Berlin. The socialization of apartments has been an issue in Berlin for years. With the increasing likelihood of a red-green-red state government, the debate is heating up again. The federal government wants to complicate Berlin's plans with an investment protection law. However, such a law is just as controversial from a constitutional point of view as socialization itself. What are the legal sticking points?
First and foremost, Article 15 of the Basic Law is often referred to in the debate. According to this, land can “be transferred into common property or into other forms of public economy for the purpose of socialization by a law that regulates the type and extent of compensation”. However, the article has never been applied so far, which is why its interpretation is controversial. There is hardly any case law to rely on.
“A socialization law would have to be measured against the principle of proportionality,” says Thorsten Schmidt, law professor at the University of Potsdam. It must therefore serve a legitimate purpose and be suitable, necessary and appropriate to fulfill it. According to Schmidt, this would not be the case with the planned socialization of apartments in Berlin. Among other things, there are milder means to achieve affordable housing, he says. From a legal point of view, however, it is controversial whether Article 15 is subject to a proportionality test.
Berlin's state constitution also plays a role in the socialization plans, says Schmidt. “The state constitution, like the Basic Law, has a provision for the protection of property,” explains the constitutional lawyer. “What you don’t find in it is a counterpart to Article 15 – an article that allows socialization.” Property is protected in Berlin more extensively than under the Basic Law.
So does it depend on the Berlin or the federal regulations? According to the Basic Law, “Federal law breaks state law”. But there is one exception: If regulations in the state constitution guarantee fundamental rights, these remain in force. “A state constitution can therefore have more extensive protection of fundamental rights than the Basic Law,” says Schmidt. “That’s why it seems very doubtful to me whether you can socialize in Berlin at all.”
An expert commission appointed by the Berlin Senate saw things differently in 2023. In their report, the majority of the 13 experts - including the former SPD Justice Minister Herta Däubler-Gmelin and Professor Ann-Katrin Kaufhold, who is now Vice President at the Federal Constitutional Court - declared the socialization of large housing companies in Berlin to be generally permissible.
“If so, socialization is only possible if the companies affected receive appropriate compensation,” emphasizes Professor Wolfgang Durner from the University of Bonn, who was a member of the commission. In the case of expropriations, compensation is usually based on market value, but in principle the legislature can go lower than that, he says. “The more the value of the confiscated goods is based on one’s own performance, the closer the compensation must be to the market value.”
With a view to Berlin, the question arises as to whether housing companies have provided a service to increase the value of their real estate portfolio or not. If the Federal Constitutional Court ultimately approved a completed socialization, but objected to the amount of compensation and demanded that it be based on market value, “the state of Berlin would probably receive another double-digit billion sum on top of that,” said Durner.
It is unclear whether there is any socialization of housing in Berlin. Federal Interior Minister Alexander Dobrindt (CSU) has announced that he will make this more difficult through a federal law. Socialization should only be possible if the state government can prove that all other means have been exhausted.
Proponents of socialization such as the leading candidate of the Berlin Left, Elif Eralp, consider the move to be unconstitutional. At least here, too, the matter is legally complex: According to the Basic Law, both the federal and state governments have the right to issue regulations on socialization, says Professor Schmidt. The federal government would then have to prove that a federal law is necessary.
In addition, the federal government may only use its legislative authority if it “designs things positively”. He shouldn't ban socialization across the board, says Schmidt. “But if he makes it clear that he wants to protect freedom of property by securing investments while at the same time keeping the interests of tenants in mind, that would be a positive regulation.”
At some point the dispute will probably end up at the Federal Constitutional Court - for example because the housing companies concerned are claiming a violation of their fundamental rights and are filing a constitutional complaint. The federal government, a state government or a quarter of the members of the Bundestag could also have a socialization law examined by means of a regulatory review application. In this way, an investment protection law in Karlsruhe could also come to the test. It will probably take several years for a final clarification.
