The debate surrounding the so-called socialisation of private housing portfolios in Berlin is having repercussions across Germany. While the local coalition of The Left, Alliance 90/The Greens and the SPD is pursuing the expropriation of large residential property corporations, the leadership of the federal coalition agreed in the summer to bindingly prohibit such initiatives through federal legislation. According to recent reports, however, the federal government is currently hesitating to implement this resolution into law.
Bavaria's Construction Minister Christian Bernreiter has sharply criticised this hesitation and is urging prompt action from the federal authorities. He noted that socialism had historically failed, yet the red-green-red coalition in Berlin continues to cling to notions reminiscent of an 'East Germany 2.0'. It is therefore high time for the federal government to strip these plans of their legal basis. He stated that he had no understanding for the current inaction, as it had been clearly agreed in the coalition committee to rule out the expropriation of private housing companies by federal statute.
Nationwide impact on investment and lending
According to the Bavarian minister, the consequences of the expropriation debate are by no means confined to Berlin. A noticeable reluctance to invest can already be observed among housing companies. If corporations were forced to sell residential portfolios well below market value, they would lack the capital for construction projects in other locations across Germany in the future.
The uncertainty is also affecting the financial sector. Against the backdrop of current developments, initial banks are already refusing to issue financing commitments for housing industry projects. This threatens residential construction across the whole of Germany, as dependable loan commitments form the foundation of all building activity.
Call to restore market confidence
To restore the confidence of credit institutions promptly, Bernreiter urged the rapid implementation of the agreements reached. The federal government must now counter the ongoing uncertainty in the sector as quickly as possible through legally watertight regulations and banish the spectre of expropriation once and for all.
