The Berliners have a lot to decide on September 26, the date of the momentous general elections from which Angela Merkel's successor will emerge. They will vote for the members of the Bundestag, for the next mayor of Berlin, for the representatives of the 12 districts of the German capital and they will still find a fourth ballot, that of a referendum that has the largest real estate companies in the country on edge: do they want us to Berlin government expropriate 240,000 homes from large homeowners? The question is explosive, and its consequences can also be for whoever wins the elections. Although the consultation is not binding, it will force a heated political debate on rising rents and rampant speculation in the real estate market.

If Germany is a country of tenants —more than half of the population lives for rent, the second highest percentage in the OECD—, its capital is probably a record: more than 85% of Berliners do not own the apartment in which they live. In the last five years, prices have risen by 43% and for low- and middle-income residents it is becoming increasingly difficult to live in central districts. The tenants accuse the big real estate companies – the initiative only affects those with more than 3,000 flats – of making a profit by increasing rents and reducing the maintenance of their properties.

Ingrid Hoffmann has spent years managing one of these companies. She moved into one of the typical East Berlin prefabricated buildings 20 years ago. At that time, she belonged to a cooperative that had just reformed it. She invested in improving the flats, hired maintenance personnel and charged reasonable rents in neighborhoods that are now highly valued. But she went bankrupt. From those years is the famous phrase of the then mayor who described Berlin as "poor but sexy". The city, drowning in debt, saw no other solution than to sell public housing. The 65,000 of the public company GSW were bought by Deutsche Wohnen, a real estate giant that almost doubled its portfolio of flats overnight. Today it has more than 100,000 in the German capital. One of them is Hoffmann's, which is why she asks to use an assumed name in this report.

“One of the first things the new owner did was double the community expenses,” explains this 71-year-old retiree. At the same time, she reduced services. For example, the company eliminated the figure of the hausmeister, an employee who was in charge of small repairs in the buildings. Then came the rent increases and Hoffmann's €1,200 pension began to fall short. “After paying rent and bills, I didn't have much left to live on. It was very fair and I did not want to throw away savings, ”she recalls. So she looked for one of the jobs for a few hours, known as minijobs, which have proliferated in recent years, both among young people and among pensioners seeking to improve their income. One of those jobs, which cost 450 euros a month, was delivering food by bicycle – “it was electric”, she specifies – for a well-known home delivery company during a winter when she was 69 years old.

Hoffmann has been very involved in the initiative Expropriate Deutsche Wohnen and company, born in 2018 and which has collected the necessary signatures to hold the referendum (they must be at least 7% of the electorate, according to Berlin law). He doesn't want to make predictions, but polls suggest that almost half of the city's inhabitants are in favor of returning the houses to public management.

The legal basis for the consultation is article 15 of the German Basic Law, which reads: “For socialization purposes, land, natural resources and the means of production may be placed under a regime of collective property […] by a law that establishes the manner and amount of compensation. An article that has never been used since the approval of this legal text in 1949.

Berlin would have to pay a "fair" price to real estate groups, something that critics of the measure brand as one of the biggest problems. The city is still in debt. "Mass evictions don't create a single new apartment and they don't reduce rent, but they cost taxpayers billions," said conservative mayoral candidate Kai Wegner. The Social Democrats don't support yes in the referendum either: they say it would be the last resort. The Greens maintain an ambiguous position and only Die Linke, the party to the left of the Social Democrats, is in favour. The initiative has recovered a word, expropriation, which was thought to have been forgotten since the end of the communist regime. Entrepreneurs speak of "populism" and the violation of private property.

"The money does not have to come from the Berlin budget," says Reiner Wild, spokesman for the Tenants' Association. The city would create a public law entity that would request financing from banks with the value of the land and flats as collateral and would also have monthly rental income. Many figures are used about what the expropriation would cost: the Government of Berlin has calculated 36,000 million euros; activists, between 8,000 and 11,000 million, and a recent study by two scientists speaks of a range of between 14,500 and 22,800 million.

“We don't want to be like London or Paris in 10 years. The time to act is now”, says Hoffmann, who foresees harsh political clashes in the new government that comes out of the polls on September 26. Affordable housing is one of the themes of the national campaign. The protests have directed the focus towards the combative German capital, but other cities, such as Munich or Hamburg, suffer even more from real estate speculation. "We have to make sure that we Berliners can continue to live in Berlin, that nobody has to leave the city because they can't pay the rent."

A failed attempt to control prices

Social pressure demanding affordable housing in Berlin forced Berlin politicians to act in 2019. The coalition government of Social Democrats (SPD), Greens and Die Linke approved rental price ceilings (depending on the year of construction and the reforms of the property) and its freezing for five years. Last April, the German Constitutional Court struck down the law, considering that the regional Parliament was not competent to regulate income by law. Berlin has a serious supply problem, explains Wild. “One of the reasons for the high demand is the massive immigration of more than 200,000 people between 2015 and 2019, a period in which only 63,000 flats were built, and most of them were high-priced. There is a shortage of ready-to-build land, land prices are extremely high, there is speculative retention of lots, and a lack of capacity in the construction sector and in the authorities. New developments need transportation routes, tram or metro connection, and that takes time,” he notes.