“Investment Protection Act” is intended to stop socialization

Interior Minister Dobrindt presents a concrete proposal that would make nationalization of living space, as planned in Berlin, almost impossible. Meanwhile, it is questionable how much housing companies actually build and whether socialization would actually prevent them from doing so.

Interior Minister Alexander Dobrindt (CSU) has some comments on the “Investment Protection Act” planned by the federal governmentCorner pointspublished. The law is intended to make socialization more difficult, as planned by the Berlin Left Party.

It stipulates that a state government may only incorporate company property if it has been proven that all other means have been exhausted to achieve the planned goal - in the current case, to reduce rents in Berlin. If other options such as investments in housing construction are possible, socialization is not allowed according to the draft law. If socialization takes place, compensation must also be paid directly in money and at market value.

fastshould be carried out. The new key points are also aimed quite directly at the plan of the Berlin Left Party, which had envisaged compensation below the market value and over time.

The federal government wants to quickly pass a law against housing expropriations

Socialization plans weakened before coalition talks

The Left Party's socialization plans are based on the “Expropriate Deutsche Wohnen & Co” referendum from 2021, which 59.1 percent of voters in Berlin approved. The referendum envisaged the socialization of apartments belonging to companies with over 3,000 apartments and compensation well below the market value.

However, these plans have already been weakened in the exploratory discussions of the last few weeks. The threshold has already been increased to 10,000 apartments.According to the initiativeAs a result of the referendum, only around 150,000 apartments would be socialized - around 70,000 fewer than planned. In addition, the Left, the Greens and the SPD agreed on compensation of a maximum of 16 billion euros.

The federal government's law is intended to prevent the socialization of apartments in many cases. Higher compensation could also be forced, which would torpedo negotiations between the parties regarding the Berlin budget.

At the same time, the SPD at the federal level and in Berlin are at odds with each other. While the SPD in the federal government is working against socialization, the only conceivable option for the SPD in Berlin is a coalition with the left, which insists on socialization. Tensions within the SPD could spill over into coalition talks in Berlin and further slow down or weaken the plans for socialization if the Left Party does not put up strong resistance.

Berlin Dictate: The Left and the Price of Power

Investments rarely lead to new housing construction

The CDU in particular repeatedly explains that socialization would deter investors. Shortly after the Left Party's election victory in Berlin, Chancellor Friedrich Merz himself wanted to send a "clear message" to investors, namely that in Germany "no expropriations"of private property. This meant the socialization plans in Berlin, even if it does not involve expropriation.

The Chancellor also received loud support from his party colleagues. CSU General Secretary Martin Huberspokeeven from a “socialist suicide mission” that would not allow any more apartments to be built.

A housing company in Berlin now appears to provide an example of such a deterrent. The Swedish real estate group Heimstaden Bostad has around 20,000 apartments in Berlin, and with the current plans around half of them would be socialized. The co-chairman Christian Fladelandexplainednow that you can no longer invest in Germany due to the risk.

However, the extent to which this is an actual example of an obstacle to housing construction has been questioned since the communication. In its eight years in Berlin, the Heimstaden group only built a total of 85 apartments. The 20,000 other apartments were simply existing apartments that were bought by the group. In 2020, the initiative “Stop home stadiums“, which has since then advocated for the interests of tenants and drawn attention to the company’s illegal practices, which the alliance describes as “rip-offs”.

Also other companies like Vonoviabuy significantly moreLiving space as they build. Since 2015, the group has built 19,852 apartments nationwide, but has purchased 443,957 apartments, making it one of the companies that build the most. State-owned housing companies from Berlin built around twice as much in the same time.

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