Berlin Faces Expropriation Vote: What Happens If The People Say 'Yes'?

With a purple-yellow colour scheme and multilingual slogans, the posters calling for a "yes" vote in Berlin's upcoming property referendum are hard to miss.

"So that Berlin remains our home" is printed in various languages. In the bottom corner of each poster is the logo of the group behind the campaign: "DW and Co. Enteignen" (Expropriate Deutsche Wohnen and Company).

They want voters to back their appeal for the Berlin Senate to devise a law which would allow for the expropriation of what they call "private" real estate companies, specifically those that own more than 3,000 housing units. The campaigners say the companies would be compensated at a rate "well below market value."

They believe such legislation would be constitutionally compatible with Germany's Basic Law under the never-before-used Article 15, which states: "Land, natural resources and means of production may, for the purpose of nationalization, be transferred to public ownership or other forms of public enterprise by a law that determines the nature and extent of compensation."

Deutsche Wohnen, which owns around 113,000 housing units in the city, is clearly the main target. But plenty of other companies would be affected, such as Vonovia (which is currently trying to buy Deutsche Wohnen) and the Pears Group.

On September 26 — the same day as Germany's federal election — Berliners will vote on the radical proposal. To get that far, the organizers had to collect 175,000 valid, handwritten and fully verified signatures of citizens eligible to vote in Berlin.

They achieved that within a few months, a reflection of the strength of views in the city around its escalating housing crisis. Recent polls suggest a slim majority of eligible voters in the capital support an expropriation law.

Legal questions

The question of what would happen in the event of a yes vote is complicated on the legal side. In September 2019, organizers passed a key stage when the Berlin House of Representatives' legal advisers said the proposal was compatible with the aforementioned Article 15.

Some lawyers agree with the assessment, others differ. Were the Berlin Senate to pass an expropriation law, it would almost certainly be subject to various court challenges. In April 2021, Germany's Federal Constitutional Court overturned the Berlin state government's decision to impose a five-year rent cap in the city.

Jakob Hans Hien, a lawyer at Knauthe, one of Berlin's leading real estate law firms, believes an expropriation law would not be applicable in Berlin. He says that the target of hitting companies or individuals only with 3,000 apartments or more has no objective basis.

He also foresees a major issue with the question of compensation. "Compensation 'well below the market value' would be unconstitutional," he told DW. "Otherwise the companies would not only be deprived of their property, but would also suffer direct economic damage. The state must not enrich itself through expropriation."

Should the proposal pass, he thinks it more likely that the Senate will use the poll as leverage to gain concessions from landlords, rather than turn it into law. If a law were actually prepared, he believes the federal government would come under pressure to enact their own law to override it while he foresees a multitude of other legal hurdles.

"Since the property would be expropriated, not the entire company, an individual lawsuit would be possible for each property," he said. "In addition, lawsuits would be directed against the law as such. In addition to the lawsuits against the expropriation and against the amount of compensation, claims for damages would probably also be brought against the city."

A political minefield

As treacherous as the legal front is, the political side may be even more so. As well as requiring a simple majority, the proposal will also need at least 25% of all eligible voters to vote yes.

That means around 625,000 yes votes are needed. In 2013, a referendum which proposed the renationalization of the electricity grid in Berlin saw a huge 83% vote in favor. However, the total amount of "yes" votes cast amounted to 24.2% of total voters, falling narrowly short of the 25% threshold.

Even if a yes vote cleared all those hurdles, the referendum is not legally binding in any way and the proposal would only become law if the ruling parties in the Berlin Senate choose to make it so.

Berlin is currently ruled by a left-leaning coalition of the SPD, the Greens and The Left Party. They are sharply divided on the proposal. The far-left Left Party strongly supports it while the Greens have given mixed signals. The SPD, which is likely to remain the biggest party in Berlin after the election, is opposed, as are all major opposition parties.

Franziska Giffey, SPD candidate for Berlin mayor, has spoken strongly against the idea. "For me the subject of expropriation is already a red line. I don't want to live in a city that sends the signal: This is where expropriation is taking place," she said recently.

The ruling coalition's official position on the proposal points out that an expropriation bill would require at least 226,000 housing units in Berlin to be taken into public ownership. "This can only be achieved through a politically and legally controversial socialization law, which would have far-reaching significance and would be new legal territory," it said.

"Hardly anyone believes that a law will really be passed," says Hien, of his firm's clients. "Legally and practically, this would simply not be feasible." But he says there are plenty of worries about the other consequences of a "yes" vote and how it will affect the housing market in the city.

"The frustration and disappointment will be very great if, after the rent cap, this 'solution' also turns out to be pie in the sky. The mood in the city will get even worse."

The organizers obviously disagree. They believe their proposal can "end the housing crisis" and "rescue Berlin". Clearly though, the vote on September 26 will not be the final say, regardless of how many agree with them.