A majority in Berlin’s election just voted to strip 240,000 rentals from major landlords and fight the city’s housing crisis

Berlin housing protest Germany
Protesters attend a demonstration against rent increase in Berlin, Germany, Saturday, April 6, 2019. Slogan in the foreground reads ‘Stopp Deutsche Wohnen (housing company)’ Michael Sohn/AP Photo
  • About 56% of voters in Berlin, Germany, approved a measure for the city to buy apartments from major landlords.
  • The rule would affect up to 240,000 apartments in Berlin and aims to cool the city’s red-hot housing market.
  • The move joins similar measures in other countries to curb skyrocketing home prices.
  • See more stories on Insider’s business page.

In an unconventional David and Goliath story, pro-housing Berliners just dealt the city’s biggest landlords a major blow.

Roughly 56% of Berlin voters backed an initiative on Sunday that would force the city government to buy units owned by corporate landlords. The measure could lead the government to buy up to 240,000 apartments from the corporations. The rule targets landlords that own more than 3,000 rental units, meaning property giants like Deutsche Wohnen – which owns more than 100,000 units in Berlin alone – would be most affected.

The outcome represents a progressive effort to cool one of Europe’s hottest housing markets. Rent prices have surged 13% in the last 12 months, according to Berlin-based real estate firm Guthmann. Years of underbuilding now leave the city with an apartment shortage of 205,000 units, the firm said. With three-quarters of Berlin residents renting, the lack of sufficient housing supply has powered a stifling jump in rent prices.

The referendum marks a shift from the free-market model and toward one that views affordable housing as a human right.Public ownership of units would offer more affordable housing options. The proposal’s approval also shows Berliners are interested in more drastic steps to cool the market than denser zoning or more building on the city’s outskirts.

To be sure, the rule is non-binding, meaning the government doesn’t have to act in accordance to the initiative. The Berlin government elected on Sunday will have the ultimate say on whether the rule goes into effect.

The city’s landlords don’t expect the referendum to make enough of a difference. Government purchases of privately owned apartments “do not solve the manifold challenges on the Berlin housing market,” Rolf Buch, CEO of property giant Vonovia, said in a statement to Reuters.

The city’s new leading party – the Social Democrats – is also skeptical. The referendum has to be respected, but it won’t shore up more supply or fix the market, said the party’s mayoral candidate Franziska Giffey, who is set to be Berlin’s first female mayor, according to the same election’s provisional results.

Berlin’s housing problems are global

The Berlin referendum echoes efforts in other countries to boost housing affordability.

In the US, lawmakers are pushing forward with legislation that, among many other things, aims to increase home supply. Democrats’ $US3.5 ($AU5) trillion spending proposal includes $US213 ($AU292) billion in funding that’s estimated to create 2 million new homes.

Separately, President Joe Biden announced in September a series of regulatory changes that seek to build 100,000 new homes and promote denser residential zoning.

On the state level, California Gov. Gavin Newsom approved a law on September 16 that outlaws single-family home zoning in the state, clearing the way for the building of duplexes on any single-family lots. The progressive measure immediately allows for the creation of 700,0000 more homes in existing neighborhoods. By comparison, California typically permits 100,000 new homes each year. By banning single-family zoning, the state reversed a century-old status quo that protected property values instead of providing denser and more affordable housing.

In Canada, Prime Minister Justin Trudeau proposed a housing plan in September that would end “blind bidding,” a process through which prospective buyers can’t see what other buyers have offered for a home.

Trudeau also plans to ban the buying of Canadian homes for investment purposes, saying Canadians “shouldn’t lose a bidding war on your home to speculators.” Investor interest has driven home prices higher and exacerbated shortages in housing markets across the world, including the US, Canada, and New Zealand.