DER SPIEGEL has declared it a “victory of the populists”, and the Frankfurter Allgemeine Zeitung is asking whether this is “already socialism”. According to CICERO, an “illusion” has been disseminated, and for B.Z., the “carefully fostered, long-term campaign [was] directed and financially supported by DIE LINKE’s Rosa-Luxemburg-Stiftung”. In the wake of Berlin’s so-called “Referendum for the socialization of apartments let out by large real-estate corporations”, numerous media representatives are rubbing their eyes in disbelief and trotting out clichés.
A Majority Votes for Socialization
Armin Kuhn and Stefan Thimmel are heads of Housing, Rental, and Urban Policy at the Rosa-Luxemburg-Stiftung.
More than a million Berliners (1,034,079), 56.4 percent of the votes cast, voted for socialization, putting the “Yes” vote 17 percent ahead of the “No” vote (715,214 or 39 percent). And it’s worth taking an even closer look. This result—which looks likely to set a record—was achieved with the yeses making up almost three quarters of the total vote in Friedrichshain-Kreuzberg and as much as 80 percent in the two electorates in northern Neukölln. But even beyond the S-Bahn ring—to which the SPD referred so often in its election campaign—there were “Yes” majorities nearly everywhere.
The initiative was successful in ten out of Berlin’s twelve boroughs—receiving 55.8 percent of the vote in Marzahn-Hellersdorf, 51.9 percent in Spandau and 60.8 percent in Pankow. Only in Reinickendorf and in Steglitz-Zehlendorf, with its villas in Grunewald and Dahlem, were the opponents of socialization in the majority. And this in spite of the fact that during the election campaign, most of the political parties and the entire real estate lobby threw down everything they had that might prevent this success: bombastic campaigns like the FDP’s Bauen statt Klauen (“Build, Don’t Steal”), tricks like the CDU election campaign flyers that looked deceptively similar to the Senate’s official advisory publication regarding the referendum, or predictions that members of housing cooperatives would also be expropriated, or attempts to re-frame the issue like that made by Bettina Jarrasch, leading candidate for the Greens, who wanted to instrumentalize the referendum in order to negotiate a “rents safety net” with the affected real estate companies and others, right up to unveiled threats made by SPD front-runner Franziska Giffey, who said there would be no expropriations on her watch and used the language of uncrossable “red lines".
But such manoeuvres have been unable to dampen the overwhelming support for the demand put forward by the Deutsche Wohnen & Co. enteignen campaign, support for which had already been manifest in the around 360,000 signatures gathered to enable the referendum. In the end, as many people got behind the petition as voted for the three parties that currently govern in Berlin (and may continue to do so in the future)—the SPD, the Greens, and Die Linke—put together. For the campaign’s success represents the culmination of the frustration and protest of Berliners after more than ten years of housing crisis and skyrocketing rents.
Over this period, countless tenants have themselves become casualties of the profit-oriented interests of a section of the real estate business, or else lived in fear of the next rent hike, or of their apartment changing hands, or of their landlord announcing an intention to make personal use of the property. The failure of the Berlin rent cap, which was declared invalid by Germany’s Federal Constitutional Court on 15 April 2021 for want of legislative authority, and which had brought respite for a few months at least, only increased support for the initiative. A large majority was grateful for the opportunity to use the ballot box to set down limits for real estate companies.
Grassroots Initiatives: The Foundations of the Campaign
The victory was achieved by a campaign run independently of the political parties, which stemmed from tenants’ initiatives and struggles and which from the beginning focused strongly on active organizing and community self-organization. Deutsche Wohnen & Co. enteignen is also an offshoot of the numerous struggles waged by tenants, housing cooperatives, and initiatives during recent years, to defend against the aforementioned strategies of the real-estate sector. This is also how Rouzbeh Taheri, one of the spokespersons of the campaign, describes it in an article that appeared back in May 2018.
One of the essential starting points was the very concrete situation that resulted when in 2004 the city of Berlin, under an SPD-Die Linke coalition government, privatized housing stock at Kottbusser Tor in Kreuzberg that had belonged to GSW Immobilien and is now owned by Deutsche Wohnen SE. By 2012, the tenants’ initiative Kotti & Co. was organizing political resistance, ranging from protest actions against rent hikes to demands for a return to public ownership and the rents petition of 2015—with the latter leading, among other things, to the Berlin Housing Provision Act.
A further milestone lay in the creation of a network of around 20 stakeholder initiatives in the form of Mieter:innenprotest Deutsche Wohnen (“Tenants Protesting Deutsche Wohnen”). The experiences and knowledge from countless initiatives and struggles were incorporated into the campaign. The idea of using decentralized structures—housing communities, neighbourhood teams or working groups, and later signature collection groups or volunteers campaigning by phone or knocking on doors—as a way to enable the active involvement of as many tenants and supporters as possible proved decisive.
The success we are now witnessing was underwritten by broad support from ultimately over 2,000 activists, which anchored the campaign in many Berlin boroughs, and not just Friedrichshain-Kreuzberg. This breadth was only made possible by an approach that consistently aimed to activate people and an openness to collaborators irrespective of their background or political experiences.
At the time when Deutsche Wohnen and Co. enteignen was initiated, not all of the companies owning 3,000 or more apartments were publicly known. From its inception, the Rosa-Luxemburg-Stiftung project “Who Owns the City?” aimed to achieve more transparency in this regard. The project puts the business models and practices of real estate companies under the spotlight, and supports tenants and initiatives trying to discover the owner of their building and understand what effects the financialized real estate market is having on their own neighbourhood. Since 2018, extensive data analysis and research undertaken as part of this project have made it possible to identify real estate corporations and owners that Deutsche Wohnen und Co. enteignen did not previously have on their list. Currently there are around 12 to 14 corporate entities with Berlin portfolios totalling around 250,000 apartments.
Landlord Business Models and Practices
The list of criticisms of the behaviour and business model of these companies is lengthy: neglected repairs, with heating or hot water systems failing every autumn; untransparent, excessive operating costs, also known as “second rent”; the difficulty in contacting property management and service representatives; improper rent increases—sent out by the thousand, while counting on the likelihood that legal appeals by some individual tenants will be successful; expensive new leases, often bypassing existing rent controls, for example, by renting furnished apartments; expensive, often senseless modernizations that result in permanent rent increases even after the costs, which are passed on to the tenant, have been made back; tenants ousted by means of vexatious construction activities and kept out by long-term, covert vacancies; and finally rampant subdivision and conversion into expensive freehold apartments. In addition, there is an ever-increasing market power that brings with it political influence, all the more so after the planned merger of Vonovia and Deutsche Wohnen, the two largest real estate corporations in Germany.
Over a million Berliners, at a minimum, have understood that with this petition to socialize the apartments of large real estate corporations an historical window has opened in which it has become possible to transform slogans such as “the city belongs to us”, “the right to the city”, or “stop the rent-spiral madness” into actual practice and to issue a red card to investors whose sole business model consists in speculating on land and housing. In the words of urban researcher Prof. Sebastian Schipper, “I would rather say that scaring off investors is precisely what we need right now ... If the debate over expropriation were to lead some investors to think twice about investing in Berlin, that would be a positive side-effect and over the long run would contribute to real estate and property prices falling again.”
The measure that has been voted for would make around 240,000 of the close to one million apartments rented for profit in Berlin (a precise inventory can be found in the November 2020 study, Who Owns the City?) unavailable for housing speculation, and transfer them to social ownership under a statutory entity (the specific German legal form being the Anstalt des öffentlichen Rechts). At a stroke, the amount of municipally owned housing stock would almost double. From then on, a non-profit entity, under democratic control, equipped with functioning stakeholder-participation mechanisms, and thus oriented towards the common good, would operate to indirectly regulate all other rental apartments. Its influence would have the potential to significantly reduce rents—which in Berlin rose by 19 percent for ongoing contracts and an astonishing 140 percent for new offers just in the period from 2013 to 2018. And not least of all, for retirees who rent, bringing rent levels down, which have exploded while pensions have stagnated or fallen, would be significantly more effective than any further subsidies for the purchase and ownership of an apartment, which is often touted as the “best old-age provision”.
Thus while the hopes of tenants and petition advocates are set on making speculation on housing more difficult and then using the socialized housing stock to improve the social provision of housing, debate at the political level involves essentially two lines of argumentation against expropriation and socialization. First, it is claimed that socialization would fail to create any new apartments—“build, build, build” is the sole motto here. But a socially responsible, future-proof strategy would consist in doing the one thing—withdrawing a quarter of the apartments in Berlin from the speculative market—while not omitting to do the other—subsidizing construction by private housing cooperatives that are oriented towards the common good. Nor is there any dispute about the lack of affordable housing: Berlin currently needs at least 300,000 apartments with rents not exceeding 6 euros per square metre. Of these, around 100,000 new apartments need to be built by 2030.
The second counterargument is that socialization is too expensive. Critics envisage a model of compensation at market value, with a total of up to 39 billion euros going just to the ten real estate companies listed by the Berlin Senate. At a discussion involving numerous well-respected lawyers and economists hosted by the Rosa-Luxemburg-Stiftung on 7 September 2021, it became clear that socialization is possible and constitutionally permitted, and that this includes cases where the compensation is far below market value and able to be financed without negatively affecting the city’s budget. Thus, socializing the major profit-oriented housing portfolios would not necessarily compete with other necessary expenditures (climate protection in the construction sector, transition to sustainability in the transport sector, a drive to build more schools, etc.).
With the public’s resounding “Yes” to expropriation, the red lines that were drawn prior to the referendum have been re-painted in the yellow-and-purple of the campaign’s colours. If the demand that has been articulated is not yet legally binding, it is now so politically. The newly elected Berlin Senate has no choice but to engage with it. And the upshot needs to be a draft law indicating a feasible path to the socialization and democratization of the big profit-oriented housing portfolios in Berlin.
The Berlin housing cooperatives, with their approximately 220,000 apartments, have never been counted among those portfolios and will never be covered by a socialization law. Oriented as they already are towards the common good rather than profit, housing cooperatives cannot be expropriated with the aim of turning them into non-profit entities oriented towards the common good. That would be absurd. Of course, the parties and organizations with close connections to the real estate lobby and its lavish donations also know this. It is obvious, however, why some of those who represent cooperatives continue to spread the myth of their impending expropriation: there are democracy deficits among the housing cooperatives as well. Nor will those representatives be able to evade the broad, open discussion about the relevant issues that will accompany any drafting of a bill. There are already initiatives exerting pressure within the housing cooperatives and demanding precisely such a discussion.
And “pressure” is also the motto of the moment, arising as it has from the dynamics of the campaign’s success: calls for expropriation in other German federal states (such as Vonovia und Co. enteignen), share-deals, an effectively functioning right of first refusal, a new approach to public housing, a different approach to land policy (cap on property prices or expropriation of speculators in land for construction), socially just home energy retrofitting schemes, a country-wide rent cap, etc., remain on the agenda; further campaigns are needed and are already in the starting blocks. The overwhelming success of Deutsche Wohnen & Co. enteignen on the night of 26 September 2021 will be an inspiration to all of these struggles.