Berlin’s Rental Revolution: Activists Push for Properties to be Nationalised
When Berliners take to the streets on Saturday to protest against rising rents, 77-year-old Barbara von Boroviczeny will be right at the front.
As crowds of marchers set out from Alexanderplatz, the activist will be using a van with a megaphone to encourage people to sign up to nothing less than a housing revolution: a vote on banning large landlords from operating in the city and expropriating their property into social housing stock.
The proposed referendum, which could take place as soon as the middle of 2020 if activists manage to gather 20,000 signatures within the next six months and a further 170,000 by February, would set a legal precedent in establishing housing as a human right, and affect real estate companies as far away as London.
If they make it to the referendum stage, campaigners can afford to dream about victory: according to a Forsa poll from February, 44% of Berliners think nationalising large landlords a sensible measure, while only 39% reject the idea. In Berlin’s press, the campaign, named Expropriate Deutsche Wohnen & Co after the city’s largest private landlord, has already caused a debate on whether socialism is returning to the former capital of East Germany.
Von Boroviczeny herself is no nostalgic east Berliner harking back to the days of the GDR, hailing instead from Zehlendorf in the city’s affluent west. She is nonetheless fulsome in her enthusiasm for the radical demands of the referendum.
“I think this kind of provocative language is exactly the right way to go about it; we’ve got to stop being so stately,” she says of the petition’s call to “expropriate” housing stock owned by large private companies. In terms of rhetoric, she argues, activists were only drawing level with the tactics large property speculators had been using for years.
“If you don’t dare, then you are never going to achieve anything,” she says. Sporting a neat grey bob and a silk neckerchief at a meeting in Kreuzberg ahead of the demo, Von Boroviczeny does not so much stand out from the crowd as confirm a pattern: rising rents in the capital are not just putting the squeeze on students and young professionals but also the over-60s, who made up the largest part of the group gathered here.
The radicalisation of previously demure Berlin pensioners serves to explain the growing momentum behind the Expropriate Deutsche Wohnen & Co campaign. In 2005, the real estate conglomerate that had acquired the Bauhaus-designed estate on Argentinische Allee where the pensioner has lived since 1959 announced a 100 euro increase in her monthly rent, to pay for renovations most of the tenants felt were unnecessary.
Incremental reforms of German tenancy law have enabled landlords to force through “energetic modernisations” of their properties and pass down up to 11% of their costs to the tenants. Critics allege that the law allows landlords to flush out old tenants and immediately put the flats on the market at a higher price without having made any significant improvements.
Since German law restricts the possibility of class action lawsuits, Von Boroviczeny and around 170 of her neighbours took their current landlord, Deutsche Wohnen, to court on an individual basis. “Like all good Germans, we dragged our case from one court to the next,” she says – with limited results.
Many tenants lost their cases, and neighbours had to organise fundraisers to help compensate for their losses. Von Boroviczeny now spends 60% of her pension on her rent.
She is not the only tenant to worry whether she will eventually be forced to move out of her home. Once a haven for artists and dropouts because of its exceptionally low rents, Berlin property prices rose by 20.5% in 2017, faster than any other city in the world.
The impact of the so-called rent brake, introduced in large cities like Berlin, Hamburg and Munich in 2015 to stop rents spiralling out of control, has been underwhelming, partly because it places the onus to calculate fair rental payments on the tenant, not the landlord.
But since the start of the Expropriate DW & Co campaign last year, Von Boroviczeny has regained hope that the frustrations of tenants across the city could be bundled into one movement.
“Suddenly, things are moving,” she says. “All sorts of measures are being discussed that had been stashed away at the back of the drawer.”
The Social Democratic party (SPD), senior partner in Berlin’s current governing coalition and the main driver behind the privatisation of the capital’s housing stock in the late 90s and early 00s, has distanced itself from the campaign, although it has proposed freezing rents in the city for five years. The SPD’s youth branch, by contrast, has trumped the campaign’s demands and proposed expropriating any landlord with over 20 apartments.
In December last year the city senate tried to stop 316 apartments in three buildings on Karl-Marx-Allee, a grandiose Stalin-era boulevard in the east of the city, from acquisition by Deutsche Wohnen.
If tenants across Berlin are feeling emboldened by the new grassroots campaign, it is because they believe its most radical demand can be supported by Germany’s 1949 constitution, the Basic Law.
According to article 15 of the constitution, which was drawn up before the country had fully embraced the market economy, “land, natural resources and means of production may, for the purpose of nationalisation, be transferred to public ownership or other forms of public enterprise by a law that determines the nature and extent of compensation.”
In late 2017, the housing campaigner Rouzbeh Taheri discovered that while article 15 had never been put to use in the way proposed by the campaign, the Berlin senate itself has used the paragraph to threaten landlords with expropriation in order to make way for infrastructure projects, such as new motorways.
Taheri, now the campaign’s spokesperson, argues that court cases between Deutsche Wohnen, which owns over 100,000 apartments in the German capital, and tenants like Von Boroviczeny prove the company is currently abusing its economic power in the city, thus providing sufficient reason for triggering the previously overlooked legal paragraph.
His campaign’s specific proposal: landlords who own more than 3,000 apartments should be dispossessed and their property passed into the hands of a new public body responsible for social housing. By the campaigners’ calculation, such a move could free up around 200,000 apartments.
Deutsche Wohnen thinks the idea is legally unenforceable and would amount to “saying goodbye to the market economy”. But three legal surveys commissioned by the Berlin senate support the basic tenet of the campaigners’ approach, one even suggesting that “socialising large companies may be easier to justify than small companies”.
Nonetheless, several hurdles still need to be cleared before Berlin can proclaim itself Europe’s new champion of housing rights. Exactly how many landlords would be affected is unclear, and remains difficult to establish while privacy rights in Germany restrict centralised access to the land registry.
What is certain is that Berlin, once regarded as a “renters’ paradise”, has over the years come to attract an unusually high number of big property players when compared to other European capitals like London, where even the biggest residential landlord, Grainger, owns only around 1,500 units.
While the senate’s initial cost estimate claimed that 10 private companies owned more than 3,000 apartments each, a new study has dug up two more landlords – both of them with links to the UK.
According to claims on its own website, London-registered Pears Global Real Estate owns 6,200 residential units in Germany, “primarily located in Berlin”, while more than 4,000 apartments can be traced to a Jersey-registered real estate fund management company called Warwick Square Trust.
Further, some legal experts believe a successful referendum in favour of expropriating private landlords would mean large state-owned housing companies such as Degewo would also have to hand over their housing stock to the new social housing authority.
A referendum in favour of expropriation, they warn, could end up not only scaring away private companies like Deutsche Wohnen – which owns 6.8% of Berlin’s rental properties – but also discourage other landlords from building and managing property in the city.
The higher the number of apartments affected by the proposed cull, the higher the cost for the senate – which in turn is eventually likely to be passed down to Berlin’s citizens in taxes. According to the senate’s own estimate, expropriating around 240,000 apartments would require compensation payments of between €28.8bn (£25bn) and €36.6bn. The official Expropriate DW & Co campaign questions the authorities’ calculation, offering up a cost proposal of €18.1bn instead.
Increasingly relishing their taste for controversy, some Berlin tenants are happy ignore the warnings. Instead, they propose even more radical solutions. In a recent talk show on German television, one veteran housing activist suggested the senate should offer no more than €1 in compensation payments.
“€1 per flat?” the moderator asked. “No! €1 per company,”, the activist responded.
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