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HOUSING

How Berliners are plotting a radical ‘expropriation referendum’ to fight housing crisis

At the Kottbusser Tor roundabout in Berlin's fashionable Kreuzberg district, 29-year-old Jannick is waiting in line to sign a petition which he says has captured the "zeitgeist" in the German capital.

How Berliners are plotting a radical 'expropriation referendum' to fight housing crisis
"Expropriate Deutsche Wohnen & Co." Photo: DPA/Paul Zinken

He is one of 170,000 signatories needed to launch a referendum on expropriating large property developers, a drastic and unprecedented move in the fight against Berlin’s housing crisis.

“Everyone has the right to have a place to live,” Jannick tells AFP as he waits to add his name to the list of those urging the state to forcibly buy back properties from large real estate companies.

The “Expropriate Deutsche Wohnen & Co.” initiative, named after the biggest property company in Berlin, targets companies with more than 3,000 apartments in their portfolios.

MUST READ: How to use Berlin’s rental cap law to catch out illegal landlords

Unthinkable just a few years ago, the initiative is gaining more and more support from Berliners exasperated by ever-rising rents and a housing crisis which threatens to get even worse due to the coronavirus pandemic.

In a city where more than 80 percent of residents rent their homes, the capital’s attractiveness to investors and structural lack of housing sent prices soaring by nearly 85 percent between 2007 and 2019.

Rent cap

Berlin’s city-state government already moved to freeze rents for five years from 2020 in a bid to halt runaway gentrification.

Yet the much-disputed “rent cap” preventing rent hikes for 1.5 million apartments has seen the number of rental offers plummet as owners decline to put apartments on the market, according to the German Institute for Economic Research (DIW).

Many private landlords are waiting to see whether the cap will be upheld in a long-awaited constitutional court ruling which is expected in the coming weeks.

“We need a long-term tool, and putting real estate assets into common ownership is one solution,” Ingrid Hoffmann, a spokeswoman for “Expropriate Deutsche Wohnen & Co.”, told AFP.

Housing insecurity has been compounded by the COVID-19 pandemic, which is also putting jobs under threat.

“The coronavirus crisis is going to lead to a real social emergency when it comes to housing,” warned rental association Berliner Mietverein in February.

According to a study by public savings bank Sparkasse, one in four Berliners expect their financial situation to worsen in 2021.

Unemployment rose to 10.6 percent in the German capital in 2020, a two-point rise on the previous year and almost 5 percentage points above the national average.

“I lost my student job because of the pandemic. If I need to find a new apartment, I’m scared I won’t be able to,” said 23-year-old Jan, a Berlin resident who is also supporting the expropriation initiative.

‘Unconstitutional’

“Expropriate Deutsche Wohnen & Co.” 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.

Adopted in 1949 with the founding of the West German state, the article was long forgotten during the Cold War with its tensions between capitalist West and communist East.

The petition, which collected 77,000 signatures in its first phase, needs more than double that number to reach the 7 percent of the city’s electorate required for a referendum.

Deutsche Wohnen, which owns around 111,000 of an estimated two million rental apartments in Berlin, dismissed the initiative’s aims.

“Expropriation is neither constitutional nor financially viable for Berliners,” Marko Rosteck, a spokesman for the property giant, told AFP.

The city’s social-democratic mayor Michael Mueller is also sceptical, arguing that he would prefer “partnerships with the private sector”.

With tensions escalating in 2019 over rising rents, Berlin authorities spent almost a billion euros to buy back 6,000 former public housing apartments that had been privatised.

SEE ALSO: These are the reasons why so many Germans rent rather than buy

Yet the city is already laden with debt, and critics warned that by renationalising homes, the authorities were participating in property speculation.

Federal finance minister Olaf Scholz in February declared housing “one of the biggest social issues of our time”.

Despite the acute shortage, a 2014 referendum on housing in Berlin saw citizens reject planned new builds on the former Tempelhof airfield south of the city centre.

Member comments

  1. I understand that Germany has a different economic model to the one us Anglo Americans are used to and is far less brutal. The forces of supply and demand, however, cannot be ignored and, ultimately, the only solution is to increase the supply and build more (I would suggest selling them at a discount and restricting ownership to buyers who are going to live in them for a minimum of 5 years on 100% government backed mortgages. You can sell up earlier but would have to pay back the discounted amount). Historically most interventions (such as rent caps) fail, as they reduce investment and the quality of the existing local housing stock as well as driving prices up in the surrounding areas. My advice is stop renting and borrow borrow borrow and buy buy buy!

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OPINION & ANALYSIS

OPINION: Sweden’s ‘historic investment’ has failed to solve the housing crisis

Five years after Sweden's government promised to solve the country's housing crisis with a "historic investment", things are as bad as ever, David Crouch argues. Radical action is needed.

OPINION: Sweden's 'historic investment' has failed to solve the housing crisis

Forced to move house 20 times in the past eight years, Maria’s situation was desperate. She and her daughter had arrived in Stockholm from Latin America in search of a better life. She found work, no problem – but housing was impossible.

“Sometimes I was paying 12,000kr in rent and it was very hard because I only had 15,000kr in monthly salary,” says Maria (not her real name). So she took a high-interest loan of 240,000kr and tried to bribe someone in the Housing Agency to get to the front of the queue for affordable housing.

But she was caught. Her fate is unknown. And she didn’t even get an apartment.

This recent story, in the excellent newspaper of the Tenants’ Association, sums up the problems facing people who move here to work. The market for rental accommodation is tight as a drum. Finding a home means competing with Swedes, but with all the disadvantages of being an outsider. So people find themselves pushed into short-term, insecure rental contracts at inflated prices.

It wasn’t supposed to be this way. Five years ago this month, the government announced a “historic investment in housing”, including subsidies for construction companies, easing restrictions on building permits, and making more land available.

The housing situation at the time was grim. Spotify had threatened to leave Sweden if things didn’t improve – how could the company attract skilled young people to a city where there was nowhere for them to live? More than half Stockholm’s population – 600,000 people – were in the queue for a coveted rental apartment, because strict regulation meant these rents were low. But it took as long as 20 years to get to the front of that queue.

The result was a thriving rental property black market, with large bribes changing hands. Many tenants exploited the situation by sub-letting their homes, or parts of them. “It is almost impossible for immigrants and new arrivals to penetrate this market – it is all about who you know and how much money you have,” said Billy McCormac, head of the Fastighetsägarna property association, in 2015.

READ ALSO: 

So what has been the outcome of the grand promises the government made five years ago? House-building at the time was already rising steadily, and it has continued to do so. Look around you in the big cities and you will see that new apartment blocks have sprung up here and there.

But we shouldn’t go only on appearances. To understand the reality, we need to look at some numbers.

The gap between demand for housing and the existing housing stock has indeed started to shrink. “As housing construction has gradually increased and population growth has begun to slow down, the gap has decreased since 2017,” Stockholm’s Housing Agency noted in December.

The Agency has broken records four years in a row for the number of rental homes it has provided. The proportion of young adults living independently has also increased somewhat, the Tenants’ Association found, probably due to the pace of construction.

But this smidgen of good news is outweighed by an avalanche of bad.

The average queuing time in 2021 for a Stockholm apartment was more than 9 years; for somewhere in the city centre you have to wait 18 years. Only 936 homes came with a waiting time of less than one year. More than three-quarters of a million people are now registered in the queue for housing – a big increase on five years ago.

The rate at which the housing shortage is shrinking is nowhere near fast enough to alleviate the huge accumulated demand.

Assuming that the current pace of construction can be maintained, it will be the end of this decade before any significant dent is made in the deficit of homes, according to Boverket – the Swedish National Board of Housing, Building and Planning. The current rate of construction is “only marginally more than the long-term need”, it says.

The challenge is even greater when it comes to producing affordable housing, Boverket says, especially for the young and those entering the housing market for the first time. Almost one in four young Swedes up to the age of 27 are forced to live at home – the second-highest figure since the measurements began.

There are already signs that housing construction is actually slowing down, owing to higher building material prices, rising interest rates and an incipient labour shortage. Construction prices rose by more than 8 percent last year, and there is concern in the industry that war in Ukraine will further affect costs, in turn slowing the pace of building.

There is another fly in the ointment, a consequence of the collapse of Sweden’s governing coalition in November. The new, minority administration was forced to adopt the opposition’s budget, which halted investment subsidies for house building, throwing the construction industry into confusion.

In short, the “Swedish model” for providing people with a roof over their heads is failing. The folkhemmet, or “people’s home”, has not enough homes for its people.

Swedes themselves understand this: in a survey last month, nine out of ten voters said they thought that politicians did not take the housing shortage seriously.

We have waited too long. It is time for fresh thinking and radical action to solve the housing crisis.

David Crouch is the author of Almost Perfekt: How Sweden Works and What Can We Learn From It. He is a freelance journalist and a lecturer in journalism at Gothenburg University

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