A few days after its victory in the House of Representatives election in Berlin, the Left is laying the foundation for explorations with the possible coalition partners SPD and the Greens - and thus also for the implementation of one of the core issues in the election campaign: the socialization of the housing stock of private corporations with more than 3,000 residential units in Berlin. This would affect around 240,000 apartments.
“It is clear to me that socialization must also take place in a government because it is a means of driving speculation out of the rental market,” says Left Party leading candidate Elif Eralp. What Eralp wants, if the planned exploratory talks with the Greens and the SPD are successful, has never happened before in the Federal Republic: socialization - i.e. the forced transfer of private property into the public sector - is provided for by the Basic Law with the payment of compensation. But this has never been implemented in this country.
Compensation below market price?
Most economists warn against this. “The way the left is planning it is a real breach of taboo,” says Michael Voigtländer from the Institute of German Economics (IW) in Cologne to the ARD financial editorial team. "The Left intends to compensate below the market price. 40 to 60 percent are being discussed."
That would mean that the housing companies affected - including Vonovia and the associated Deutsche Wohnen - would receive more or less only half of what they would have received if the apartments had been sold at the market price. “That would be real economic damage for investors. And that has far-reaching consequences for the location,” Voigtländer is convinced.
Rental market particularly tense
Thomas Beyerle from Biberach University said in an interview with the ARD financial editorial team: "No new apartments will be created through socialization." If it is not clear that the property is protected from government access, investors will be deterred - and not just real estate investors, warn numerous experts.
The German capital has one of the most competitive housing markets in the republic: real estate service provider Jones Lang LaSalle reported a slight decline in average rents in the capital in the first half of this year.
However, the JLL housing market overview states: "Despite this slight short-term correction, Berlin has the strongest long-term rental development among the Big Eight cities with an average annual growth rate of plus 8.4 percent over five years."
New contracts are much more expensive
The population of the capital is now around 3.9 million people and the trend is rising. According to forecasts, tens of thousands of apartments are missing. Especially affordable ones, because income levels are often low. Beyerle from Biberach University also mentions a Berlin-specific problem: "The existing rents are comparatively cheap, but new rental agreements have much higher prices per square meter."
The Berlin rent index 2026 shows an average of 7.71 euros per square meter for the existing property. According to the current housing market analysis by the Berlin-specialist agent Guthmann, new rentals are priced at 18 to 22 euros per square meter. This means that if you have a cheap apartment, you won't move out, even if it has now become much too big.
Can rents be stabilized?
Tom Krebs is Professor of Economic Policy at the University of Mannheim. He says new construction alone is not enough to combat the housing crisis. He is one of the few economists who can gain something from the planned socialization.
In a written statement, he told the ARD financial editorial team: "Socialization increases the supply of apartments with rent controls and thus contributes to stabilizing rents in this housing segment. Of course, public housing is also needed - you can do one without leaving the other behind."
More public housing is also needed because many private companies have invested too little in new apartments, says Krebs.
New construction is needed
Other experts wonder where the money for public housing will come from. As part of the planned socialization, the capital's already tight budget could be burdened with an additional eight to 36 billion euros, experts estimate. That depends on whether and how significantly the compensation for socialization is below the market price.
Beyerle from Biberach University says: "Economically speaking, this is a fall from grace for the city of Berlin." Instead, he recommends not spending the money on socialization and compensation, but rather putting it straight into public housing. And to offer private investors investment incentives such as a solid return.
“In the end, more should be built,” said the expert. "But not luxury apartments, but for the general public, affordable, then it also makes economic sense."
Vonovia shares are falling
The DAX group Vonovia and the associated Deutsche Wohnen, which own around 130,000 apartments in Berlin, would be particularly affected by the socialization plans. After the election victory of the Berlin Left, Vonovia's share price fell further this week. However, property values generally suffer from rising interest rates.
It is still unclear whether and when socialization will actually occur. Even if the left gets its way, there is a risk of years of legal disputes with private housing companies. The federal government is also planning a law against such associations.
