Berlin Residents Just Voted In Favor of Nationalizing 240,000 Apartments From Landlords

Germany is one of the world’s biggest real estate bubbles, and it might pop in a spectacular way. Yesterday the majority of Berlin residents voted to nationalize 240,000 rental units. The move was driven by Deutsche Wohnen & Co. enteignen (DW enteignen), a housing activist group looking to cut large corporate landlords. The referendum isn’t binding, but it’s a step in the direction of pushing the issue to the Senate. More importantly, it tells policymakers how frustrated people are with housing.

The Majority of Berlin Voted In Favor of Evicting Large Landlords

Berlin residents voted in a referendum to expropriate homes from large landlords. If successfully passed, landlords with more than 3,000 units would be nationalized. This would result in 12% of the region’s rental stock returning to public ownership. It still has a few hurdles to pass to get done, but it’s pretty wild to see this measure get this far.

Institutional Landlords Are Generally Worse Than Mom & Pop Landlords

The measure doesn’t ban all private landlords, just those with very large holding. This is due to the model they have, which is often optimized to squeeze people for profits. Higher eviction rates, low-income renovictions, and poor maintenance are issues cited by the activists. Due to the size of institutional landlords, they also influence the market.

Comrades at the US Federal Reserve found similar issues with institutional landlords. They tend to be optimized for profit extraction. This is a really fancy way of saying they’re effective at beating people like a money pinata. Wait… companies want profits?

The Idea Is More Feasible Than It First Seems

The idea sounds like it’s an outlandish one, but is more feasible than it first seems. The state would borrow money to buy the properties, fueled by low rates. Those are the same low rates the property companies are using btw. Rather than rent going into profits, it would pay for maintenance and the loans. The idea is to create stable housing for the public, since it’s a core need for cities to operate.

The resolution is non-binding and faces a few hurdles, even though it might be feasible. The government still needs to follow through, and agree on a price that makes sense. Berlin’s Senate estimates the cost between €26 billion and €36 billion. The latter is the market price, which wouldn’t make much sense to buy. It would effectively mean paying bubble valuations and providing an exit for investors.

The DW enteignen argues the compensation should be much lower. Due to Germany’s Article 15 of Basic Law, the state can determine the compensation. They argue it should be based on a multiple of fair rent, which they estimate is closer to €18 billion. The act of socialization has never been invoked though, so it’s unclear how long it would take to execute.  

Whether nationalization occurs or not, it shows how frustrated people are with housing. Germany is the second longest-running bubble in the G7, beating Canada by a quarter. As central banks sweeten the pot for institutional investors, institutional landlords expand. At the same time, the same factors create rising inequality.

It might be surprising to see people demand wealth redistribution, but it shouldn’t be. Central banks are already pushing for wealth redistribution. They’re just doing it in the opposite direction these activists are asking for.

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  • Tom Wolfe 3 years ago

    €18B vs €36B.

    A 200% difference in estimation seems to indicate that no one actually knows the value of the properties or the currency they are using. On something as basic as shelter for citizens, the problems with society are perhaps bigger and more pervasive than we have admitted.

    Events leading up to January 6 2021 brought out a minority of misguide crazies. What will happen when the majority of marginalized, hopeless and angry, normal people hit the wall? The majority of the western world can’t just be canceled without expecting serious repercussions. It seems to me that the world is on an ugly and dangerous path.

    Someone get Marie Antoinette on the phone, she might have a perspective to offer.

    • Kaliucla 3 years ago

      My guess would be Secessio plebis.

      Imagine if even 25% of the country’s working population simultaneously and unanimously went on strike for an indefinite amount of time.

      With no single union or workforce directly responsible, how do you stop it? A strike isn’t an act that you can simply pepper spray or beat with a club either (like a protest against police brutality for example). The massive disruption would likely bring the government to its knees almost immediately.

      With the availability of technology I could see this happening and gaining momentum fairly quick. Once the media gets a hold of it, I imagine it would spread quickly across the world.

      Food for thought anyway.

  • J_Morrow 3 years ago

    So the answer to crony capitalism is communism? Right.

    But this sure does sound a lot like Marx’s ‘end stage capitalism’. When done ‘correctly’ end stage capitalism moves on to pervasive socialism, and ends with totalitarianism.

    But that’ll never happen (again) /s

    • Kaliucla 3 years ago

      Meh… The shift from Obama to Trump proves that any particular country is only 1 step away from Totalitarianism at any given time. Socialism isn’t necessary to facilitate the transition.

      The private sector, specifically in finance, has proven over the last 50 years that it’s fundamentally irresponsible and self-serving. It needs regulation and oversight and the regulators needs regulators and so on.

      • J_Morrow 3 years ago

        That you would suggest the Trump regime was ‘totalitarianism’ betrays either your reckless use of language or your ineptitude. Name a Trump policy that was totalitarian. On the other hand, Biden has made a decade of progress towards totalitarianism in a mere 8 months.

        Despite your ‘meh’, presumably to project your superior insight, your second paragraph essentially echoes my initial point: crony capitalism is the problem.

        • BCGuy 3 years ago

          The anti-trump propaganda was ramped at full throttle for 4+ years so its hard for people to look through that.

        • Canadian Lobbying 3 years ago

          Canadian Lobbizm of everything is masked totalitarianism.

    • Lisa D 3 years ago

      It applies to landlords who own 3000 or more units. They are not squashing small time investors. Canada’s federal government was significantly more invested in housing in the 70’s and 80’s until there was a change in policy and the private market has ‘filled in’. Would you say Canada of that period was communist?

  • David Chan 3 years ago

    Europe’s willing to go to extreme threats (even if they don’t execute), while Canadians are willing to be the punching bag and be looted by politicians giving their friends handouts. No wonder that Oxford prof said Canada is a bit of joke.

  • Gary 3 years ago

    Mao had a lot of great ideas about landlord management.

  • SH 3 years ago

    Germany is a real country with social cohesion and value attached to citizenship. Canada is a fake country with as much social cohesion as a mall food court, and citizenship that is tossed out like confetti.

    • BCGuy 3 years ago

      Comments like yours are why I keep coming back to this site.
      Its brilliant in every way.

    • Ontario works 3 years ago

      The easiest from G7 to get- Canadian permanent residence.
      Canada is looking for new working force, however many new comers are ending up on social assistance.

  • Ike 3 years ago

    Can you imagine something like this happening in Canada? I can’t.

  • Mark Robertson 3 years ago

    I can only imagine that the proponents of this have never seen the state of public housing in most countries.

Comments are closed.