 of the Basic Law, "land, natural resources and means of production can be transferred to common property or other forms of community management for the purpose of socialization by means of a law that regulates the type and extent of compensation".

So far, there are no leading judgments on such a project.

However, there are now numerous expert opinions which - depending on the client - give contradictory answers to the question of constitutional conformity.

On the one hand, it is argued that Article 15 of the Basic Law gives politicians practically a free hand in socialization projects.

According to another view, the plans of those in favor of expropriation are already failing because housing companies are not among the objects whose socialization is permitted by the Basic Law.

Supply structure still very fragmented

The socialization project is examined from a new perspective in a policy paper by the Society for Real Estate Research, which is available to the FAZ.

The constitutional lawyer Jürgen Kühling, chairman of the Monopolies Commission and holder of the chair for public real estate law at the University of Regensburg, and the research assistant Moritz Litterst focus on the question of the power of market-dominant companies.

In order to assess the constitutionality of socialization projects, the purpose of Article 15 of the Basic Law must be considered: the instrument of socialization is intended to counteract the dangers of economic market dominance by companies.

As the Bundeskartellamt found

However, there is no questionable concentration of the economic and property system on the Berlin housing market.

Despite the large housing companies Deutsche Wohnen and Vonovia, the supply structure is still very fragmented.

At the end of 2019, out of around 1.66 million rental apartments in Berlin, 322,000 belonged to municipal real estate companies, and almost 190,000 apartments were owned by cooperatives.

Around 1.15 million rental apartments belonged to private housing companies and individual owners.

Of these, Vonovia held around 41,000 apartments and Deutsche Wohnen around 110,000 apartments.

"The combined market share of the two groups in rental apartments in Berlin was around 10 percent," the experts calculate.

There are therefore no dangers on the rental housing market that would allow the socialization article to be activated.

Kühling also has constitutional concerns about the compensation plans of "Deutsche Wohnen & Co." The initiators of the referendum are calling for the affected housing companies to be compensated "well below market value" with a total of 10 to 11 billion euros.

According to the experts, this corresponds to 20 to 38 percent of the estimated market value.

With such deductions from the market value, there can no longer be any question of adequate compensation.

Incidentally, compensation below market value not only affects the company itself, but also the shareholders.

At Vonovia, 93 percent of the shares are in free float.

For less wealthy people in particular, investments in real estate companies or funds are often the only way to benefit from positive returns on the real estate market.