Berlin coalition talks advance plan to take 160,000 apartments into public ownership

Berlin's Left Party, Greens and Social Democrats have agreed in principle to transfer roughly 160,000 privately owned apartments into public hands, according to a joint exploratory paper drawn up as the three parties negotiate a possible coalition government. The move would mark the first large-scale socialization of housing stock carried out by a German state.

Under the plan, compensation paid to the affected property companies would be capped at 16 billion euros. The money would be raised through loans and repaid over time using rental income from the properties once they pass into state ownership.

The measure would apply only to private companies holding at least 10,000 apartments in Berlin. Five firms currently meet that threshold. Each would be allowed to keep a base portfolio of 10,000 units rather than losing its entire Berlin holdings.

Housing cooperatives and companies organized around nonprofit or public-interest principles would be excluded from the policy. Apartments built since 2021, or currently under construction, would also fall outside its scope.

The real estate company Vonovia would be the most affected by far, with roughly 130,000 apartments in Berlin potentially subject to transfer under the plan.

Officials from the three parties have set a timeline that stretches years into the future. A draft law is expected by mid-2028, and even after parliamentary approval the legislation would not take effect until a year later. The policy is also expected to face legal challenges, with a review by Germany's Constitutional Court considered likely and lawsuits from the housing industry anticipated.

The Left Party has long argued that expanding the city's stock of publicly owned apartments would give Berlin greater leverage over rents citywide. Party officials contend that keeping rents low on state-owned units has a moderating effect on the broader rental market, since those rents feed into the city's official rent index, a benchmark used to calculate typical local rents and to set legal limits on how much landlords can raise rents elsewhere.

The proposal has drawn criticism from economists and industry representatives, who raise several objections. Critics argue the policy would not add a single new apartment to the city's housing supply, since it only redistributes ownership of existing buildings rather than funding new construction.

Opponents also warn that the policy could deter investment in new housing development at a time when Berlin, like many German cities, faces a shortage of affordable units. They further argue the plan would be prohibitively expensive for the city and question whether it could survive constitutional scrutiny.

Jens Tockmitt, managing director of the Association of German Pfandbrief Banks, an industry group representing mortgage bond lenders, said the proposal would damage investor confidence well beyond the housing sector. "Damit wird Vertrauen zerstört. Investoren werden sich verabschieden," he said, meaning that trust would be destroyed and investors would withdraw.

Tockmitt argued that the consequences would not stay confined to Berlin or to residential property. He said the policy would set a precedent whose effects could ripple into other real estate segments and into the financing of infrastructure projects more broadly.

The three parties have not yet finalized a coalition agreement, and the socialization proposal remains part of ongoing exploratory talks rather than settled policy. Even if adopted, the extended timeline for drafting and implementing the law means any transfer of apartments into public ownership would not take place for several years, leaving open the possibility of legal or political obstacles along the way.

Berlin voters previously backed a nonbinding 2021 referendum calling for the expropriation of large private landlords, though that vote did not carry the force of law and required follow-up legislation to take effect. The current exploratory paper represents the clearest step yet toward turning that referendum result into an actual government policy.