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Berlin voted for the city to seize apartments owned by developers to lower rent costs

MARY LOUISE KELLY, HOST:

As Germany's chancellor, Angela Merkel, prepares to leave office, the country's new government plans to make affordable housing a centerpiece of its agenda. Berlin is already taking the lead. This fall, residents voted to have the city seize nearly a quarter of a million apartments owned by the region's largest real estate developers. It's part of an effort to bring down rents in one of Europe's hottest markets. NPR's Rob Schmitz reports.

ROB SCHMITZ, BYLINE: So let's say you're renting an apartment, and your radiator stops working in the middle of a freezing winter. Normally, you'd call your landlord. But in Berlin, hundreds of thousands of renters have to call a hotline.

MEL: You just have to wait and keep calling. But every single time you call the hotline, you are talking to someone else. And in the end, they were asking me, oh, is the radiator leaking? Is there water or whatever? And I was like, no, but it doesn't work, and it's winter. And they're like, well, then it's not an emergency.

SCHMITZ: Mel (ph), a renter who only gives her first name for fear of retribution, lives in a one-bedroom apartment owned by Deutsche Wohnen, one of Europe's largest property companies. Mel says the company kept her in voicemail hell for days, leaving her freezing in her apartment. It was only after she posted her plea on social media when Deutsche Wohnen finally responded.

MEL: You just don't feel appreciated as a tenant anymore. You don't even feel appreciated as a human anymore. You're just a number and you're a value to this company, and they just see how much more they can profit off of you.

SCHMITZ: Tenant frustration in Berlin is boiling over. Eight out of 10 city residents are renters, and their rent has increased by 42% in the past five years, faster than any city in Germany. The city's growing fast, too. An average of 40,000 people have moved here each year for the past 10 years.

Property companies like Deutsche Wohnen have profited from this, buying nearly $50 billion in large-scale real estate development since 2007, more than London and Paris combined. And this explains why, in September, 56% of Berlin voters ticked yes on a referendum titled Expropriate Deutsche Wohnen, which tasks the city to seize property from any company that owns more than 3,000 apartments in Berlin.

THOMAS MCGATH: For us, that's, like, a clear mandate that something radical has to happen in terms of the housing market.

SCHMITZ: Thomas McGath, a spokesperson for the group that organized the referendum, says these big companies are speculating on property values rather than providing decent housing for Berliners.

MCGATH: People are fed up with the current situation. They're tired of showing up to apartment viewings with 100 people and having to fight tooth and nail for any kind of chance. Our referendum is not the only solution to Berlin's housing market woes, but it would undo around 20 years of privatization and speculation. It would bring around 250,000 apartments out of the speculation kind of circuit.

(SOUNDBITE OF SIREN)

SCHMITZ: McGath meets me at a Berlin landmark - the Horseshoe Estate, a social housing project built by Berlin in the 1920s shaped like a horseshoe surrounding a pond and a park. It was designed by Bruno Taut, one of Germany's most renowned architects, and is a UNESCO World Heritage Site thanks in part to its vision of affordable, state-owned housing. After Berlin went bankrupt 20 years ago, the city sold it to Deutsche Wohnen.

MCGATH: So for me, this is - it's a metaphor, and it's really a illustration of everything that's gone wrong with housing across the world.

SCHMITZ: Deutsche Wohnen refused an interview request. In a statement, the company wrote, real solutions can only be found if all parties work together. We are willing to play an active role in finding solutions from which Berliners will benefit. Berlin real estate lawyer Jakob Hans Hien says the proposed solution of expropriating hundreds of thousands of apartments in the manner the referendum demands is not possible under German law.

JAKOB HANS HIEN: (Through interpreter) It's not compatible with the constitution, and this legal opinion is shared by many other experts. Apart from the legal issue, the immense practical and financial hurdles are insurmountable. So what the referendum is demanding is neither legal nor feasible.

SCHMITZ: And many economists say expropriating this many apartments will likely make Berlin's housing shortage worse. Marcel Fratzscher is the president of the German Institute for Economic Research.

MARCEL FRATZSCHER: No matter what, the government would have to compensate financially the current owners whom they are expropriating. And that's additional money, probably around about 30 billion euros, that the government then will not have to invest in constructing additional social housing.

SCHMITZ: Sure, says Fratzscher, those lucky enough to live in the expropriated apartments will benefit from lower rents, but everyone else will pay the price for it. The city's prospective mayor, Franziska Giffey, has ruled out expropriation, saying Berlin could never afford it, but says she'll respect the intention of the referendum. Fratzscher says a reasonable solution would be for the city to allow more construction to build more housing. But he says that solution is problematic too because construction companies in Berlin can't find enough workers.

Rob Schmitz, NPR News, Berlin. Transcript provided by NPR, Copyright NPR.