Sep

WARNING: Plans to nationalise Berlin rental market to have ‘global effect’

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Berliners have voted to forcibly buy housing owned by large property companies in the German capital in a bid to combat rising rents.

While delegates at the Labour conference have been debating rent controls in Brighton, Berlin tried and failed to establish a rent cap in January 2020 – but this step is an even more dramatic approach.

If approved, Berliners’ vote to take public ownership of private property could have ‘worldwide ramifications’ and set a precedent for similar initiatives worldwide.

The non-binding referendum, which got 56% support, would mean the local government would buy 11% of the city’s properties to make housing more affordable by transferring about 226,000 apartments into public hands.

The proposal applies to property companies that have more than 3,000 rental units, however Deutsche Wohnen, which owns more than 100,000 units in the city, says it doesn’t expect the transfer will happen, and that such a move would be ‘unconstitutional’.

Tied up

The firm says: “Funds and resources would be tied up for decades in compensation payments and thus be lost to the construction of urgently needed housing and further investments in the infrastructure of the growing city.”

More than 84% of the population of Berlin are tenants and are paid an average salary lower than other major cities, yet rental prices have increased markedly in recent years.

The neighbourhood of Mitte is the second most unaffordable neighbourhood in Germany, according to estate agent Homeday.de, where someone earning the average salary would need to spend 61% of their net income on rent.

It says a rental burden of more than 40% of the household income is defined as financial overload, meaning that the average earner is priced out of 17 out of 19 Berlin neighbourhoods.

View Full Article: WARNING: Plans to nationalise Berlin rental market to have ‘global effect’