One of the apartment blocks on Karl Marx Allee just bought by the city Joachim Herrmann/Reuters

To ward off rent hikes and evictions at the hands of new building owners, the city will purchase about 700 homes the much-coveted Karl Marx Allee neighborhood.

In fall 2018, residents of East Berlin’s Karl Marx Allee—a grand Stalin-era boulevard lined with massive state-owned apartment blocks that have become desirable residences in this fast-gentrifying city—faced an alarming situation. About 700 homes were to be sold to a mega-landlord called Deutsche Wohnen; soon, they feared, poorer tenants would be evicted as their new landlord used legal loopholes to hike the rents beyond levels they could afford.

But then city leaders proposed a novel rescue plan: The city would step in and buy the apartments, barring the takeover and ensuring that the rents stayed manageable. This week, news came through that the city had acted on its plan. As of last Friday, the city is the owner of 674 of the apartments, making the Deutsche Wohnen sale impossible. As one headline put it, Karl Marx Allee “belongs to Berlin once more.” It could also be just the beginning of something even bigger.

The “once more” in that phrase is significant. Built during the Communist era (and the spark for a major uprising in 1953), the apartments along Karl Marx Allee were sold off to private landlord companies in 2004. This was a phenomenon across the post-reunification city—also in the West, where many buildings were also publicly owned—powered partly by faith in the private market, but more substantially by a hole in the nigh-on bankrupt city’s finances. The sales helped plug that gap, but ended up triggering another problem: runaway rent increases. Huge tracts of housing that had been hitherto managed as a public asset ended up becoming a cash cow milked by private companies until it bled.

Germany does have some legal brakes on galloping rent rises, however. In German rental contracts, the amount rent can rise per year is controlled, meaning at least that living costs couldn’t double overnight. But landlords who renovate their properties can avoid this. That work-around has turned luxury renovation into a tool for displacement, as The New Yorker recently detailed. A low-income resident might find their building newly equipped with balconies on its inner courtyard, or underfloor heating, then find their rent hiked beyond a manageable level, forcing them out.

It was fear of this process that led Karl Marx Allee residents to fight the Deutsche Wohnen buy-out. The city’s decision to step in, meanwhile, is not entirely unprecedented. Berlin boroughs can in some cases exercise the right to step in to prevent a building’s sale to a landlord they suspect of exploitative practices, buying the building itself or obliging the landlord who does so to sign a strict agreement on rent rises. While most Berlin districts steer clear of this practice, it has become common in the borough of Friedrichshain-Kreuzberg, where Karl Marx Allee is located.

What is entirely new, however, is the sheer scale of this buyout.

The purchase will cost an estimate €90 to €100 million ($101 to $112 million), an amount that will ultimately be recouped through rents but which is still an initial strain on the public purse. If a popular public campaign is successful, however, many more such buyouts will follow: Housing activists are pushing for a citywide referendum that would ban all mega-landlords in the city and return their housing stock to public control.

In a city where people of all classes rent, it’s a campaign that enjoys considerable support across the voter spectrum. The proposal recently passed its first hurdle, successfully hitting the required number of verified signatures on its petition. In the meantime, the city has already agreed to another radical housing fix—a ban on rent rises in all but newly constructed buildings for the next five years. Taken together, these reveal a city prepared to go further than any other in Europe to fight acute housing cost inflation.

This might make Berlin sound like a renters’ paradise. The reality, alas, is far different. Despite the city’s use of state apparatuses to fix its housing market, there is still intense pressure exerted on the system by private real estate investors—a pressure that’s become all but ubiquitous in major cities like London, Paris, and New York City that have become speculative playpens for the hyper-wealthy. As extreme as they might seem from a North American perspective, Berlin’s housing interventions may still prove insufficient to resist the sheer force of this speculative slash and burn. But in setting itself up as a laboratory for possible fixes to the global housing crisis, at least Berlin is trying.

About the Author

Most Popular

  1. photo: subway in NYC
    Transportation

    Inside Bloomberg's $1 Trillion Infrastructure Plan

    Drawing on his time as New York City mayor, Michael Bloomberg proposes handing power and money to urban leaders as part of his Democratic presidential bid.

  2. Environment

    Housing Discrimination Made Summers Even Hotter

    The practice of redlining in the 1930s helps explain why poorer U.S. neighborhoods experience more extreme heat.

  3. photo: a couple tries out a mattress in a store.
    Equity

    What’s the Future of the ‘Sleep Economy’?

    As bed-in-a-box startup Casper files for an IPO, the buzzy mattress seller is betting that the next big thing in sleep is brick-and-mortar retail outlets.

  4. a map of the U.S. Midwest
    Maps

    We Mapped ‘the Midwest’ for You, So Stop Arguing

    We surveyed more than 12,000 people (and counting) about the most contentious border question in the U.S. to reveal the true geography of America’s midsection.   

  5. Transportation

    In Paris, a Very Progressive Agenda Is Going Mainstream

    Boosted by big sustainability wins, Mayor Anne Hidalgo is pitching bold plans to make the city center “100 percent bicycle” and turn office space into housing.

×