Left party proposes nationalising 240,000 Berlin flats to tackle rent crisis
The proposal would raise public housing to over 30%, but courts, compensation levels and loan costs will determine whether rents fall.
The Left party that won the recent Berlin state election has proposed transferring roughly 240,000 privately held flats into public ownership as a radical response to the city’s long-running housing squeeze. The plan, if enacted, would raise Berlin’s publicly owned housing share from about 20% to more than 30%.
Party leaders say the move should quickly push down rents in parts of the city by bringing thousands of units under municipal control and applying lower public-sector rents across large portfolios. The Left envisages creating a new public institution that would borrow to buy the housing stock and later manage it. The party’s lead candidate, Elif Erelp, has said the operation would be largely financed with loans.
Legal, fiscal and market questions
Critics — including business groups, banks and federal politicians — warn the scheme faces steep legal and financial hurdles. Berlin would almost certainly need to pay compensation to owners, and the size of that payout will decide whether rents actually fall or whether the measure triggers long court battles.
Berlin’s 2024 audit concluded that “for rents to fall or at least stop rising at the current pace, compensation would have to be very low.” The same report warned that the farther compensation departs from market value, the greater the legal risk. Konstantin Holodilin of the German Institute for Economic Research (DIW) adds that if acquisitions are made at market prices, the debt service on the loans could push public costs up and even put pressure on taxpayers: “The city will not formally lend the money to the public institution, but it will guarantee it. If problems arise with repayment, the burden will fall on taxpayers.”
Supporters cite constitutional provisions on expropriation and social ownership, and note that a 2021 referendum in Berlin showed popular backing for the idea. But opponents argue there are less risky alternatives — such as accelerating public construction and supporting housing cooperatives — which could increase public housing stock without the same fiscal exposure.
At the federal level, Chancellor Friedrich Merz has backed plans to prepare legislation that would block provinces from expropriating private housing stock under regional laws. The German banking association also warned that below-market compensation “does not create new housing, brings significant financial risks for the public sector and reduces room for other public investments such as education and social policy.”
Photo: press material from the event
