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Explainer: Berlin has voted to forcibly buy homes from property giants, what happens next?

The referendum supports the expropriation of homes from property companies to the city.

PastedImage-58819 Shutterstock Shutterstock

AMID THE HEADLINES about Germany’s federal elections, there was another vote in the capital Berlin that could send shockwaves across global rental markets. 

Yesterday, Berliners voted in favour of a referendum that seeks to force some of the biggest property companies in the world to sell housing units to the city. 

The referendum is non-binding, so it doesn’t mean this will happen, but it will put huge pressure on authorities to tackle the issue of sky-high rents in Germany’s capital. 

The vote is already being hailed by property rights campaigners here in Ireland as an example of the kind of radical thinking needed in response to the housing crisis. 

So what’s the background to this referendum in Berlin? 

The biggest context to this referendum is spiralling rents. Berlin is a city of about 3.7 million residents where about 80% of people rent their homes, something that made the city very attractive to property investors. 

There is also a stark lack of housing supply in Berlin. Despite estimates that the city needs about 100,000 new dwellings per year, only about 16,000 were being delivered each year. And that was before Covid. 

These two factors have led to rent prices soaring by nearly 85% between 2007 and 2019.

There have been various efforts to combat this, most famously when Berlin’s left-wing government voted in 2019 to freeze rents in the city for five years

This move was blocked earlier this year when Germany’s federal constitutional court ruled that the freeze would be illegal. 

What about these big landlord companies?

 

berlin-germany-14-april-2018-rip-deutsche-wohnen-is-written-on-a-sign-of-a-demonstrant-during-the-demonstration-under-the-motto-resist-rental-madness-in-front-of-the-spd-party-central-more-tha Alamy Stock Photo Alamy Stock Photo

Berlin’s property market is dominated by big real estate firms, some which own tens of thousands of units across the city. 

This is partly a hangover from the changeover from communism to capitalism following reunification. West Berlin was a tiny capitalist enclave within East Germany while the rest of East Berlin was communist. 

West Berlin survived on subsidies from West Germany but when the wall fell subsidies ran out and the local government ran up huge debts. Seeking a solution, it sold off huge assets to private companies including the city’s water utility and about 200,000 apartments.

Bloomberg has previously reported that among the buyers were US private equity firm Cerberus Capital Management, backed by Goldman Sachs, which bought Berlin’s public housing association, paying $448 million for 66,700 housing units. 

In 2013 Cerberus’s holdings became part of what is now Berlin’s biggest publicly traded landlord, Deutsche Wohnen. In all, Deutsche Wohnen owns around 111,000 of an estimated two million rental apartments in Berlin. 

The company has become a lightning rod for the opposition to property companies in Berlin and the main campaign group which pushed for yesterday’s referendum called itself “Expropriate Deutsche Wohnen & Co”. 

Germany’s biggest property company Vonovia has recently been trying again to buy Deutsche Wohnen after multiple previous efforts failed.

Vonovia has said it has reached a deal to buy its rival, which would create a property behemoth that would own some 550,000 homes across Europe worth in excess of €80 billion

So how did the vote come about and what does the campaign want? 

Expropriate Deutsche Wohnen & Co began a grassroot petition which required 172,000 signatures for the question to be put to a general ballot.  

In total, 346,000 signatures were collected in support of their proposition, leading to yesterday’s vote. 

The movement would like to see more than 240,000 homes placed under a public agency to be administered “democratically, transparently and in the public interest”.

To achieve this, the campaign wants to see Berlin’s politicians devise a law that would mean that all property companies with more than 3,000 properties are forced to sell them to the city.  

German broadcaster DW reports that the campaign envisages that the companies would be paid “well below market value” for the properties. 

The campaign group bases its claims on Article 15 of the German constitution, which stipulates that “land, natural resources and means of production may… be transferred to public ownership” in the public interest in return for compensation.

Even before the referendum was passed, however, the campaign has already put huge pressure and focus on the issue of property ownership in Berlin.

Last week, the city of Berlin announced that it purchased 14,750 residential properties from Deutsche Wohnen and Vonovia for €2.4 billion.

Partly as a way of smoothing their potential merger, Vonovia and Deutsche Wohnen also pledged to limit rent hikes until 2026 with Vonovia saying rent increases would be capped at 1%.

The vote looks to be passed, so what next?  

Final results are not expected until later but it looks as though there’ll be a clear majority in favour of the referendum, with indications that over 56% have supported it.  

The result is non-binding, which means that it doesn’t legally have to be implemented, but it does force the local government to debate it. 

Campaigners have argued that even though the referendum may not be legally binding there is a mandate to pursue it, with several parties in fact supporting it.  

One campaign spokesperson Thomas McGath told The Journal this morning that there is political will to see it implemented. 

The referendum is a resolution referendum which means it would have the same power as if the parliamentary house of Berlin passed a resolution saying they would create a law. So we see it as politically binding, which means that we would expect a new coalition to work quickly to enact this.The main candidate for mayor for the Greens has already said that this should be part of the coalition discussions and debates. The Left (Die Linke) is also 100% behind it and said this needs to be supported, otherwise it would be a scandal. So it’s heavily dependent on coalition discussions but we’re not going to stop and I think we would continue until it’s implemented. 

There are other questions of course, such as how much expropriation would cost the city and indeed whether it would be tied up in legal challenges. 

Much like the rent freeze that was blocked by German courts, expropriating the large property landlords would almost certainly be challenged, something raised by Franziska Giffey of the Social Democrats (SPD), who is her party’s mayoral candidate.

“Such a draft then has to be checked and if it is not constitutional, then we cannot do it,” Giffey told German broadcaster ARD, adding: 

“I am still of the opinion that expropriations do not help to create even a single new apartment or solve the big question of affordable housing.” 
- With reporting by Ian Curran and © – AFP 2021

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24 Comments
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    Mute Dermot Hickey
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    Jan 8th 2012, 8:02 PM

    Why oh why did they picture cork? It just gives all them corkonians another reason to call cork the real capital lol!

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    Mute Dave
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    Jan 8th 2012, 8:28 PM

    How? It’s obviously merely a shadow of Dublin! :-)

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    Mute Paraic Simpson
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    Jan 8th 2012, 10:45 PM

    They kept the best til last…lol

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    Mute Alan Larkin
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    Jan 9th 2012, 12:04 AM

    Even if it IS upside down! Or is that, Inside out?

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    Mute Faceless Man
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    Jan 8th 2012, 7:10 PM

    Anyone else see their gaff?

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    Mute foggy_lad
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    Jan 9th 2012, 2:49 AM

    Isn’t el paso in mexico?

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    Mute Kieran Murphy
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    Jan 8th 2012, 8:11 PM

    I wonder why Tokyo is all white light while every other city is yellow?

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    Mute Emsy wemsy
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    Jan 9th 2012, 10:05 AM

    Ha that’s what I was thinking

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    Mute Edmundo Lee
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    Apr 1st 2013, 2:15 AM

    Tokyo’s greenish tint can be attributed to its streetlights. More here > Cities at Night: The View from Space http://earthobservatory.nasa.gov/Features/CitiesAtNight/

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    Mute Oliver Walker
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    Jan 8th 2012, 8:31 PM

    Yay u added Cork boy…But sure why wouldn’t Cork have a picture with the story,Up the rebels

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    Mute Dave
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    Jan 8th 2012, 8:36 PM

    Ha! Rebels! Your funny! :-)

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    Mute Paul carew
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    Jan 8th 2012, 10:41 PM

    You don’t have to be in space to see that the ESB are smiling :):):)!!!!!!!!!!!!

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    Mute Paul carew
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    Jan 8th 2012, 10:46 PM

    Is that the infrared picture of cork people talking shite again

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    Mute Éilish Ní Bhroin
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    Jan 8th 2012, 8:46 PM

    Such a pity to see all that energy being wasted by sending it into space.

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    Mute Oaklane1
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    Jan 8th 2012, 9:12 PM

    What a pity all that energy was wasted on such a ridiculous post.

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    Mute Conor Farrell
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    Jan 9th 2012, 2:13 AM

    Éilish, you’re absolutely right, despite all the ‘thumb-downs’. Pretty much every astronomer you meet will have a word to say about the bad design of street lights in our town, cities, and roads.

    The only reason we can see cities from space is because streetlights have their light partially directed upwards. Considering streetlights are meant to light the paths and roads beneath them, the upward lighting means that people are paying for electricity that is not being used.

    When these lights are placed near rivers and streams they can affect the local ecologies: water plants and animals think it’s daytime all the time, and their life cycles and reproductive cycles become severely affected.

    Bad lighting like this is also the reason why people in Ireland’s larger towns and cities cannot see the night sky, apart from a couple of bright planets or stars. Drive 15 minutes outside any city in Ireland and you’ll be able to see the Milky Way, thanks to the lack of up-directed lighting.

    Yes, these photographs are absolutely stunning and beautiful, but they’re also a reminder to us astronomers of what’s going wrong.

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    Mute Éilish Ní Bhroin
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    Jan 9th 2012, 8:56 AM

    How is it ridiculous? My point is essentially what Conor said above. Sure it looks spectular, but at what cost. There’s a far more amazing view to be seen when you switch off the lights and look up.

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    Mute will butler
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    Jan 9th 2012, 12:34 AM

    I think the the pictures of Dublin, Cork & london England are the most beautiful, they kinda look like galaxies, which is sort of ironic!! the American cities are too ordered, the lights show the “blocks” and the streets.

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    Mute limofax
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    Jan 8th 2012, 7:08 PM

    Picture of Chicago is upside down.

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    Mute Réada Quinn
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    Jan 8th 2012, 7:37 PM

    Ireland’s face down. :-(

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    Mute Declan Carroll
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    Jan 8th 2012, 7:47 PM

    A spectacular pic all the same -

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    Mute Réada Quinn
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    Jan 8th 2012, 8:10 PM

    She’s a beauty alright Declan.

    Will her sons and daughters put her right though. Or have I been reading too much Yates poetry again?

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    Mute Kevin Rourke
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    Jan 8th 2012, 8:25 PM

    There is no such thing as upside down in space limofax :)

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    Mute Lawrence McKenna
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    Jan 8th 2012, 8:36 PM

    There is no right side up in space

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    Mute Jay funk
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    Jan 8th 2012, 9:33 PM

    Limofax in overhead photos or maps there is no right side up or upside down, it’s just one persons perspective , good example ask a southsider and a nothsider (of Dublin) to draw a map and they will draw them with their side of the city on the bottom of the page liffey horz in the middle and otherside of the city at the top This will happen about 70% of people some will do the opposite and others have Liffey vert

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    Mute Réada Quinn
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    Jan 8th 2012, 9:40 PM

    Oh gawd guys. Ye’re taking this very seriously. I’m sure he meant it as a joke. God love him thinking there’s any Messers on this site…

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    Mute limofax
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    Jan 8th 2012, 9:56 PM

    Sorry, I meant to say Chicago was inside out!

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    Mute Shane Brehony
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    Jan 9th 2012, 7:43 AM

    Who cares if it’s upside down it just stated a picture of Chicago it didn’t say which way it was

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    Mute Eoin Ó Nialláin
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    Jan 8th 2012, 7:14 PM

    Been in 6 of the 10 and yes, it sheds a completely new light of most of them. Next stop Tokyo!

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    Mute Nyssa Taylor
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    Jan 8th 2012, 11:23 PM

    Look at the pictures, Dublin looks like. Butterfly or a moth, Chicago looks like a spider web and one of the others looks like a strong muscled monster.

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    Mute Paraic Simpson
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    Jan 8th 2012, 11:48 PM

    butterfly or moth? don’t you mean shithole?

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    Mute Joe McDermott
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    Jan 9th 2012, 12:38 AM

    Paraic your mixed up man, the one shaped like a turd is Cork… BOY!!

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    Mute Leo McCabe
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    Jan 9th 2012, 7:56 AM

    @cork people…. See the single bright light to the north of Dublin city? That’s Croke Park. 500000ft is the closest you’ll be to that for a while I’d say! ;)

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    Mute Lawrence McKenna
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    Jan 8th 2012, 8:39 PM

    Sorry Kevin. U got there first

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    Mute Charles Mark
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    Jan 8th 2012, 11:14 PM

    Boring article.Have we not all been in planes?

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    Mute Joe McDermott
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    Jan 9th 2012, 12:34 AM

    What planes have you been in that take you 500000 ft above the earth? Nob.

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    Mute Kevin Smyth
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    Jan 9th 2012, 3:29 AM

    Charles is a ‘Space Cadet’.

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    Mute Charles Mark
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    Jan 10th 2012, 12:31 AM

    Next time I’ll take my binoculars and look through the wrong end. No doubt I’ll be awe-inspired.

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    Mute Jingles
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    Jan 8th 2012, 10:15 PM

    Next stop Las Vegas!

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    Mute Dave
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    Jan 9th 2012, 12:34 AM

    No, I don’t think she does.

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    Mute Ger Byrne
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    Jan 9th 2012, 10:28 PM

    the pictures of ireland were taken by nasa on the instructions of the american secret service so they can spy on jim corr!!! ….fact…………. he told me so himself!!!!

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    Mute Bernadette Dunne
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    Jan 9th 2012, 4:16 AM

    The pictures a fab but not much said about the lights of Roscommon and they mention Cork and the poor ROSSIES just want to be seen lol lol lol lol lol lol

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    Mute Marko Medina
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    Jan 29th 2012, 5:20 PM

    I would want to include in my site http://www.satelliteview.org this images, possible is?

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