Faced with a growing affordability crisis, Berlin will ask voters this month to consider a radical housing decision: whether or not to evict the city’s biggest landlords and transfer 240,000 rental units to public ownership.
After collecting nearly 350,000 signatures, Berlin housing activists secured a referendum to be held alongside Germany’s national and state elections on Sept. 26. Voters will be asked whether the city should invoke a rarely used article of the German constitution to expropriate corporate landlords owning 3,000 or more units, including the country’s largest, Deutsche Wohnen, and Stockholm-based Akelius, which also owns properties in Montreal and Toronto.
Even if the referendum passes, the expropriation would face numerous political and legal challenges. But the campaign is shedding light on a global rental-affordability crisis, which stretches into Canada, where party platforms have largely focused on home ownership ahead of Monday’s federal election.
“Every city is experiencing this rapid rise in the cost of housing – especially for renters,” said Leilani Farha, an Ottawa-based former UN special rapporteur on the right to housing who now runs a housing research and advocacy group called The Shift. The Berlin referendum, she said, “has provided a vehicle for it to become a public conversation.”
It’s been a little more than three decades since the German city was cleft by a wall that symbolized the Cold War, with state-owned apartment blocks dotting Communist East Berlin. Though the city’s first years after reunification were once famously described as “cheap but sexy,” Berlin’s appeal as a global capital has belatedly bestowed it with swaths of new citizens, prompting demand that sent rents soaring.
The city’s average rent has doubled since 2008, according to the housing-search provider Immowelt.de. “That is a problem for renters, because their rent doesn’t just pay for the buildings, but for dividends to shareholders,” said Jonas Becker, a spokesperson for the group behind the referendum, Deutsche Wohnen & Co. Enteignen.
The campaign’s mauve-and-yellow signs are scattered throughout Berlin alongside ads for candidates seeking seats in Germany’s next government. Mr. Becker spoke with The Globe and Mail this month as thousands marched through central Berlin in protest of rising rents, many of them wearing vests and carrying flags bearing the same colours.
Berlin sold off 200,000 units of public housing in the first 25 years after the wall fell, and corporate landlords began taking an increased interest in the city following the financial crisis of the late 2000s, as many investors diversified into new asset classes.
Mr. Becker said he pays the equivalent of $30 per square metre for his apartment in the city’s northwest. The campaign, which has more than a thousand volunteers, is asking for Berlin to set a rental price of $6.05 per square metre for new public housing if the referendum succeeds.
Joanna Kusiak, a referendum campaigner and University of Cambridge research fellow who studies progressive housing movements, said the campaign is unprecedented globally. “You have a grassroots initiative that is trying to leverage a national legal framework to tackle the global financialization of the housing market,” she said.
Success will not come easily. The campaign believes the government should buy the units for about $15-billion, but the city has said it might cost as much as $54-billion – closer to the units’ market value. As proposed, the purchase would be covered by loans, which could be paid via rental income.
And though the city government imposed a five-year rent freeze last year, it was struck down in April by Germany’s top court, which found that the decision infringed upon federal law. If passed, the expropriation referendum could face similar challenges.
Jakob Hans Hien, a Berlin lawyer who represents some commercial landlords, pointed out that Berlin’s constitution lacks the same expropriation measures that Germany’s contains, which could throw a successful referendum into jurisdictional disarray. And expropriation, he said, is generally meant to be a last-resort decision; it might be easier for the city to buy stakes in the companies that own the units instead.
The political and legal wrangling of following through with the expropriation, Mr. Hien said, “would lead to chaos, deepen our problems and not help at all.”
But even if the grandest ambitions of the referendum don’t succeed, Ms. Farha said, the result could force governments to respond more strongly to the rental crisis: “When movements get more radical, it pushes politicians.”
Asked to comment, Deutsche Wohnen provided a statement arguing that Berlin’s biggest housing issue is low supply, not the concentrated ownership of existing units.
Most of Canada’s cities are designed far differently than Berlin, with a greater emphasis on single-family homes than mid-rise apartment buildings. Still, as of 2018, more than one in four Canadians was a renter, said Statistics Canada, and according to a recent Canada Mortgage and Housing Corporation report on income inequality, the price of a two-bedroom apartment doubled between 1992 and 2016.
The decreasing affordability of housing has left many Canadians without homes at all, leading to encampments in public spaces in cities such as Toronto and Halifax, which have prompted tense, sometimes violent clashes with police and few long-term solutions from local politicians.
Yet Canadians will have few options as drastic as Berliners do as they head to polls on Monday.
The Liberals have promised affordable housing investments, a rent-to-own program and “policies to curb excessive profits” for corporate landlords. They’ve also promised incentives to convert office space into rental housing, while reviewing the tax treatment of corporate landlords. The Conservatives, meanwhile, are pledging to offload at least 15 per cent of federally owned real estate for housing while making it easier for landowners to donate their property to land trusts for affordable housing.
All three leading federal parties have promised to build or repair a million or more new units – of which the New Democrats say at least 500,000 would be affordable homes. The NDP has also promised to launch incentives to encourage the construction of affordable housing while making mortgages more flexible for first-time buyers.
Still, Ms. Farha, whose research focuses on the financialization of the housing market, called the platforms “underwhelming’ with “too much emphasis on home ownership.”
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