A federal law against socialisation

Federal construction minister Verena Hubertz (SPD) told the t-online portal that the government wants a law against the socialisation of residential property to arrive as quickly as possible. The planned investment protection law is meant to block socialisations that the Basic Law permits, because the CDU/CSU and SPD coalition sees such moves as a threat to Germany as a place to invest. Chancellor Friedrich Merz (CDU) had already announced the law before the Berlin election. Hubertz also warned against a hasty draft, saying the law must be right in its details.

“A rushed effort that makes things worse helps nobody.”

She said state and federal law must be weighed against each other, along with Articles 14 and 15 of the Basic Law, which cover the guarantee of property and the possibility of socialisation. The Federal Ministry of the Interior, headed by Alexander Dobrindt (CSU), holds the lead on the file, while the construction ministry contributes rules for the property sector. Hubertz said the details were still being coordinated between the ministries. She made clear that she rejects the socialisation concept itself.

Berlin referendum and the cost argument

Die Linke won the Berlin House of Representatives election after campaigning on the socialisation of large private housing companies, and it now holds exploratory talks with the SPD and Greens. A 2021 Berlin referendum produced a majority for socialisation, with about 59% of voters in favour according to WELT.

Justice minister Stefanie Hubig (SPD) had already criticised the plan on Thursday, 15 October, and jurists see high legal hurdles. Hubertz argued that socialisation would not create a single flat while costing a double-digit billion figure, enough, she said, to build entire districts. Her ministry's position is that the money would be better spent on new construction and better market rules.

Left party leaders reject the arguments

Heidi Reichinnek, the Left's parliamentary group leader, told RP Online that a law aimed at undermining the Berlin referendum would be a serious problem for democracy. She accused the government of putting the interests of large housing companies ahead of tenants, and said Merz was shielding big firms. Sören Pellmann, co-chair of the Left's parliamentary group in the Bundestag, called Hubertz's argument a 'sham argument' meant to fool people, and said large housing groups hardly build at all. He argued that the tighter the supply, the higher the rent and the return for landlords.

“A law that aims only to torpedo the implementation of the Berlin referendum points to an extremely doubtful understanding of democracy.”

Luigi Pantisano, the party chair, told WELT that the SPD had lost its political compass and called Hubertz the 'patroness of the real estate lobby'. He wants the market power of large housing companies limited and homes returned to public hands. Pellmann also accused Merz of caring more about the profits of the landlord lobby than about tackling housing poverty.

A federal housing company from 2027

Hubertz outlined a federal housing company that she is planning with finance minister Lars Klingbeil (SPD), which should start in 2027. The concept is to be presented in autumn, and the Union and SPD agreed in early July to set up a company for affordable housing. The federal government would hold 51% of the shares and external partners 49%, which could come from the private economy or from municipal and state housing companies. Hubertz said the federal state could place large orders to secure price advantages and that it would bring its AAA credit rating to the financing. She stressed that the structure should be lean and not a new authority.

Economists question the plan

The Institute for Macroeconomics and Business Cycle Research (IMK) of the Hans Böckler Foundation warned in a study of 'great constitutional risks', because the Basic Law assigns housing construction to the Länder rather than the federation. The study authors, IMK director Sebastian Dullien and former Berlin finance senator Matthias Kollatz, consider the plans questionable. Instead, they propose that the federation create a new funding pillar, for example through the KfW development bank, for affordable homes. Hubertz's plan and the Left's socialisation push are now set against each other in a debate that the Berlin coalition talks will shape.