The referendum on socializing large housing corporations in Berlin won with over one million votes in September 2021. Three years later, there is no sign of implementation. A current analysis examines the political blockades and shows what effects the failure to implement the measure has on the rental market of the capital.
Referendum with clear result
On September 26, 2021, 59.1 percent of Berlin voters voted in favor of expropriating housing companies with more than 3,000 apartments. Deutsche Wohnen and other large corporations were to be socialized. The referendum was not legally binding, but politically obligated the Senate to take action. Specifically, around 240,000 apartments were affected that should be transferred to public ownership.
The initiative "Deutsche Wohnen & Co. enteignen" argued with rising rents and displacement. In the years before the referendum, advertised rents in Berlin had sometimes doubled. Large housing corporations were suspected of maximizing returns at the expense of tenants through aggressive rent increases and modernization measures. The referendum was intended to counteract this trend.
Political blockades since 2021
After the election victory, the Senate of SPD, Greens and Left appointed an expert commission. It was to examine the legal feasibility and costs of socialization. The commission presented its report in June 2023—two years after the referendum. The expert opinion concluded that socialization under Article 15 of the Basic Law would in principle be possible, but identified high legal hurdles.
The commission estimated the costs of compensation payments at 29 to 36 billion euros. This sum far exceeds the Berlin state budget. The city would have to take on correspondingly high debt or develop alternative financing models. The SPD used these figures to warn against implementation. After the 2023 state election, a new coalition of CDU and SPD was formed, which definitively shelved the referendum.
Constitutional legal debate
At the center of the legal dispute is Article 15 of the Basic Law. It permits the socialization of land and soil for compensation. The norm has never been applied since the Federal Republic existed. Legal scholars disagree on whether Berlin's plans would be constitutional. Critics point to property protection under Article 14 of the Basic Law and expect years of court proceedings.
Supporters argue that Article 15 was deliberately anchored in the Basic Law as a tool against monopoly formation. The concentration of housing property among a few corporations justifies its application in their view. In fact, the Vonovia Group alone, to which Deutsche Wohnen has belonged since 2022, owns around 165,000 apartments in Berlin. This corresponds to about nine percent of the entire rental housing stock in the capital.
Effects on the Berlin housing market
While the political debate continues, the housing market continues to change. Rents in Berlin have risen by an average of 12 to 15 percent between 2021 and 2024, depending on the district. The rent price brake has only limited effect. At the same time, new construction has declined significantly. In 2023, only 12,000 apartments were completed in Berlin, 30 percent less than the previous year.
The failure to implement the referendum has paradoxical effects. Large housing corporations are investing little in Berlin because they anticipate regulatory risks. At the same time, public funds are lacking for social housing construction because the city does not want to concentrate its investment capacity on purchasing private stock. The result is a supply gap that further drives rental price development.
Strategies of housing corporations
Deutsche Wohnen and other affected companies have adjusted their Berlin strategy. Vonovia announced in 2023 that it will not expand its Berlin portfolio further. Instead, the corporation is focusing on other metropolitan regions. Modernization investments in Berlin have been scaled back. This leads in the medium term to a backlog of repairs that affects housing quality and jeopardizes energy goals.
Smaller housing companies with portfolios just below the 3,000-apartment threshold sometimes benefit from the uncertainty. They can purchase portfolios that larger corporations are divesting. This leads to fragmentation of the market but makes city-wide modernization strategies and sustainability goals more difficult.
Alternative solutions
Faced with the blockade, experts are discussing alternatives to socialization. One model is the gradual buyback of apartments by state-owned companies. The city's housing corporations Degewo, Gewobag and others could strategically purchase portfolios. This would be legally unproblematic but also costs billions and takes decades.
A second approach focuses on stricter regulation instead of expropriation. Rent caps, stricter modernization surcharges and right of first refusal could dampen the return expectations of private landlords without interfering with property rights. Vienna is often cited as an example: there, 60 percent of apartments are owned by the city or non-profit cooperatives. Rents are significantly below Berlin levels. However, this system was built up over decades and cannot be copied in the short term.
Role of federal politics
The Berlin debate has nationwide implications. Other cities with tight housing markets are watching closely. Hamburg, Munich and Cologne have similar problems with rent increases and housing shortages. A successful implementation of the Berlin referendum could find imitators. Failure, on the other hand, strengthens the position of those who rely on new construction and market solutions.
The federal government has so far taken no clear position. The Building Ministry under SPD leadership signaled understanding for Berlin's concerns but warned of constitutional risks. The FDP categorically rejects expropriations. This blockade at the federal level makes a solution more difficult, as Berlin may need federal legislative changes to implement the measure.
Social consequences of non-implementation
The failure to implement the referendum damages trust in direct democracy. Over one million Berliners had participated and voted in favor of socialization. That politics is factually ignoring this mandate three years later leads to frustration. Polls show that 67 percent of Berliners are dissatisfied with the Senate's housing policy.
The initiative "Deutsche Wohnen & Co. enteignen" announced legal action. It is examining a constitutional complaint to enforce the implementation obligation. In parallel, it continues to organize protests and tenant consultations. The movement has become more professional and is networking nationwide with tenant initiatives. The housing question thus remains a central political issue in Berlin.
Outlook and perspectives
Implementation of the referendum in its original form is unlikely under the current government. The CDU rejects expropriations, the SPD is divided. At the earliest, after the next state election in 2026, the political constellation could change. Until then, the Berlin rental market will remain under pressure.
Compromise solutions are more realistic. An obligation for large landlords to invest in energy-efficient renovation, social housing construction, or rent price caps could find political majorities. Non-profit models are also being discussed in which housing corporations renounce profit maximization in exchange for tax benefits. Whether such models will meet the expectations of referendum supporters is questionable.
The Berlin blockade shows fundamental limits of direct democracy in Germany. Referendums can reflect moods but cannot solve complex legal and financial questions. The housing question requires long-term strategies that go beyond legislative periods. Whether Berlin finds a way here not only decides the future of the rental market in the capital but shapes the housing policy debate throughout Germany.
