Berlin Landlord Expropriation Proposal Backed by Legal Expert

(Bloomberg) -- A proposal to force Berlin's largest residential landlords to hand over their properties in return for compensation wouldn't violate German law, according to a professor at the University of Administrative Sciences.

“What this initiative wants to achieve would be feasible under the constitution and under federal law,” according to Joachim Wieland, who published his legal opinion Wednesday. The study was sponsored by the Left party, one of three ruling parties in the German capital's administration.

A grassroots initiative to force the government to buy out large Berlin property owners would affect companies including Deutsche Wohnen SE, the city's largest residential landlord, and Vonovia SE. Expropriate Deutsche Wohnen and Co., the organization that's pushing for a referendum on the issue, needs to collect 170,000 signatures by February as a first step in the process.

If Berlin carried out the proposal to buy out all companies that own 3,000 apartments or more, it would need to pay compensation that balanced the interests of society as a whole with those of the landlord, Wieland said. “There's absolutely no requirement to base this on market prices,” he said.

The Left party -- which has roots in Germany's former Communist Party -- and its coalition partners are trying to introduce other measures to clamp down on landlords after a sharp increase in living costs led to mass demonstrations. Katrin Lompscher, Berlin's housing senator and a Left party member, has proposed a five-year rent freeze and a plan to cap rents at levels that relate to the age of individual properties.

Tenants who spend more than 30% of their disposable income on rent would be able to apply for a reduction. Small rent increases would be permitted, as long as they don't increase the total beyond the upper limit. If the Berlin senate approves the law, the changes will take effect at the beginning of next year.

Caren Lay, a Linke politician who has called for the cap to be extended to other cities, acknowledged Wednesday that the campaign for a referendum has sparked lively discussions across the country. “The real scandal isn't the referendum itself, but the fact that things have gotten this bad,” she said.

To contact the reporter on this story: Andrew Blackman in Berlin at ablackman@bloomberg.net

To contact the editors responsible for this story: Chad Thomas at cthomas16@bloomberg.net, Iain Rogers

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