Four old people — I assume they were two couples — were out for a Sunday afternoon stroll. As they approached, I tried to smile, holding my flyers and my petition. They did their best to avoid eye contact. And who can blame them? I hate it when people want my attention for some random cause. I said this is against high rents, and they kept walking. They were almost out of range when I added “expropriate Deutsche Wohnen.”
“Deutsche Wohnen?” One of the old people came back. Now I started talking rapidly about how we needed to take these big landlords and put them into public ownership. Before I could finish my pitch, she was signing. “Come over here!” she yelled to her friends. “It’s against Deutsche Wohnen!” Their buildings had been taken over by that conglomerate years ago. Since then, rents shot up while maintenance dropped to an absolute minimum.
Thousands of activists are having this same experience all around Berlin these days. The widespread hatred for the big landlords explains with the campaign to expropriate them, Deutsche Wohnen & Co. enteignen, managed to get well over 100,000 signatures in the middle of a pandemic. Since this is Berlin city administration we are talking about, there is no way to sign the petition online — it has to be pen on paper.
Berliners might be wary of “radical” proposals like socialising private companies. But rent increases in the city have themselves gotten so “radical” that people are open to any solution. Would public housing be better? “Just look at the disaster when the Berlin Senate tried to build an airport! Do you want the same people running hundreds of thousands of apartments?” That’s what some people are wondering.
This reminds me of the absurd discussions about healthcare in the U.S.: “Do you want government bureaucrats making decisions about your health?” Well, if the alternative is capitalist bureaucrats making those decisions, with the aim of maximising their profits, then…yes? Deutsche Wohnen is also a huge bureaucracy, but one that has few obligations to its renters and no hint of democratic control.
The Tagesspiegel published a guest essay claiming this measure would violate Berlin’s constitution. The next day, they admitted that the piece had been written by a lawyer whose firm had represented Deutsche Wohnen.
What would socialised housing look like? Will all of Berlin’s apartments transform, Cindarella-style, into grey Soviet-style blocks? To answer this question, Deutsche Wohnen & Co. enteignen has written a draft law. This is what “socialisation,” carried out according to Article 15 of the German constitution, could look like in practice. The proposal is 21 pages of dense legalese. So let me try to cover the highlights.
Berlin would first make a list of every company that owns more than 3,000 housing units on a specific date. This includes companies that have broken up their holdings into countless murky shell companies, which would have to reveal what they own or face high fines. Estimates are that about 10 companies with 240,000 apartments total fall into this category.
This would not apply to either public or cooperative housing companies, as only profit-oriented companies would be socialised. At the moment, the CDU and other opponents of the campaign are claiming that cooperatives or even individual homes would also be nationalised. It doesn’t seem like they have much faith in their arguments if they have to shamelessly distort what is being proposed.
All these apartments would go through Vergesellschaftung (socialisation). They would become part of a public company named “Gemeingut Wohnen” (roughly: Commons for Living).
How much will it cost? The constitution guarantees compensation in the case of socialisation: “Such compensation shall be determined by establishing an equitable balance between the public interest and the interests of those affected.”
So it comes down to what is “equitable.” The senate, which is basically opposed to the measure, claims it would cost €28 billion. Others claim as much as €36 billion. But this is based on fantastical speculative prices, and is much more than Deutsche Wohnen & Co. paid to acquire the properties. And as you can see, the constitution says nothing about “market prices.” The campaign made a calculation about how much the properties would be worth if the rents were affordable. They think compensation should be just €10 billion. This would be an “equitable balance” between the companies, who want as much money as possible, and the vast majority of Berliners, who need affordable rents.
According to this draft law, the companies should not just get a big pile of cash up front. Rather, they would get compensation from bonds from the new public company, to be paid out after 40 years. Thus, rents would pay for the costs of compensation, without costing a pfennig to the Berlin budget.
Right now, the private companies are sucking rents out of the city like giant vacuums. Money goes into the pockets of Blackrock investors or into tax havens in the Caribbean. If the housing becomes public, that money can be invested in maintenance, lowering rents, and the construction of new housing.
Are there any good arguments for letting huge corporations buy up Berlin’s housing stock and constantly raise prices? The Tagesspiegel published a guest essay claiming this measure would violate Berlin’s constitution. The next day, they admitted that the piece had been written by a lawyer whose firm had represented Deutsche Wohnen. Just about every independent legal expert — including the Research Service of the German Bundestag — agrees this is completely constitutional. Check out the constitution yourself.
If it were up to me, of course, Deutsche Wohnen would get exactly €0 in compensation. If they keep raising rents and radicalising people, I can promise that the next campaign will be run by communists like me. I can say that I have spent almost 20 years in Berlin trying to convince people to expropriate capital. And I have never gotten the enthusiastic response I have gotten now. So just keep it up, Deutsche Wohnen. You might be able to press a few more euros out of people now — but this extortion will end sooner than you think.
Red Flag is a weekly political column by Nathaniel Flakin.