What is at stake after Berlin’s referendum for the expropriation of big corporate landlords
All of us facing daily problems in housing and economic insecurity are watching what happens next as Berlin paves the way
written by Nikos Vrantsis
It was the mid-1990s and Berlin was suffering a fiscal crisis. Neoconservatism was the dominating ideology, spreading entrepreneurialism as the new mantra for urban development, preaching structural urban reforms to turn cities into attractive sites for international investment. This was the economic-political ambiance, in which the privatisation of the city’s state-owned housing stock was presented as a no-brainer.
Years later, the no-brainer proved how massive a failure it was. It led to an exponent increase in rents mainly affecting lower income households and people, without leading to any improvement of the stock.
In January 2019, in view of the housing cost overburden for disillusioned tenants and under the pressure of social movements, the city government approved a five-year (2020–2025) rent-freeze, despite big and small landlords’ fiery opposition and Angela Merkel’s federal government hostility.
The new rent regulation, called Mietendeckel was passed in January 2020 and came into effect on 23 February 2020. It lasted for almost one year, before Germany’s highest court ruled it unconstitutional and hence void, in April 2021.
The response of the tenants was instant and fiery. The long-lasting complicity of speculative landlords and institutions expropriating housing en masse with the intention of increasing rental values (something that constitutes a form of enforced displacement) was time to stop.
A campaign for a referendum in favour or against the expropriation of properties owned by big corporate landlords was launched, apropos a housing stock of 240.000 properties, owned by 12 big corporate landlords, each having in its portfolio more than 3,000 apartments in the state of Berlin.
Big corporate landlords in an unequal property structure
Strange how naturalised the workings of speculators have been. Our lexicon is replete with names of elusive entities such as investment funds, vulture capital, banks, insurance companies and other professional financial market players. These are the actors investing primarily in commercial real estate around the world, but who are also aggressively active in the housing market as well, even more so after the financial collapse of 2008 which created unprecedented potentials for big capital to buy cheap, fix and resell in a much higher price.
Berlin’s housing market proved highly attractive for these companies due to the potential of a collapsing property structure to yield profit out of rent extraction. As for the ”buy it, fix it, sell it” scheme, the ”fix it” part was missed. In 2019, the total number of properties owned by corporate landlords were 240,000, all privatized after 2000 but still crumbling. Αs for the elusive entities they have well branded names, notorious for their speculative practices all over the world:
1. Deutsche Wohnen SE, founded in 1998 as an investment vehicle by Deutsche Bank, that now owns a stock of 111.500.
2. Vonovia, the largest housing company in Germany, now owning a stock of 44.000.
3. The Adler Group which was created in 2020 through the merger of ADO Properties AS and Adler Real Estate AG, owning a stock of 22.200.
4. Covivio SE, a real estate company investing in hotels, offices and apartments primarily in Paris, Milan and Berlin, owning a stock of 15.700.
5. Akelius Residential Property, a company the majority of which is owned by a foundation in the Bahamas, with a stock of 13.700.
6. TAG Real Estate AG with a stock of 9.900.
7. Grand City Properties AS, with a stock of 8.000.
8. BGP group with a stock of 8.000.
9. Ηilfswerk- Siedlung Gmbh with a stock of 6.000.
10. Pears Global Real Estate, managed by the three Pears brothers, through two companies on the British Virgin Islands and Cyprus, with a stock of 6.000.
11. Heimstaden with a stock of 5.500.
12. DIV German asset and real estate management with a stock of 3.800.
These companies distort the already extremely volatile and speculative property structure of Berlin, at the expense of tenants. According to a report published by Rosa Luxembourg Stiftung in 2019:
– 16,5% of the total stock belongs to financial market investors,
— 25,1% is distributed among big private owners,
— 17% is distributed among ”small property owners”,
– 16% belongs to the six state-owned housing companies (LWU) of Berlin,
— 15,3% belongs to homeowners owning one or maximum two properties,
— 10% belongs to housing co-operatives,
— Another 20,000 homes belong to the church and charitable foundations.
It will be difficult to ignore a request made from such a clear majority.
Those against
Prior to the referendum, the government of Berlin, led by the Social Democrats, bought an estimate of 15,000 homes back from Deutsche Wohnen. Some media sources covered this as a victory of the people and as a retreat of the government. However, this was no victory, and it was definitely not a retreat. The real reason for the buy-off was different.
First and foremost, this purchase turned into a key argument for the government against the referendum, suggesting that it was unnecessary, since political representatives were already doing their job, socializing properties. Second, the State bought these properties back at market prices, even though their condition was worse than it was before their initial privatization. This was not expropriation, but a State intervention in favour of big capital. Greeted on all sides by the media, politicians and citizens as a victory for the people, this was merely the State facilitating housing speculation among corporate landlords and international capital.
The campaign for its part, clearly spelled out the meaning of expropriation (enteignen) and specifically Article 15 of the constitution, according to which “Land… may be transferred to common property… for social purposes.”
The main arguments of those opposing expropriation — that is CDU (Christian Democrats), SPD (Social Democrats) and FDP (liberals) — were twofold. One is that expropriation would be bad for Berlin’s international image because it sends investors a message that the state is expropriating property. According to this argument, after housing, comes transport, electricity networks, Deutsche Telecom, etc.
Secondly it is argued that given the demands of the expropriation campaign, the genossenschaften (housing co-ops) will be expropriated. The campaign insists however that cooperatives operate on the basis of the principles of public interest. They prove that adequate housing can be offered at low prices and therefore must be excluded from any expropriation.
The soft spots
There was a whopping population slice excluded from voting: those not having German citizenship, i.e. immigrants. Given that one third of Berlin’s population is either a migrant or of migrant origin in insecure tenure, the exclusion is overwhelming. According to estimations, one fourth of the total population was excluded from the ballot.
This partly explains why despite the high turnout in real numbers, it still remained low considering the fact that 84% of the total population of the city are tenants. Many of those tenants, many of them of migrant origin, gasterbeiters (”guest workers”), living in investment-starved, dilapidated housing, simply had no right to vote.
However, the ”right to the city” group, emerging from the Berliner Starthilfe project has tried to include migrants in the campaign. Insisting that they cannot speak on behalf of all migrant groups in Berlin, nevertheless they represent migrant experiences in accessing housing and thereby introduce some welcome diversity into the over-representation of the German, middle class, predominantly white population that makes up the bulk of the campaign.
Another soft spot is that there is not a single, mature and active tenant union to provide the organizing needed for a long-lasting struggle against corporate landlords, speculation and inadequate housing conditions, despite the fact that 84% of the total population in Berlin lives on rent.
The Berlin Tenants’ Association (Berliner Mietverein or BMV), formed in 1888, with 180,000 members, is nothing more than a service provider of legal assistance to tenants. As a response to this toothless outfit, MGB (Tenants’ Union of Berlin) was created in 2020, having a more militant structure and a fourfold purpose: (i) creating a long-term base for organizing, (ii) testing new ways of contending housing defects such as direct action and rent strikes, (ii) safeguarding tenants’ rights but also tenant agency and (iii) sharing knowledge for the purpose of self-empowerment of the tenants. MGB seeks more radical action. But there is still a long way to go.
Organise, convince, expropriate!
The counter-arguments did not suffice to overturn the wave of civic rage unleashed after years of speculation and exploitation at the expense of the poor. And this was due to the impeccable organization of the campaign, crushing defamation. The main organizing body, primarily charged with resource management (coming from voluntary contributions), ensured access to decision-making for all participating members. The main executing bodies were organized at neighbourhood level, divided into sub-groups (for legal support, awareness raising, collective participation etc.), while the whole campaign was not geared around large-scale, central protests but into local, decentralized actions, organized by grassroots action groups.
The difficult areas dominated by suspicion of the new left and marked by a strong far-right presence such the district of Marzahn, were tackled by militant segments of the campaign who charged themselves with the difficult task of fitting in and helping raise local awareness. For example, activist groups from the guaranteed “pro-referendum” Friedrichschain, made it their job to fill in information gaps with their field actions in Marzahn.
In total, 1.03 million people (56.4%) voted in favor of the expropriation and 715,000 (39%) voted against it. Central districts, like Kreuzberg and Friedrichshain, where the movement was strong, gave an overwhelming vote in favour. Marzhan, a working-class neighborhood but stronghold of the far-right AfD, also voted in favour.
There were only two districts in which the ballot gave a majority against expropriation: Steglitz-Zehlendorf, the wealthiest neighbourhood of Berlin and the well-off Reinickendorf, both with high-levels of homeownership in the tenure mix, together with strongholds of the conservative CDU.
The referendum… explicitly refers to expropriation of the stock at prices lower than those on the market.
Untouched capitalist and the strategically elusive demand of the campaign
On Monday, a day after the referendum, Akelius signed its total Berlin portfolio of 13.700 properties to Heimstaden. But there was another bigger trade-off… On that same day, news channels reported that Vonovia, the second largest player in the local housing market acquired the majority stake in Deutsche Wohnen stock, in a buy-up in defiance of the referendum results.
Vonovia’s owner Rolf Buch stated: “In view of these great challenges, Berlin cannot stand still like this for years. This sort of thing will happen because the new Senate will now be called upon to draft a new law on expropriation but also because of the clear constitutional concerns raised.”
The purchase took place for two main reasons. First, Vonovia estimates that the expropriation will not be implemented anyway. Second, it hopes that if the State is to socialize properties, it will do so at market prices, and such a transaction would be highly profitable. However, if the State buys these houses at market prices, it will violate the essence of the referendum, which explicitly refers to expropriation of the stock at prices lower than those on the market.
However, the referendum did not come together with a pre-crafted proposed legislation on behalf of the campaigners. This is because in 2014, a similar law was put on the ballot but was discredited in judicial terms thus leading to the cancellation of the whole campaign. This time the organizers preferred not to put the law on the ballot, to avoid jeopardizing the realization of the referendum. Hence, the government of the State of Berlin is responsible for turning the referendum into law.
Several committees in both the Bundestag (Federal Parliament) and the State Senate confirm that the expropriation request is legally valid and compatible with the constitution. Hence, if this request for expropriation is followed to the letter and to the spirit, companies will still be compensated but at a price lower than the market prices. By doing this it will have to set the costs of compensation of the corporate landlords and then decide on which entity is to manage the socialized housing stock.
Many activists have pinned their hopes on the Bezirk, the community councils that played a key role in preventing evictions and controlling rental prices. Bezirk, nominating leftists and activists, usually have the strongest tenants’ protection because of two key tools of defence:
– the Vorkaufsrecht, that is the right of first denial, which gives the Bezirk the opportunity to buy a property when it goes on sale, before the landlord has the right to sell it to a third party,
– the Milieuschutzgebiet, which means that in the poorest areas with larger swathes of people in need of social protection, the conversion of a tenure into property (mainly the conversion of rented houses into privately owned properties) cannot take place without the approval of the Bezirk.
But the campaigners have defence enough. Their intention is to push for the expropriation to be implemented, and their focus is geared towards the district level and local representatives to enforce the popular will in parliament.
However, it is the skeptical SPD that holds the majority both at state and at federal level, yet it cannot govern alone. The composition of the new government, whether it is conservative or progressive, will play a key role. According to the activists, the expropriation law can be ready by the spring of 2022 and the expropriation will cost between 9 and 10 billion euros. If their local representatives or the government try to bypass them, they will suggest a new ballot, this time including their 21-page long legislative proposal. In that case a vote in favour means the ballot turns directly into state law, bypassing the parliament altogether.
What does the referendum result mean to housing activists everywhere
The decision of Berliners to expropriate corporate landlords will surely be a point of reference for housing movements everywhere. The housing crisis is raging worldwide. Since the financial collapse of 2008 housing precarity is eating its way into the social core of societies, unsettling even those defining themselves as part of the middle class who were previously protected by the alleged robustness of their housing system. Now these too are collapsing under the pressure of financialization and speculation of different sorts.
Even in contexts and housing systems different from Berlin, creating a social demand for universal access to adequate and dignified housing is crucial for all of us facing daily problems related to housing and economic precarity. Berlin is paving the way. And the world is watching.
