Germany's ruling coalition has agreed to ban the nationalization of private rental housing and to set up a state housing construction company, in a bid to provide legal certainty and increase the supply of affordable homes, senior representatives said on Thursday after a coalition committee meeting.
Among the decisions agreed by the coalition committee is the founding of a "housing construction company for affordable housing," known by its German abbreviation WBG.
Its aim would be to "build more housing in the affordable price segment, where the housing market does not permanently provide sufficient affordable housing," the coalition said.
The company would support social housing construction and serial building methods, and would focus particularly on regions with a proven housing shortage.
At the same time, the coalition wants to definitively block moves - championed for years mainly by The Left party - to expropriate companies with large rental housing portfolios.
"In order not to jeopardize private housing construction, a federal law will stipulate that the nationalization of private rental housing stocks through socialization laws at state level is no longer possible," the coalition committee's decisions stated.
Response to construction ministers
The coalition said it was responding to a request from the Conference of Construction Ministers. The state ministers had asked the federal government to take legislative measures to protect the value of investments in the housing market sustainably.
"Socialization endangers housing construction and makes housing even more expensive," said North Rhine-Westphalia's Construction Minister Ina Scharrenbach. Such debates also endangered confidence in the stability of Germany as a business location, she said.
Alongside North Rhine-Westphalia, Bavaria in particular had strongly opposed any such moves and had announced it would seek a judicial review should anything similar be implemented in Berlin.
Merz: Abroad, people are asking what is going on
Chancellor Friedrich Merz said corresponding efforts at state level had led to questions being asked "around the world about what is happening in Germany."
"Do we have to expect expropriations in Germany?" Merz said one of the questions was.
Each state could do as it wished, Merz said. But if decisions at state level led to problems across Germany as a whole, it was right to respond at the federal level. "And in this very specific case, we are responding with a law that bans the expropriation of housing companies - and we can regulate that under federal law," the chancellor added.
Primarily a Berlin issue
Berlin's population voted by a majority in 2021 in favour of expropriating large housing companies. This called on the then Berlin administration to "initiate all measures" needed to transfer property into public ownership and to draft a law to that effect. However, the vote was not legally binding on politicians.
Last September, the Berlin initiative presented a draft law on the socialization of large housing companies. Representatives of the initiative announced the law was to be passed via a referendum within the next two years.
Berlin's state parliament is due to be re-elected on September 20.
