Study backs Berlin housing socialization at €13.5 billion as coalition talks loom

Economic feasibility of housing socialization

The Institute for Macroeconomics and Business Cycle Research (IMK) of the Hans-Böckler-Stiftung, collaborating with researchers from the University of Mannheim and the University of Duisburg-Essen, published a study evaluating the socialization of large private apartment portfolios in Berlin. The researchers concluded that transferring approximately 210,000 flats into public or common-good ownership is socio-politically meaningful and economically viable. Using the capitalised earnings method based on net cold rents, the authors calculated the total compensation payable to private real estate corporations at 13.5 billion euros. The Düsseldorf-based research foundation determined that the required compensation can be funded without imposing spending cuts on the Berlin state budget.

With a clever design of the socialization, this would be financeable without cuts in the Berlin state budget.

Effects on rent index and housing supply

The study affirmed that transferring existing apartments into public hands will not eliminate the general housing shortage in Berlin, emphasizing that large-scale new construction remains essential. Even so, the researchers assessed socialization as an effective secondary instrument for stabilizing rising housing costs across the capital. Large private property groups currently control extensive holdings in Berlin, including numerous apartments in the low and middle rental price segments. Converting these units into public or non-profit ownership allows public authorities to expand their influence on the housing market, limiting future rent increases and exerting a downward effect on the broader Berlin rent index (Mietspiegel).

Nevertheless, socialization can be useful as a supplementary element to reduce the affordability problem of rents.

Political dispute and compensation estimates

The policy has become a central point of debate following the Berlin state election, which Die Linke won after campaigning on the pledge "We make Berlin affordable". Die Linke confirmed that it intends to maintain its socialization platform during upcoming exploratory talks to form a state government with the SPD and the Greens. The proposal faces cross-party criticism, particularly over the expected financial burden on the state. During the election campaign, SPD lead candidate Steffen Krach opposed socialization, arguing that compensation claims would cost the city between 20 billion and 30 billion euros. According to the IMK, estimates produced by different calculation models range from approximately 10 billion to 36 billion euros.

Operational models and landlord reactions

The researchers examined three potential operational models for socializing housing, advising the state to utilize the existing administrative infrastructure of municipal housing companies. The study specified that municipal acquisitions must be structured in a way that prevents any negative impact on future residential construction. Meanwhile, private landlords have reacted to the policy debate by pointing to escalating expenses. Landlord Ronny Voland stated that property owners face public characterization as rent sharks and usurers even as maintenance and operational costs rise sharply. As coalition discussions approach, political parties in Berlin face differing economic assessments on how best to manage rent affordability and municipal finances.