(de-news.net) – intends to transfer over 160,000 flats owned by major real estate businesses into public control is increased by a debate over housing affordability, investor confidence, and constitutional constraints as Berlin is forming its projected coalition of the Left Party, Greens, and Social Democratic Party (SPD). Industry representatives and the Federal Government warn of possible legal and economic repercussions, while advocates stress democratic legitimacy and tenant protection. Stronger enforcement against exorbitant rents, rent regulation, and construction targets are additional topics of discussion.

The Left Party, Greens, and SPD have agreed on a preliminary framework for bringing large residential property portfolios into public ownership as part of exploratory talks on forming a coalition government in Berlin. The proposal has drawn criticism from construction industry representatives, economists, and real estate companies, highlighting divisions over how to address housing affordability while maintaining investment incentives. Under the plan, approximately 160,000 apartments would be removed from market-based allocation, with private landlords owning more than 10,000 units subject to the measure. Companies would retain their first 10,000 apartments, while housing cooperatives, public-interest organizations, and apartments completed after January 1, 2021, would be exempt. The parties intend to introduce legislation by mid-2028 under Article 15 of Germany’s Basic Law, which permits land, natural resources, and means of production to be transferred into public ownership or other forms of public economy through legislation specifying compensation.

Construction industry warns of investment risks

The German Construction Industry Association has strongly opposed the proposal, arguing that transferring existing housing into public ownership would neither increase construction nor encourage renovation. Tim-Oliver Müller, the association’s chief executive, warned that the plans could discourage development and weaken Germany’s reputation among international investors. He called instead for a second major acceleration of construction reform, extending beyond the simplification of planning and permitting procedures to address broader obstacles to building. Economist Michael Voigtländer of the German Economic Institute in Cologne likewise warned that the initiative could damage both Berlin’s economic prospects and Germany’s wider investment environment. He estimated the market value of the affected apartments at approximately 25 billion euros, compared with the 16 billion euros reportedly available for compensation, arguing that the gap could send a negative signal to investors.

Vonovia, one of Germany’s largest residential property companies, has challenged the legal basis of the proposal, maintaining that it would be unconstitutional and unlikely to survive judicial review. The company argued that overcoming the housing shortage would require substantial private investment supported by legal certainty and a stable investment environment. Vonovia reported an average rent of 8.26 euros per square meter across its Berlin portfolio and said approximately 1,000 housing units were currently under construction. The dispute reflects competing approaches to the housing shortage: transferring existing properties into public ownership or relying on private investment to expand and maintain the housing supply.

Federal investment protection bill remains under discussion

The coalition negotiations have also exposed divisions over the Federal Government’s response to Berlin’s 2021 referendum, in which approximately 59 percent of voters supported bringing major property companies’ housing into public ownership. Heidi Reichinnek, parliamentary leader of the Left Party, criticized Construction Minister Verena Hubertz (SPD) for proposing federal legislation to prevent such measures. Reichinnek argued that the government should prioritize tenants struggling with housing shortages and rising rents rather than protect investment funds and wealthy property owners. Luigi Pantisano, the Left Party’s leader, similarly accused the SPD of undermining the referendum’s democratic mandate by defending real estate interests. Both politicians rejected the argument that the proposal would fail to create new housing, emphasizing instead the immediate objectives of improving affordability and restoring public control over existing apartments.

Hubertz’s proposed investment protection law is still being coordinated within the Federal Government. An Interior Ministry spokesperson said the initiative was being handled jointly with the Justice and Construction ministries, although no draft legislation had yet been prepared. In July, the government agreed to pursue measures intended to prevent the transfer of rental housing into public ownership, amid concerns, particularly within the conservative bloc, that the Berlin initiative could damage Germany’s economic competitiveness. The legal basis for such a prohibition nevertheless remains contested. Although Article 15 of the Basic Law permits such transfers under specified conditions, the Federal Government’s authority to prohibit measures at the state level depends on constitutional rules governing concurrent legislation. Legal experts have questioned whether a law that simply prohibits the practice would be permissible, suggesting that any restriction might instead need to serve a substantive policy objective, such as expanding the housing supply or facilitating homeownership.

Prospective coalition outlines additional housing, environmental measures

Beyond the dispute over property ownership, the prospective Berlin coalition has outlined a broader housing and environmental agenda. Its proposals include stricter rent supervision, a rent cap for state-owned housing companies, and a construction program targeting 100,000 apartments. The parties also intend to examine whether vacant office buildings could be converted into residential properties, while requiring landlords to invest in their buildings and provide social housing. Werner Graf, parliamentary leader of the Greens in Berlin’s House of Representatives, said the parties aimed to achieve net-zero additional land sealing by 2030. The coalition also ruled out development along the edges of Tempelhofer Feld, favoring alternative ways to create housing without additional land development.

Separately, Sören Pellmann, parliamentary leader of the Left Party in the Bundestag, has urged Justice Minister Stefanie Hubig (SPD) to strengthen Germany’s legal provisions against excessive rent charges. Pellmann called on the government to act on proposals already submitted by the Bundesrat and the Left Party, arguing that the existing rules were rarely enforced and therefore offered tenants limited practical protection. Hubig had previously described the relevant provision as ineffective in practice, indicating that she wanted the law to become more effective. The dispute adds another dimension to the broader housing debate, with the parties divided not only over ownership and new construction but also over the enforcement of existing tenant protections.