Rising Rents Threaten Berlin’s Diversity, Activists Demand Expropriation

April 11, 2019

Germany is abuzz about a new movement to expropriate 240,000 apartments from large landowners in order to halt rapidly rising rents in Berlin

A grassroots movement in Berlin wants a referendum on expropriating more than 200,000 privately-owned apartment buildings from landlords and handing them over to public ownership, and tens of thousands took to the streets last week in support. Activists collecting signatures for the expropriation campaign want to put the issue to the electorate in a referendum. The campaign is focused on all large-scale private owners, but the one named most frequently is Deutsche Wohnen, Berlin's largest owner of private property.

Rent in Berlin has increased by over 20 percent in the past two years—faster than in any other city in the world. Currently, around 300,000 apartments are owned by the city, run independently, and managed more democratically. Deutsche Wohnen Enteignen (“Deutsche Wohnen Expropriate”), a group campaigning in favor of the referendum, does not think that's enough and that there is a need for more affordable housing.

The Real New Network's Greg Wilpert spoke to Thomas McGath, a spokesperson for Deutsche Wohnen Expropriate. While rent in Berlin is still among the lowest in Western Europe, the issue, McGath explained, is how rent has been rising so quickly.

“The issue here is just the speed, I would say, and the rapid rent raises. So it's something that's really I would say almost unprecedented in Germany, actually. So the rent has actually doubled in the last 10 years. It's faster than any other city in the country,” McGath said. “And right now it's something that's so dramatic that wages are just not keeping pace. So there's quite a lot of working-class people in Berlin that are suffering under this new, I would say, housing regime.”

“The basic threshold for the law is that any company that has over 3,000 apartments would be expropriated at the moment. This is about nine companies within Berlin,” McGath said. “All together, though, it's around 240,000 apartments.”

Political parties on the left and right have opposed the expropriation plan, though there is a tension between leaders who oppose it and members more open to expropriation. The Christian Democratic Union opposes it and former CDU leader, Angela Merkel, spoke out against it earlier in the week.

“They see it as kind of an intrusion upon the markets, that it is really shaking at the core of the property rights that are enshrined in the German constitution,” Mcrath said. “However, if you look at the left, even the center-left FPD [Free Democratic Party]. there is actually quite a lot of resonance within the membership of the party. So the leaders themselves have actually taken a step back and been a bit more hesitant to endorse this. However, within FPD and the Greens there's been quite a lot of support from the memberships.”


Rising Rents Threaten Berlin's Diversity, Activists Demand Expropriation

Story Transcript

GREG WILPERT: It’s The Real News Network, and I’m Greg Wilpert in Baltimore.

Last Saturday, tens of thousands took to the streets in Berlin, Germany to protest in favor of expropriating the city’s largest landlords. The proposal to turn privately owned apartment buildings over to public ownership is happening in response to rapidly rising rents in Berlin, which have increased by over 20 percent in the past two years, faster than any other city in the world. Activists are in the process of collecting signatures for the expropriation campaign to force the city government to respond to the proposal. If they don’t respond, the plan is to collect more signatures in order to put the issue to the electorate in a referendum.

Joining me now from Berlin is Thomas McGath. He’s one of the spokespeople for Dortch of Woodenbong. And I wouldn’t. Sorry I messed up I’m going off to redo this but we’ll do later. He’s one of the spokesperson for Deutsche Wohnen Enteignen, the main group behind the expropriation campaign. Thanks for joining us today, Thomas.

THOMAS MCGATH: Hi. Thanks for having me, Greg. Good to be here.

GREG WILPERT: So tell us more about what your organization is hoping to achieve. How many companies and how many apartments do you think could be expropriated in Berlin, and how would this work concretely?

THOMAS MCGATH: Sure. So our campaign is basically a grassroots citizen initiative that’s campaigning for a referendum from the state of Berlin to expropriate mega landlords in the city.

So the basic threshold for the law is that any company that has over 3,000 apartments would be expropriated. At the moment this is about nine companies within Berlin. And the biggest of them is, of course, Deutsche Wohnen, which has something like 110,000 apartments. All together, though, it’s around 240000 apartments. So it’s not something to actually shake a stick at. It’s quite a lot of apartments.

In terms of the campaign itself, so, Berlin has some very cool laws that allow for direct democracy. According to Berlin law once you pass a referendum, basically once it goes to vote for the citizens, the Senate then is given the task of creating a law. And once that becomes law, these apartments will then come into public hands. So underpinning the entire initiative is actually a desire for creating a much more strong and viable public housing sector within Berlin. At the moment there’s something around 300,000 apartments that are actually owned by the city. They are run as independent companies that are managed somewhat democratically. Not enough, in our opinion. However, it’s very important for the social fabric of the city that these apartments exist, otherwise most people would not have access to affordable housing, which currently right now is actually, I would say, at an extreme lack at the moment.

GREG WILPERT: Now, I mentioned that rents in Berlin have been rising faster than anywhere else. But they started from a relatively low level. And as far as capitals go, it’s still cheaper than most other capitals in Western Europe. So why would you say is this action really needed? I mean, that’s been one of the criticisms that some people have against it.

THOMAS MCGATH: Sure. So a bit of history, Berlin has kind of been seen as the cheap, affordable city within Germany. So Klaus Wowereit called it [German], which translates to ‘poor but sexy.’ So it’s been kind of this Bohemian city where a lot of people have moved to in their college years. David Bowie lived here for some time in the ’70s as kind of like his own oasis away from things in the UK.

The issue here is just the speed, I would say, and the rapid rent raises. So it’s something that’s really, I would say, almost unprecedented in Germany, actually. So the rent has actually doubled in the last 10 years. It’s faster than any other city in the country. And right now it’s something that’s so dramatic that wages are just not keeping pace. So there’s quite a lot of working class people in Berlin that are suffering under this new, I would say, housing regime. And for them it’s not enough to just build more. They have a real issue right now with an existential need for affordable housing, and somebody to protect them from, I would say, the wills of–the whims of the market.

GREG WILPERT: So Deutsche Wohnen itself, you know, owns over 100,000 apartments in Berlin, and they say that expropriating them won’t change rent laws or construct more apartments. In other words, they say, expropriation won’t make much of a difference. Now, how do you respond to that argument?

THOMAS MCGATH: So from our side, it’s about actually stopping and keeping rents affordable. For us, as I mentioned, it’s all about this idea of socialization of housing, as well. So for us it’s all about decommodifying housing, and making it affordable for everybody. On average, the state-owned apartments in the city are much more affordable than apartments with companies like Deutsche Wohnen, Vonovia, and

, which is some of the other big ones, as well. So for us, we think it’s much more fair.

When it comes to these organizations, they have much more, I would say, need to answer to the public, and there’s much more accountability. So within the Senate there’s people that have oversight over these companies, as well. So it’s a much more democratic process, rather than just, as I mentioned, the whims of the markets. I also think what’s very unique about our referendum is that we actually are actively promoting a democratization of housing within this company, as well.

So when the new apartments are brought into public hands, there will be an Institute of Public Law that is created, and we have actually called for democratic governance structures within this Institute of Public Law. And it will be managed by a democratically elected council that is made up of a majority of renters and workers, with two representatives from the Berlin Senate. So for us we see it as a much more accountable institution, rather than these stock market companies that actually have profit as their only interest.

GREG WILPERT: Now, finally, some critics are concerned that the expropriation would be too costly for the city. If as many as 240,000 apartments are turned over to public ownership, some estimates are that it could cost as much as $40 billion, or 36 billion euros. What do you think? Is this really feasible for the city of Berlin?

THOMAS MCGATH: Well, I think we have a pretty clear answer to that. It’s really a matter of political will. So in the German Constitution, in Article 15 it states explicitly that any compensation amount is to be determined by the law. So here I believe there has been several calculations about this. The Senate did their own calculation. However, they made a mistake in their calculation and they overcalculated it by about $10 billion. So we have actually done our own compensation estimate. And we range at anywhere from around $3 billion to $18 billion. And in terms of financing, we actually say it’s not that–it’s not that bad, actually. So it’s completely affordable if you look at it from a financial perspective. So there’s ways to do this where you could actually be budget neutral. So if you actually were to have this set up long term, and financed through direct rent from the Institute, it would actually be budget neutral. So we don’t see that as an issue.

GREG WILPERT: Okay. One last question. How are the political parties reacting to this? I mean, this seems to be an independent initiative. But of course, you know, Germany has six, seven different political parties. How are some of the main ones reacting to this proposal?

THOMAS MCGATH: Well, I think in German politics, just like any other country, you have left and right-wing parties. The right has been extremely against this, to be honest. So even the CDU has come out explicitly.. Merkel came out against it a couple of days ago. They see it as kind of an intrusion upon the markets, that it is really shaking at the core of the property rights that are enshrined in the German constitution. However, if you look at the left, even the center-left SPD, there is actually quite a lot of resonance within the membership of the party. So the leaders themselves have actually taken a step back and been a bit more hesitant to endorse this. However, within the SPD and the Greens there’s been quite a lot of support, I would say, from the memberships. Die Linke is actually the only party right now that’s actively supporting this. But we also see that as a net positive. So they are also in the coalition government in Berlin, as well. So they are actively promoting it. They have signature lists in their offices around the city. They’ve made it one of their campaign issues, I think, for the EU election as well. So we see that as positive. However, I think it’s necessary in a thriving democracy to have this kind of citizens’ initiatives to keep politicians honest, and to keep them, I would say, listening to the will of the people.

GREG WILPERT: Well, as a former Berliner, I can say this sounds like a very exciting initiative. We’ll continue to pay attention to see how it develops. But we’re going to have to leave it there for now. I was speaking to Thomas McGath of Deutsche Wohnen Enteignen. Thanks again, Thomas, for having joined us today.

THOMAS MCGATH: Great, thank you so much.

GREG WILPERT: And thank you for joining The Real News Network.