After the Berlin election: Waiting for the anti-law

The black-red coalition in the federal government wants to prevent the socialization of housing companies in the states with a federal law. But would such a prevention law be legally permissible?

At the beginning of July, the coalition committee of the CDU/CSU and SPD at the federal level decided: “In order not to endanger private housing construction, federal law regulates that the nationalization of private rental housing stock through socialization laws at the state level is no longer possible.” After the Berlin election on Sunday, in which the Left became the strongest party and made the socialization of large housing companies a condition of a government coalition, Chancellor Friedrich Merz confirmed the plan.

Such a ban on socialization would not only apply to laws passed by the Berlin House of Representatives. It would also block the popular initiative for a socialization law planned in Berlin.

It is still unclear what a federal law should look like. All that is known is that it is being prepared within the federal government by Interior Minister Alexander Dobrindt (CSU) and not by Justice Minister Stefanie Hubig (SPD). The Interior Ministry has not yet given a timetable for when it plans to present the first key points or a first draft law; “Internal government consultations” are still taking place. The formation of a government in Berlin cannot wait for this.

The Basic Law provides in Article 15: “Land, natural resources and means of production can be transferred to common property or other forms of public economy for the purpose of socialization by a law that regulates the type and extent of compensation.” This option has never been used.

The federal government is relying on Article 74 Paragraph 1 No. 15 of the Basic Law for its planned anti-law. According to this, the federal government has the competing legislation for the “transfer of land, natural resources and means of production into common property or into other forms of public economy”. This means that if the federal government regulates the matter conclusively and permissibly, the federal states are blocked.

First of all, such a federal law must be “necessary” for uniform living conditions or legal uniformity. This is questionable because socialization in Berlin does not affect the housing market in Bavaria. However, the federal government will probably argue that a nationwide ban is necessary to reassure uncertain investors.

It is relatively clear that a pure prohibition law would not be possible. The Federal Constitutional Court declared in 2021 that a federal law in the area of ​​competing legislation may not serve exclusively to “exclude the state legislature from legislation”. Justice Minister Hubig was probably referring to this when she said in the Handelsblatt interview at the end of July: “A blanket ban is certainly not possible.”

But there are also many other ways to make socialization more difficult. A Federal Council proposal from Bavaria calls for a law that would prescribe “immediate and equivalent” compensation. Berlin would then have to compensate the housing companies at the market price, in money and not through bonds or similar, as previously planned.

If the federal government actually passes such an anti-socialization law, Berlin could appeal to the Federal Constitutional Court. The anti-law could remain in force until a verdict is reached. Berlin could apply for an interim order in Karlsruhe, but this would probably not be granted in this situation.

How the Federal Constitutional Court would then decide after a few years cannot currently be reliably predicted, especially not as long as the federal government does not specifically say what an anti-law draft should look like.

But even without the federal government's anti-law, Berlin's socialization would probably end up in the Federal Constitutional Court. Ultimately, the affected housing companies would probably sue. They are likely to argue that socialization is disproportionate because there are less drastic and more efficient means of combating housing shortages and high rents. In addition, they would probably sue for higher compensation.