After Berliners Voted to Nationalize Housing, City Hall Isn’t Delivering

Last fall, 59 percent of Berliners voted to nationalize the big landlords’ housing stock — only for city hall to throw up barriers to implementation. The impasse shows how real estate lobbyists and weak-tea progressives combine to thwart the popular will.

Activists from the grassroots movement Deutsche Wohnen & Co enteignen gather to hand over boxes filled with the signatures to city authorities on June 25, 2021 in Berlin, Germany. (Sean Gallup / Getty Images)

September 26, 2021 was a bittersweet date for many Berliners. That day, a groundbreaking referendum to nationalize the properties owned by the city’s largest real estate companies passed with a resounding 59.1 percent majority — sparking jubilant disbelief among residents and housing campaigners across Europe. Widely called an “expropriation,” the move promises the compulsory buyback of both private builds and apartments which were once owned by the state.

Yet the same day also saw the Social Democrats (SPD) — a party openly opposed to this “expropriation” — come first in elections for the Berlin Senate. Such are the contradictions of democracy.

One explanation lies in the fact that many Berliners, including even some grassroots activists of the Deutsche Wohnen & Co. Enteignen (DWE) campaign pushing the referendum, learned only subsequently that the result was not in fact binding. In any case, it soon became clear that the new Senate’s makeup could create significant problems for the measure.

Post-election negotiations saw the SPD, the Greens, and the left-wing Die Linke form a new coalition, with the same parties as the previous administration. Yet in the new arrangement, Die Linke — the only party which officially supported the referendum prior to the vote — lost the strategically important Senate position for Urban Development, Building and Housing to the SPD’s Andreas Geisel. Die Linke was forced to concede due to its weakened position following setbacks in September’s election — a fact exacerbated by SPDer Franziska Giffey’s stated preference to work with the free-marketeer Free Democratic Party (FDP). Die Linke’s participation in the new coalition was only secured through the Greens’ insistence.

For DWE campaigners, this loss of ministerial backing was a massive blow, “The only reason we got the Mietendeckel (rent cap) back in 2020 was because Die Linke had held this post,” explains DWE cofounder Ralf Hoffrogge. Soaring rents in a once cheap and public housing sector have forced a series of activist initiatives in recent years — of which the rent cap was, for a time, the most prominent victory. But faced with tough legal challenges by real estate interests and their allies, it has proven difficult to translate them into law. In this context, Hoffrogge is anxious, “I fear Geisel is going to put up obstacles all along the way and make our job much more difficult.”

The Expert Commission

The city government has created a new twelve-person expert commission (each coalition party, as well as the DWE campaign, were able to nominate three experts) to examine if and how the expropriation law can be implemented. For Hoffrogge, this counts as the first obstacle to actually making the vote reality. The commission has been given one year to establish the constitutionality, and financial viability, of socializing housing stock; and then, contingent upon the answers to these questions, to present clear policy options for best implementation. “The expert commission is just a way for the governing coalition to pretend they are respecting the referendum, whilst actually delaying the decision, and hoping enough people will forget about it so they can drop it without a backlash. Politicians count on the amnesia of the press and the public,” contends Hoffrogge, “There have already been several judicial evaluations. There was one in 2020 that lasted over 400 days. If it was against the law, we could never have held the referendum in the first place.”

Hoffrogge’s distrust has been exacerbated as the city government has long kept DWE in the dark about the process: “They made all their appointments to the commission without consulting us. Then, after months of deliberating behind closed doors, they told us we had a week to choose our nominees. It was not a cooperative process, and this was clearly an unrealistic deadline for an organization that makes all its decisions democratically. It was utterly disrespectful.”

A bad omen? Perhaps. But DWE’s allies in Berlin’s House of Representatives see things differently. Katrin Schmidberger, Green spokesperson for Housing, Rent and Tourism, favors expropriation. After the bad precedent set in 2021, when a rent cap passed at city level a year earlier was reversed by the Constitutional Court, she advocates caution, “Expropriation is not a simple question, legally, managerially, economically. We have a responsibility to get it right. If we screw up and it gets rejected by the Constitutional Court, it will set a legal precedent and the instrument will in effect be dead. This would not only have negative consequences for Berlin, but for other cities as well. I believe the commission will be able to deliver good answers to the many difficult questions involved, so we’ll be in a better position to win in the Constitutional Court, and to overcome any future resistance in the Senate.” She does, however, regret the fact that DWE was not included at an earlier stage, “That was an error. I think it’s vitally important that DWE are a central part of the process.”

Similarly, Niklas Schenker, Die Linke’s spokesperson for Housing in Berlin, sees the commission as “a necessary compromise. The SPD would never have agreed to form a coalition without it. The decision on expropriation has been delayed, it’s true, but at least this way the possibility of implementing it in future is kept open.” Despite this, he is cynical about the SPD’s intentions, “They are hoping to turn what should really be a political question into a legal one. They want the commission to say it isn’t legally possible, so they can absolve themselves of responsibility.”

Schenker’s fears seem to be borne out by the SPD’s nominees for the commission. They have selected three conservative law experts: Michael Eichberger, a former Federal Constitutional Court judge appointed to that position by the Christian Democrats; and Christian Waldhoff and Wolfgang Durner, two public law professors who have both previously openly stated minority legal opinions against the expropriation. The SPD seems to want the commission to focus less on how expropriation can best be implemented, and more on if it is legal — with the hope it will answer with a resounding no. “The irony is,” fumes Hoffrogge, “the SPD were the ones that created Article 15 [on expropriation] in the first place, seventy years ago. Now they are employing conservatives to try to bury it!”

The outcome of the commission is no foregone conclusion. Most of its members are likely to favor using Article 15, as Die Linke and the Greens both officially support implementation. Yet, “it’s not only a question of numbers — it’s also about credibility and how the commission is conducted,” explains Schenker. The SPD’s appointees are highly renowned “heavyweights,” and their arguments will not simply be able to be dismissed. “Ultimately we must have the better arguments,” says Schenker.

In practice, the commission is set up so as to allow room for minority opinions in the final report and will thus likely produce a mixed result. “There will probably be more than one recommendation in the end,” predicts Schmidberger, “those on either side will justify their positions in detail, describing how and why implementation does or doesn’t work. There may even be a selection of possible avenues.” Schmidberger is pushing for the meetings to be open to the public, as she believes this way the commission will come out more strongly in favor, “With transparency it won’t be possible for the SPD’s lawyers to simply derail the process. They will have to engage in the discourse and provide evidence-based arguments. If they are not convincing, I assume the commission will make a positive recommendation.” The Senate, however, has been dithering on this issue, further exacerbating the doubts of DWE campaigners. Gisèle Beckouche, a campaign representative, believes closed sessions would prove “that the Commission is really there to serve the interests of real estate companies.”

A Smoke Screen?

The second potential obstacle comes in the form of the Alliance for New Construction and Affordable Housing, which Geisel and new mayor Franziska Giffey announced in January. This so-called “alliance” is a roundtable made up of representatives from the Senate, the real estate industry, districts, housing associations, and more. It is supposed to deal with tenant protection and rent control, alongside building construction, refurbishment, and sustainability, but its agreements will not be legally binding.

The inaugural meeting was met by protests by DWE activists, who complained that the Alliance was a deliberate distraction. Schmidberger shares their skepticism, “The political motivation of the SPD is clear. They think that, by reaching a few verbal agreements with real estate companies, they can wash away the topic of socialization. But none of the companies involved will ever agree to the kinds of fundamental changes in their business practices necessary to truly solve the city’s housing problems. Whatever they agree on will not be enough.” She is worried that the Alliance could even be “misused to encourage further deregulation” of the housing market. “We must fight against this attempted roll-back,” she says.

The SPD’s urban development spokesperson, Mathias Schulz, rejects this criticism as “unfair,” arguing that the aims of the Alliance and the referendum are “unrelated. The referendum was about changing the ownership of the buildings that exist right now, but the Alliance is about building the apartments that are needed for the future. Everyone knows that we need to build more apartments. The referendum said nothing about what kinds of buildings should be built, or who’s going to build them, or what the rent for them will be.” The coalition has announced an ambitious building plan, aiming for two hundred thousand new apartments in Berlin by 2030. According to the SPD, this requires a cooperative relationship between the public and private spheres.

“The SPD’s answer is always ‘build, build, build,’” retorts Schenker, “but the new apartments are often too expensive, and do very little to solve the housing crisis. Building must come alongside other instruments. Controlling rents requires regulating the market, and since the rent cap was overturned, expropriation is one of the few remaining effective instruments we have at our disposal.”

The social housing system in Germany mostly functions through the state subsidizing real estate companies to earmark a certain percentage of their stock as “social.” This raises manifold problems. Firstly, this percentage is often not high enough — in Berlin, it is 30 percent, although 50 percent of city residents have an income low enough to be entitled to social housing. Secondly, even this criterion is not fulfilled in practice — since 2014 only 10 percent of newly built flats in Berlin have been reserved for social housing. But the biggest problem results from a 2019 Federal Constitutional Court decision, ruling that real estate companies cannot be prevented from putting social housing on the open market after a certain period (usually fifteen to thirty years). “So, bringing property into public ownership is the only way to create social housing with affordable rents for an unlimited period,” explains Hoffrogge.

Katalin Gennburg, Die Linke’s urban development spokesperson, has thus dubbed the alliance a “smokescreen . . . which would continue to guarantee rent increases and displacement in Berlin.” This is unlikely to fool the enthusiastic supporters of September’s referendum, but may suffice to hoodwink less switched-on voters and preserve the SPD’s majority if they do block the implementation of Article 15.

Moving Forward

If the commission does produce mixed results, as Schmidberger predicts, it will be easier for the SPD to avoid implementing Article 15 — whether through the Alliance or by some other means. But even a clear positive recommendation does not guarantee implementation. In this context, DWE, Die Linke, and the Greens all recognize that maintaining political pressure will be vitally important. This means public-facing campaigns, as well as building cross-party alliances, especially with the significant minority of SPD members who favor expropriation. It also means, according to Schenker, “not relying on the commission’s lawyers, but working independently on the issue. We need to become our own experts on socialized housing companies.”

If, despite this pressure, the SPD continues to block implementation, it may require more drastic measures. Die Linke has said it may consider leaving the coalition. Schmidberger believes, once the commission has clearly laid all the options on the table, that “it might even be necessary to hold a second referendum.”

At this stage, the future of Deutsche Wohnen & Co. Enteignen remains unclear. The only thing that seems certain is that September 26, 2021, was not, as many had hoped, the end of Berlin’s battle to socialize housing. Rather, it was just the beginning.