Federal bid to end expropriation opens constitutional battle

Germany's federal government has taken the unprecedented step of trying to remove one of the biggest sources of political uncertainty hanging over Germany's residential investment market. On 2 July, the CDU/CSU and SPD coalition committee agreed to introduce a federal law prohibiting Germany's states from using socialisation legislation to transfer private rental housing into public ownership. Chancellor Friedrich Merz presented the move as a necessary signal of reassurance. "People all over the world are asking what is going on in Germany, and whether we should expect expropriations here," he said. The answer, in his view, was now a clear no — whether it proves that simple is another matter entirely.

The proposal is aimed squarely at Berlin, where a 2021 referendum produced a 57.6% majority in favour of expropriating housing companies owning more than 3,000 apartments in the city — around 220,000 homes held by companies including Vonovia, Deutsche Wohnen and Covivio. After five years of political delays, legal commissions and Senate manoeuvring, the initiative behind the referendum has now filed draft legislation for a new, this time binding, referendum.