Battle over Berlin housing expropriation plans escalates

German Chancellor Friedrich Merz's conservative-led government is seeking to block plans by a possible left-wing administration in Berlin to expropriate tens of thousands of flats from commercial landlords in a bid to curb soaring rents in the capital, reported dpa.

Interior Minister Alexander Dobrindt is pushing for new federal legislation that would impose significant hurdles on the city-state government's plans to bring large swathes of Berlin's housing stock into public ownership.

"We will make it clear in an Investment Protection Act that the arbitrary left-wing obsession with nationalization is incompatible with the constitution," Dobrindt told the Bild newspaper in comments published on Sunday.

The Left party, which won Berlin's regional elections last month, aims to bring around 160,000 flats under public ownership in line with a 2021 referendum, in which a majority of Berliners backed the expropriation of large property developers to curb rent prices.

The party, which is vying to appoint a Berlin mayor for the first time, is expected to begin formal coalition talks with the Greens and the Social Democrats (SPD) in November.

The plans have drawn fierce opposition from Merz's conservatives at the national level, setting the stage for a confrontation between the federal government and Berlin's likely next administration.

Under the proposed scheme, five companies who each own more than 10,000 flats in the German capital would be forced to sell all units above that threshold for a total of €16 billion ($17.7 billion).

Interior Minister Dobrindt's legislation aims to make that more difficult, according to details of the plan reported by Bild and confirmed to dpa by his ministry.

Under the plan, the expropriation of flats would only be possible if a regional government can show that it has exhausted all other possible options to fight the housing crisis, including new investments and subsidies for housing construction.

If that is the case, housing to be brought under public ownership must be paid in cash, meaning it cannot be financed by loans, and at market value, as determined by an expert valuation.

If passed, the federal legislation could effectively derail Berlin's expropriation drive. The €16 billion envisaged by the city's likely next government is believed to be below market value, while Berlin's notoriously strained finances would make a cash purchase particularly difficult.

Luigi Pantisano, co-leader of the Left party, accused Dobrindt as well as the entire German government of prioritizing the shareholders of large housing corporations over tenants in Berlin.

"A law like this will not stand up in the federal constitutional court," he said, adding that the SPD, the junior partner in the national government, must now choose whose side it's on, "the 'rent mafia'or on the side of tenants.