Berlin Buys Thousands Of Homes To Stop Rent Increases

The Berlin city council has agreed to buy 14,750 apartments with the two largest owners in Germany for 2.46 billion euros, in an attempt to offset the increase in rents. The three municipal companies that have acquired these apartments are Degewo, Howoge and Berlinovo , according to a statement from the city’s finance department.

On the other hand, Vonovia and Deutsche Wohnen (private companies) are the ones that have sold these thousands of apartments as part of a merger plan that is being closely watched by the German authorities. The agreement with the city council includes a commitment by the two companies to limit rent increases until 2026 and to build 13,000 new apartments to try to address the housing shortage and alleviate public concerns about rising costs of living. as explained by the financial agency Bloomberg .

Municipal housing
“The return to municipal property gives tenants the necessary assurance that their apartments will be permanently in the low-cost segment,” said Matthias Kollatz, city finance councilor, in an e-mailed statement on Friday.

“We are buying carefully,” he says, adding that the three Berlin real estate companies that will take over the properties “are in very good condition and can successfully manage the purchase.”

The combination of Vonovia and Deutsche Wohnen to create a housing giant with more than 500,000 residential units in Germany is being watched closely in Europe’s largest economy. Furthermore, Germany has one of the highest proportions of rented families in the developed world.

Affordable housing has become a hot political issue and particularly in the capital, which a few years ago was an affordable place to live. Rising rents in Berlin have sparked mass demonstrations and a referendum that seeks to force the city to expropriate the big landowners .

Elections and referendum
The vote on the non-binding measure will take place on September 26, the same day as the national and Berlin elections. Most political parties have pledged to try to control rent increases across the country, concentrating primarily on building more homes.

“The timing of the proposed deal during a key election year, and with several politicians proposing to curb rent increases, appears controversial. However, the two owners have protected their future by interacting early with key stakeholders.”

Berlin is particularly exposed to the problem because much of its social housing was sold after reunification. The growth of the population of the city derived from its resurgence has generated strong tensions in housing and has attracted many investors from the sector.

Vonovia CEO Rolf Buch has commented that the agreement announced on Friday will create “a more affordable, needs-based and environmentally friendly living space, especially for young families.”

“We will only solve the challenges in the Berlin housing market together with politicians and society,” he says in an emailed statement.

Organizers of the Berlin referendum believe the deal shows that their concept can work to restore balance in the housing market, but they criticized the price and how the transaction was negotiated.

“Berlin needs transparent and affordable socialization and not gifts for real estate companies,” says Moheb Shafaqyar, spokesman for the referendum organizers.

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