Berliners fight rent increases

Posted on 09-05-2019 by D. Voesenek

Rents have been rising at breakneck speed in Berlin for decades. According to many Berliners, this is the fault of the city's big landlords. On the initiative of the left-wing SPD party, a referendum is even being held to expropriate property owners. Opponents, including Angela Merkel are instead taking a strong stand against this expropriation.

Many tenants in Berlin believe that rent increases in their city are due to real estate players such as Deutsche Wohnen, which acquired large portfolios just after German unification. During this period, the city of Berlin proceeded to sell its properties en masse to reduce government deficits. After purchase, new rental contracts were concluded, resulting in rent increases. However, when looking at this objectively, it can be argued that this is not only the fault of these real estate players. Other measures such as encouraging new construction can also be taken by the city government. In addition, given the current economic climate including low interest rates and a rapidly growing Berlin population of 50,000 a year, the price increases are inevitable. After all, prices in other European cities such as Amsterdam and Frankfurt are also skyrocketing.

Berlin's initiative to use a referendum to force the city government to expropriate large companies is generating considerable public debate. Partly because it seems to be followed in Munich and other major German cities. Chancellor Angela Merkel has taken a clear stand against expropriation as a remedy in the fight against housing shortages. Recently, Social Democrat president Frank-Walter Steinmeier also intervened in the discussion: in his view, there are other means of providing affordable housing for 'ordinary citizens'.

Before it comes to a referendum on expropriation of real estate companies, twenty thousand signatures must first be collected. If that number is reached, the city council will then look at the issue. Many Berliners are positive and expect it to come to a will referendum.

In a referendum, the outcome can be challenged non-binding but heavily up to the highest judicial level in Germany. Lawyers are already battling over whether the legislation allows expropriation at all. It therefore seems that expropriation will not be an issue for the time being. However, it cannot yet be ruled out completely.