On 26 September 2021, 59.1 percent of the Berlin electorate voted in favour of socializing large housing corporations. The “possibilities and pathways” towards a potential socialization of housing are currently being discussed by an expert commission appointed by the Berlin Senate. The debate has moved decisively towards the stage of legal feasibility and cost estimates.
Matthias Bernt is a senior researcher and acting head of the “Politics and Planning” research area at the Leibniz Institute for Research on Society and Space (IRS) in Erkner, Germany, as well as a private lecturer at the Institute of Social Sciences at Humboldt University in Berlin.
Andrej Holm is a social scientist at the Humboldt University of Berlin. His research focuses on gentrification and housing policy.
While this is happening, opponents of housing socialization continue to deny that it could improve social housing in the city. Housing Senator Andreas Geisel of the Social Democratic Party (SPD), for example, took a clear stand against the project in the rbb evening show on 15 December 2022. The “question of whether it makes sense” remains a present one, as the capital that would need to be raised to compensate the housing corporations that would be socialized “would no longer be available for new construction, climate-friendly renovation, or rent stabilization”. Furthermore, “the question of whether it would actually contribute to easing the housing market remains ... open”.
This is the backdrop against which this short study discusses the social effects of possible socialization of large housing corporations in Berlin. It shows that socialization of housing is beneficial for Berlin’s tenants and apartment seekers, and that it can indeed contribute to an easing of the housing market.
The scope of these benefits is dependent on the form that the socialization of housing takes: the price point of compensation to the housing corporations, for instance, or how the housing is managed following socialization, what the conditions are for housing allocation, and the price of rent. All these questions still remain open. Many variants are conceivable and ultimately all these factors depend on political decisions. However, in this study we proceed from the assumption that socialization of housing is only justifiable if it includes public management of the housing being taken over. The conditions under which Berlin’s state-owned housing companies rent out their apartments represent a minimum threshold, below which it would be difficult to justify the socialization of housing. In this study, the state-owned companies, therefore, act as a benchmark against which the possible effects of socializing large profit-oriented housing corporations can be measured.
When getting down to the finer details, different transition models present themselves. They are presented in this short study as two basic variants centred on the cost of rent. We refer to these variants as the “rent reduction model” and the “rent freeze model”. What both these models have in common is management according to the guidelines that currently apply to the state-owned housing companies. If socialization of housing leads to other organizational forms, such as those proposed by the initiative “Expropriate Deutsche Wohnen & Co.”, the calculation would have to be adjusted accordingly.
Based on the current rules followed by the state-owned housing companies, the benefits to Berlin’s tenants afforded by socialization of housing can be quite precisely measured. This is due to rental and management practices of the state-owned housing companies having been controlled already for some time by the cooperation agreement “Affordable Rents, New Housing Construction and Social Housing Supply” entered into with the state of Berlin, which contains detailed specifications on the price of rent, housing allocation, new construction, and tenant participation. In addition, detailed descriptions of the letting and management policies of state-owned housing companies are available in the form of reports prepared by Wohnraumversorgung Berlin.
It is clear that state-owned housing providers are supported by the state of Berlin through the allocation of land and the provision of earmarked subsidies in order to contribute to the easing of Berlin’s housing market through new construction, acquisition, and energy-efficient renovation. Alongside this, the companies have been generating profits in the triple-digit millions for years. The fixed increases to rent set out in the cooperation agreement thus allow for a solid management of the housing stock.
On this basis, when comparing the practices of state-owned housing companies with the letting and management activities of the large profit-oriented housing corporations that each own more than 3,000 apartments in Berlin, i.e. those that would be affected by housing socialization measures, major differences become apparent. The housing corporations rent at a higher price point, they spend less money on maintenance, and they have more housing stock in high-priced locations. Management of their housing stock on the terms on which the state-owned housing companies manage their stock would therefore reduce rent prices, improve the housing situation, and make more affordable housing available where it is needed most.
This study highlights the above-mentioned benefits of socialization of housing in detail by utilizing three key methods:
- We analyse the effect that socialization could have on rents and show that rent could be significantly reduced for more than 200,000 households;
- We examine the social supply effects of socialization and show that more people searching for an apartment who are entitled to social housing through possessing a Wohnberechtigungsschein (WBS) could actually acquire an affordable place to live;
- We shed light on the effects of the socialization of housing on social segregation and show that expropriation of large housing corporations could counteract the socio-spatial division of the city.
All in all, socialization of housing could facilitate the implementation of the public sector mandate in Berlin’s constitution to “promote the creation and maintenance of adequate housing, especially for people with low incomes” (§28, Constitution of Berlin). The socialization of housing therefore makes sense.
To evidence this assessment, we proceed as follows: in the first chapter, we take a look at the large housing corporations operating in Berlin and their letting and management strategies. In the second chapter, we calculate the rent effect of a socialization of housing for existing tenants, as well as for new tenants and apartment seekers. Based on this, we then examine the effect that a socialization of housing would have on the quantity of supply for households with a WBS. We conclude with a consideration of the socio-spatial implications of housing socialization and a brief summary.