Expropriate corporate dictatorship

The Berlin citizens ‘initiative" Deutsche Wohnen & Co. The collected 349,000 signatures should be sufficient to hold a referendum on 26 September parallel to the Bundestag election and the elections to the Berlin House of Representatives. It is about nothing less than the" expropriation " of all private housing corporations that rent more than 3,000 properties in the city. This affects around 243,000 residential units. But what is seen by many as the last opportunity to improve the precarious housing situation in the capital has numerous pitfalls in detail and should not lead to the big hit that many now expect even if the referendum is successful.

Anyone who knows Berlin knows that the housing market there is a single disaster. This is not only annoying for Berliners, but also a distribution problem with economic implications. In the median, real estate prices there rose by 12% per year – in some districts, the value increases by more than 20% per year. Rents lag behind this development only slightly and have risen by an average of 5.6% in new rentals in recent years, and by more than 9% in special locations. The share of rental costs in income is on average proud 46% in the capital. This also means that the Berlin tenant households have to hand over half of their income to the landlord directly after receiving their salary. From rent increase to rent increase, the disposable income decreases because the salary usually rises more slowly than the rents. For the almost 85% of the urban population who do not live in their own four walls, this rent-induced increase in purchasing power deprivation is an economic brake par excellence. Those who have to spend all their money on rent consume less, from which the local economy suffers.

These figures can be broken down into the following formula: the more house prices and rents rise, the more money is redistributed from tenants to landlords. Since the landlords of these yield or rather speculative objects statistically almost completely belong to the wealthiest tenth of the country, this represents a gigantic redistribution from the bottom up. Or to top it off: the rich are getting richer, the tenants are getting poorer.

In the case of large housing corporations, this deprivation of purchasing power is even global. The largest German housing group, Deutsche Wohnen, which rents more than 150,000 residential units in Berlin alone, for example, is largely owned by investment banks and asset management companies, which are almost exclusively based in the USA – the largest single shareholder is BlackRock with a share of around eight percent. Thus, the rents of the Berliners flow via Deutsche Wohnen as dividends into Wall Street and are passed on from there to the customers of these financial groups around the world. It is right to correct this development, and the Basic Law even provides a suitable framework for this.

The motto of the Berlin campaign “Expropriate Deutsche Wohnen & Co.” is admittedly poorly chosen. The Basic Law provides for expropriations and this has also been actively used in the past. Whenever a new motorway, a lignite mining area or a power line was to be built, renitente owners of land were reminded by means of Article 14 that property is obliged and its use should at the same time serve the well – being of the general public-at least if the general public likes to drive cars and burn coal. However, the Basic Law not only provides for expropriation under Article 14, but also quite explicitly for socialization under Article 15. “Land, natural resources and means of production can be converted into common property or other forms of common economy for the purpose of socialization by means of a law that regulates the nature and extent of compensation,” it says there in the jurist-German mixture of pathos and bureaucracy that is so peculiar to the Basic Law. However, this has never been used in the entire history of the Federal Republic. The Berlin referendum does not provide for expropriation, but precisely this socialization according to Article 15. Correctly, the initiative should be called" Deutsche Wohnen & Co.vergesellschaften".

What does that mean in concrete terms? If it were up to the citizens ' initiative, the Berlin Senate would introduce a law that forces the housing corporations to sell their apartments to a public housing company that is yet to be founded. The 243,000 apartments would then be owned by the City of Berlin. This sounds simple, but brings with it two problems.

Thus, the Basic Law provides for adequate compensation of the previous owner. However, what exactly is “appropriate” here is new legal territory – as already mentioned, there has been no precedent in the past. The spectrum ranges from the Citizens ' Initiative’s estimate of EUR 8 billion to the Berlin Senate’s estimates of EUR 28.8 to 36 billion based on the market value. If the referendum were successful and politics followed the citizens ' vote, this question would probably be decided in the last instance by the Federal Constitutional Court. And it would not even be said that it would remain at the 36 billion euros. Any farmer who has to cede a piece of land needed, for example, for the construction of a motorway to the state via an expropriation procedure will be able to confirm that the compensation figures determined by the court are in doubt rather more generous than the market prices. Where does the chronically clammy city of Berlin want to take this money from?

The citizens ' initiative provides that the compensation amount will be repaid with the rental income via long-term loans. That may work for a sum of eight billion euros. However, with a sum that is around five times as high, the city of Berlin will not be able to avoid paying the current borrowing costs from the regular budget. This money is then missing for other things. In addition, it is completely open whether the city is allowed to borrow at all in this amount – after all, politics in the federal government and also in the city of Berlin has put a powerful stop to such projects with the debt brake. Here, too, courts would probably have to decide.

In any case, these are rather mind games, which presuppose that politics actually accepts and implements a positive vote of the citizens. However, the Berlin Senate is by no means forced to do so by the citizens ' decision. The Berlin Senate in particular is known for sitting out or completely ignoring the result of referendums. As paradoxical as it sounds: According to the Berlin Constitution, a referendum actually has a realistic chance of implementation only if the opinion of the people does not differ from the opinion of the senators. And the SPD has already stated clearly that it does not think anything of the ideas of the citizens ' initiative. It looks the same with the CDU and FDP. Only the left and the Greens support the idea, but there will not be a dark red-green majority in Berlin and thus it is rather unlikely that a possible positive result of the referendum will have any concrete consequences at all.

Nevertheless, the debate associated with the referendum is important. In the whole debate, we must not forget that the housing groups criticised today did not fall from the sky. The basis of Deutsche Wohnen’s Berlin real estate comes from the formerly public real estate company GSW. Their then 65,000 Berlin apartments were sold in 2004 by the red-red coalition in Berlin for about two billion euros to private investors and later found their way into the portfolio of Deutsche Wohnen. Almost all the apartments, which are now to be bought back for a handsome sum, were previously sold from the public sector to private investors.

Critical voices, such as the thoughtful, have always pointed to the negative consequences of privatization. Today’s debate would not have been necessary at all if the critical voices had been listened to at the time. In the end, one can only hope that the public has learned its lesson from the developments on the Berlin housing market. The mistakes have been made and, unfortunately, it will not be possible to reverse them under the new neoliberal framework such as the debt brake. However, if you at least learn from these mistakes and avoid them in the future, much would already be gained. And at some point you could even think about changing the framework conditions. This would give a policy that truly represents the interests of its voters the opportunities it has denied itself.