Hans Böckler Foundation: Socialization of Berlin apartments economically viable

According to economic researchers from the trade union-affiliated Hans Böckler Foundation, the socialization of housing stock planned by the Left in Berlin can be socially politically sensible and economically viable. This is the result of a study by the Institute for Macroeconomics and Business Cycle Research (IMK) of the Hans Böckler Foundation.

Accordingly, the socialization of large housing stock will not solve the housing shortage in Germany's major cities. This requires new construction on a large scale. “Nevertheless, socialization can be useful as a supplementary element to reduce the affordability problem of rents,” reported the foundation in Düsseldorf.

In Berlin, large private housing groups had extensive portfolios, including many apartments in the lower and middle rental price segments, it was said. “If these were converted into public or community-oriented property, the public sector could quickly increase its influence on the rental market.”

Subdued rent increases in this portfolio would also dampen the overall rent increase through their effect on the rent index. “In addition, the public sector could ensure social mix and socially oriented renovation better than the large private housing companies do,” it said in a statement.

The researchers estimate that the compensation due to private housing companies if around 210,000 apartments are transferred to public ownership is around 13.5 billion euros. “If the socialization were cleverly designed, this could be financed without cuts in the Berlin state budget,” it continued.

There are different estimates of the amount of such compensation depending on the calculation method. During the election campaign, SPD leading candidate Steffen Krach clearly spoke out against socialization and justified this with estimated compensation of 20 to 30 billion euros. According to IMK, the range of estimates ranges from around 10 billion to 36 billion euros.

In their study, the IMK researchers advocated using existing public housing structures in the event of socialization. “The apartments could be transferred to the six existing state-owned housing companies directly or via a temporary public institution.”

These would already manage several hundred thousand apartments and have the necessary capacity, “which of course would have to be expanded”. The compensation could be financed through additional equity capital provided by these companies as well as loans.