German coalition moves to ban state-level expropriation of housing giants, Berlin SPD and Left cry foul

The federal intervention

Germany's ruling coalition has agreed to pass a federal law that would prevent individual states from expropriating the rental portfolios of large housing companies. The decision, announced after a coalition committee meeting, is framed as a measure to restore investor confidence and boost new construction. Chancellor Friedrich Merz (CDU) said the debate over expropriation had caused international concern. "In der ganzen Welt wird gefragt: Was ist da in Deutschland los?" he told reporters, adding that when state-level decisions create nationwide problems, the federal government must act.

When decisions at the state level lead to problems for all of Germany, we react.

Berlin's 2021 vote and the new push

In 2021, a majority of Berlin voters backed a non-binding referendum to socialise the housing stock of companies with more than 3,000 units. The initiative "Deutsche Wohnen & Co enteignen" submitted a draft law last September, preparing a new popular initiative. The federal ban would pre-empt any such move. Several Berlin SPD MPs criticised the plan. Hakan Demir called it "a campaign gift to the Left" that would restrict Berlin's political room for manoeuvre. Annika Klose, the SPD parliamentary group's social policy spokesperson, noted that expropriation is anchored in the Basic Law and should remain an option for states.

A ban at the federal level would restrict Berlin's political room for manoeuvre and, given the ongoing debates, would be a campaign gift to the Left.

Left party vows resistance

The Left party, which has surged to first place in recent Berlin polls, reacted with fury. Parliamentary group leader Heidi Reichinnek accused the government of putting corporate profits above constitutional rights. "Vonovia frohlockt, die Aktienkurse steigen," she said, claiming the government was protecting "property sharks." Berlin's lead candidate Elif Eralp pledged to defy the ban and push ahead with socialisation, insisting the city needs more affordable housing and that the will of Berlin voters must be respected.

The announcement is nothing less than a shocking admission that for this government, the profit interests of housing corporations rank higher than constitutionally protected rights.

Housing shortage and construction slump

The backdrop is a deepening housing crisis. More than a million homes are missing across Germany, and completions fell to 206,600 in 2025, with a further decline expected this year. Construction costs have soared: the average cost to build one square metre of living space in a major city reached €4,630, up over 50% since 2020, excluding land prices. The coalition argues that the mere debate over expropriation has deterred investors. CSU leader Markus Söder rejected the notion that the ban is primarily aimed at stopping a Left victory in Berlin, insisting it is about ending "socialism" and reviving private construction.

Other measures and reactions

Alongside the ban, the coalition agreed to set up a federal housing company (WBG) to support social housing construction. Building Minister Verena Hubertz (SPD) welcomed the clarity, saying the focus should be on investment, new builds, and strong tenant protections. CDU construction spokesperson Jan-Marco Luczak called the expropriation debate a "death blow" for private housing and urged Berlin's parties to end their "populist rent election campaign." Real estate expert Michael Voigtländer of the IW Köln warned that nationalisation without market-rate compensation would have triggered capital flight.

We are creating clarity through federal law and focusing on what really helps people in tight housing markets: investment, new construction, and strong tenant protection in existing stock.