Renters are by far the majority in Germany. (The country actually has the lowest number of homeowners in the European Union.) So when the majority is unhappy about surging rental costs, politicians listen.
A referendum, spurred by too high rental costs in Germany and specifically in Berlin, seeks to expropriate large landlords and companies that own more than 3,000 rental units. (Rents have nearly doubled since 2011.) Essentially, if passed, this referendum would nationalize big chunks of Germany’s housing market. Though pushing the state to buy all of these apartments would not increase the supply of apartments, it could send a message to landlords that “…they need to play fair” or risk losing those assets.
Activists working to pass the referendum need to collect 20,000 supporters’ signatures within the next six months on top of the already collected 170,000 signatures. Germany’s Green Party, the country’s second strongest, is already tentatively supporting the referendum’s concept of using taxpayer money to buy up the apartments.
The risk involved with this referendum? State intervention in Germany’s housing industry could scare away potential investors at a time when the industry needs to bolster supply. The German construction industry association cautioned that such an intervention could run nearly $41B, an amount that could be used to build 220,000 rental units on government land.
Merkel’s Christian Democrat Party has passed legislation to limit rent increases (now standing median rent is $1,100/month, expensive in Berlin) and to pledge $6B Euros towards affordable housing. But union leaders say that what is really needed is to “build, build and build again.”
Real estate experts in Germany are pushing for more moderate solutions to relieve rental cost pressures. They are looking to
- boost construction by relaxing regulations with the goal of speeding up the approval process and reducing taxes on developers
- clamp down on Airbnb rentals to make housing supply available to permanent residents
- reward builders for building affordable, not luxury, apartments
Any of this sound familiar?