Berlin votes to expropriate big landlords amid anger over rents

Berlin

VOTERS in Berlin backed a referendum to expropriate the housing of large property companies in the German capital amid public anger over rising rents.

More than 56 per cent of voters supported the proposal with 99.9 per cent of precincts reporting, the city-state's election board said on its website on Monday.

While the measure isn't legally binding, it could mean transferring about 226,000 apartments into public hands if enacted - including those of Deutsche Wohnen, which owns more than 100,000 units in Berlin.

The local vote, which applies to property companies that own more than 3,000 rental units, underscores the growing divide between people feeling squeezed out of an increasingly expensive rental market and those who want to maintain Berlin as a hub that attracts companies, capital and housing investment.

"It's not a good signal for Germany as a place for investment," said Roman Heidrich, a director of residential valuation at real-estate agency JLL Germany. "Most likely, it could lead to an immediate halt to most investment and modernisation plans."

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Supporters argue that the government is better suited to keep a lid on rising housing costs.

Joanna Kusiak, a spokeswoman for the referendum organisers, said the vote puts pressure on politicians to carry out the measure. "We Berliners have decided that no one must be allowed to speculate with our apartments," she said in a statement.

Since the fall of the Berlin Wall more than 30 years ago, the once-divided capital has morphed from frontier city in the former communist east into a thriving metropolis attracting companies that offer high-paying jobs. Rents have shot up over the years, complicating the lives of many in a city where 84 per cent of the population are tenants. Berlin has estimated that the city needs 20,000 new homes annually to accommodate the growing population.

Vonovia said on Monday that while the referendum is a sign that the situation on the Berlin housing market needs to change, expropriation would only make things worse. "Not a single new apartment would be created and investments in modernisation would come to a halt," the landlord said in a statement.

Vonovia and Deutsche Wohnen earlier this month agreed to sell 14,750 apartments to Berlin as part of their effort to merge.

With turnout running at 75 per cent, the vote coincided with elections for Germany's Parliament and Berlin's city government. The Social Democrats pulled ahead of the Greens in local elections in Berlin as of early Monday, meaning they'll get a chance to appoint the next mayor in the country's most populous city.

While the SPD hasn't come out in favour of expropriation, the party will struggle to ignore the voices of hundreds of thousands of voters.

Paying for a transfer of ownership is also a contentious issue. Proponents of the referendum argue that the government can shoulder the burden of reimbursing real-estate companies.

Opponents say the cost to implement this measure would be vast - between 29 billion euros (S$46 billion) and 39 billion euros, funds that should be made available for other projects.

Berlin has had mixed results trying to put a lid on rental prices. BLOOMBERG