240,000 homes to be expropriated: Die Linke has big plans after victory in Berlin
Berlin will most likely get a mayor from Die Linke for the first time. The socialist party won the state elections last week and wants to form a coalition with the Greens and the SPD. Die Linke campaigned with a striking promise in the fight against high rents: the expropriation of large real estate companies.
The plan is to bring companies with more than 3,000 homes under the control of the city. In total, this concerns 240,000 homes, which will be placed in a new organization. Together with the existing social rental homes, the city will then have control over 30 percent of the rental market.
Rents will be frozen or even lowered because no profit will be made anymore. This also affects the private rental sector, because contracts are linked to a rent index based on the average of a neighborhood.
Die Linke wants to pay the expropriated companies compensation that is much lower than the market value. According to the Berlin audit office, this is possible but also involves great legal risks. The party estimates the amount at 10 to 17 billion euros. This will be paid from loans, which will be repaid over decades with rental income.
Moldy home
It was in Berlin, where 84 percent are renters, for many the reason to vote for Die Linke. "It will take a long time, but I am hopeful," says Daniel Ahl in his flat in the Kreuzberg district. The electricity has just gone out due to a leak. "I have lived here since 2019 and this is already the sixth time."
Ahl rents from Vonovia, with 130,000 homes the largest landlord in Berlin, and is very dissatisfied. "Instead of replacing rotten pipes, they let it leak so that it eventually becomes an insurance issue for the tenant." Contacting the multinational is hardly possible, he says.
He hopes his house will be renovated once Vonovia is expropriated. "Last year the company paid out 1 billion in dividends to shareholders. That money could be better spent on the tenants."
Expropriation is not radical, Ahl thinks, because the company "violates human rights" by letting tenants live in moldy homes.
Criticism
Economists are skeptical about the plan. Housing market researcher Konstantin Kholodilin from think tank DIW calls it an expensive and risky operation. He estimates the costs higher, at around 50 billion. "If you want to lower rents, it is questionable whether the loan can be repaid." The city must guarantee, so the bill could ultimately fall on the citizen.
Furthermore, it will scare off investors. "It will no longer be very attractive to invest in Berlin, while the city needs 20,000 new homes per year," says Kholodilin. "Expropriation will not add a single home, but will add a mountain of debt."
Federal Chancellor Merz wants to block the expropriations at the federal level, he announced a day after the Berlin elections. The Social Democratic SPD, with whom Die Linke wants to govern, is also against it. For the socialists, however, it is a breaking point in the coalition negotiations.
Accusations of antisemitism
Die Linke is struggling with another issue that stands in the way of coalition formation. It concerns statements by supporters that opponents see as antisemitic. These include texts like 'death to the Israeli army' and 'yallah, yallah, intifada.' In German politics and media, a very broad definition of antisemitism is used, which also includes criticism of Israel.
Politicians from the SPD and the Greens want Die Linke to tackle antisemitism within the party. The party leadership has meanwhile sidelined several members.
The expropriations have a long history. At the beginning of this century, the then left-wing city government sold tens of thousands of homes out of financial necessity. This way, a handful of companies suddenly gained a part of the rental market.
In 2021, a majority of Berliners voted in a referendum for expropriating these companies, but it was not carried out.
The Berlin tenants' association doubts the feasibility and suggests alternatives. "Think of forcing private landlords to rent a share of homes as social housing," says Sebastian Bartels of the Mieterverein. More staff is also needed to tackle abuses. "We see countless violations of rental rules, but they are not addressed."
Tenant Daniel Ahl mainly wants his home to be habitable again. A technician will come in two days; until then he sits in the dark. Meanwhile, he fears the next rent increase. "Leaving is not an option, then I would have to move to the city outskirts. And this neighborhood is my home."