Debate about socialization: Everything is better than Vonovia

He caught! First, during the election campaign, we talk all the time about wanting to lower rents and then break the promise before the government is formed. This accusation sums up the media reactions to an appearance by Left Party leader Ines Schwerdtner on the 3Sat program “Bosetti Late Night”.

“I can’t promise any single tenant that the rents will fall,” Schwerdtner replied to presenter Sarah Bosetti’s question on Sunday evening as to whether the Left wanted to lower the rent in the properties after successful socialization. In fact, Schwerdtner explained that rents in the state-owned housing stock will increase by 2 percent annually.

Moderator Bosetti's implicit accusation is that the left raised unrealistic expectations of socialization during the election campaign. The newsletter Tagesspiegel Checkpoint echoes the same sentiments and happily lists statements from left-wing politicians from the past few months in which there is a connection between socialization and falling rents.

The argument has a core of truth, but it does not change the meaningfulness of socialization. Ultimately, it's about fundamentally changing Berlin's dysfunctional housing market. Socialization is intended to break the power of the large real estate companies. In the future, rental surpluses should no longer flow into the pockets of investors, but should instead be used for modernization, maintaining the property or cheaper rents.

But first of all, the rental profits would have to flow into the repayment of the loans that would have to be taken out to pay the compensation. The positive effects of socialization would only be fully effective once the loans had been paid off. In principle, it's like buying your own home: the repayments are hardly different from the usual local rent, but after several decades you then have a home as retirement provision. Most Berliners should have understood this principle.

Similar to buying a house, the question of whether it makes sense depends on the purchase price and the available income - when applied to socialization, this means the level of compensation and the rent level in the socialized holdings. If you want to keep rents stable, i.e. not increase them more than the inflation-related 2 percent per year, the compensation amount must be correspondingly low.

But the maximum sum of 16 billion euros agreed in the exploratory paper is far too high if it is fully exploited. In this case, an increase in rents would be unavoidable if the socialization is to take place as agreed, without subsidies from the budget. The Federal Constitutional Court will ultimately decide whether the amount is appropriate.

The financial policy think tank Dezernat Zukunft has calculated the whole thing and, depending on interest rate developments, assumes a period of 18 to 32 years until socialization pays off at 16 billion. Until then, rents will rise at the same rate as Vonovia.

Socialization would still make sense. In every scenario, the tenants would be better off than with Vonovio and Co. But with a compensation amount of 16 billion euros, the savings would be 3.30 euros per square meter after 30 years. Not to forget the regular attempts at fraud regarding additional costs and the rent index that Vonovia tenants currently have to endure. Now it is the task of the left to communicate this sensibly.