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Image: Getty Images / Archi Banal
Image: Getty Images / Archi Banal

SocietyMay 23, 2022

Why Berlin voted to seize thousands of apartments from corporate landlords

Image: Getty Images / Archi Banal
Image: Getty Images / Archi Banal

If Berlin can expropriate hundreds of thousands of apartments currently in private hands, could we be doing more to promote public housing and collective ownership here?

Since 2017, house prices in Auckland have risen by an average of 34%, with many suburbs seeing rises far higher than that. As landlords accumulate yet more properties, and inflation continues to take effect, higher prices are passed on to renters. The national median weekly rent rose 7% in the year to March 2022, according to figures from Trade Me. Skyrocketing rents in cities like Wellington are even driving students to switch universities.

Germany’s capital city Berlin is also facing rapidly rising rents. Eight out of 10 Berliners are renters, and they have seen their rents increase by 42% in the past five years. As a result, late last year 57.6% of Berliners voted to expropriate hundreds of thousands of apartments currently in private hands. But what does that mean exactly? And what has happened since?

Given Auckland’s upcoming mayoral elections and the important role housing and housing policies are likely to play, it is worth looking in detail at the Berlin referendum. To do so we first need to define some crucial terms.

Apartment buildings at Gleisdreieck Park, Berlin (Photo by Sean Gallup/Getty Images).

Who is a corporate landlord?

The landlords in question are those who separately own at least 3,000 rental properties in Berlin. Overall, corporate landlords targeted by the referendum control one in six of all Berlin apartments. The primary targets were, as organisers readily acknowledged, Deutsche Wohnen (DW), a company which owns over 114,000 apartments in Berlin, and Vonovia, which owns around 43,000 apartments. Both companies benefited from the privatisation of Berlin’s housing stock in the early 2000s.

A left-wing coalition government of Social Democrats (SPD) and the far left (Die Linke) oversaw this process, selling off tens of thousands of flats far below market value. This was driven by the neoliberal view that these were ultimately not assets but liabilities which could be sold off to help balance the state’s expenditures in the short term and that, in any case, the private sector would take better care of Berliners’ housing needs than the state.

Is what Berlin voted for ‘nationalisation’?

Some media have called the plan to seize the apartments “nationalisation”, but a more accurate translation of the German term “Enteignung”, as used by the campaign, is “expropriation”.

There are two articles in the German constitution that might be deployed to expropriate corporate landlords. One of them, which states that various kinds of property may be transferred to “common” ownership (Gemeineigentum) in certain circumstances, is more likely to succeed, according to experts. But that article has never, in the entire post-war history of Germany, been applied. This leads to a number of issues. For one, it is not clear what form “common ownership” might take exactly. But it is unlikely that the properties would be transferred straightforwardly into state ownership, as implied by the term “nationalisation”.

Concrete balconies on a modern apartment building in downtown Berlin. (Photo: Getty Images)

How much is an apartment worth?

Opponents of expropriation, including Berlin’s current mayor Franziska Giffey, have argued the campaign could bankrupt the city. But the proposed solution is quite simple. The expected returns from rental properties were never going to be realised all at once. Rather, corporate landlords expected returns to come in over years, if not decades. Why not compensate them in the same manner? This would, proponents argue, create a budget neutral solution. Ownership would be transferred, with rental payments now going into the pocket of the new entity in common ownership, which would in turn make compensation payments to the previous owners for the next 30 or 35 years.

But it is not clear how much the properties in question are worth, or how their value should be determined. The highest estimate is around €36bn. But that would amount to the state simply buying all the apartments in question at their current market value, an unusual step for large-scale real estate transactions. It is more common to use expected future rental income as the basis for such deals, which would reduce compensation payments to €23bn at most.

That number still includes loans taken on by corporate landlords in a market with prices greatly inflated due to speculation based on the hope that rents would continue to increase rapidly. It would even allow these publicly traded companies to continue to pay dividends to shareholders.

But what about a model which would prioritise the interests of the wider community over those of property owners and their shareholders? Corporate landlords have an interest in continued rent increases; the wider community does not. Other models therefore assume a lower rental earnings potential of the flats in question due to more socially sustainable rents being charged in future. This would further reduce compensation payments to somewhere between €14bn and €16bn.

What happens next?

Giffey was vocal in her personal opposition to expropriation. As mayor, her problem is that the referendum result is, in principle, legally binding. The Berlin state government must now take all necessary steps to transfer into common ownership the rental properties which fall into the scope of the referendum. An expert commission evaluating the constitutional conformity of expropriation has recently been convened. The referendum’s organisers believe that the selection of experts for the commission has already skewed the commission’s findings in favour of the opponents of expropriation. The commission is to present a report on the legal challenges ahead within a year. Should the commission find that expropriation may be legally permissible, the Berlin state government would have to introduce legislation to begin the process.

Berlin is far from expropriating corporate landlords. Berliners voted in the referendum on the same day as they effectively installed a mayor who opposed the idea from the start. A mayor who, before the election and the referendum, cited potential future compensation payments as a reason for currently low investment in health and social care.

There is some substance to critiques of expropriation: this measure will not create a single additional flat. But that is not its purpose. Its purpose is to guarantee affordable rents in around 250,000 Berlin apartments. Expropriation can only be one measure among many to guarantee sustainable rents. Another must be an expansive strategy to build new low- and middle-income housing. They must go hand in hand. As recently as 2019, the German constitutional court affirmed that preventing social and economic segregation was a legitimate reason for the state to intervene in the housing market. Berlin’s government, or a new entity under common ownership, could leverage the expropriated rental properties to generate funds for investment in new social housing, or to make existing housing more energy efficient, an urgent demand to tackle the climate crisis.

Luxury apartments in Wynyard Quarter, Auckland (Photo: Getty Images)

What could Auckland learn from Berlin?

Berliners have clearly, and with a strong majority, voted to expropriate corporate landlords. There may be legal obstacles, but it is unacceptable that their elected representatives should dismiss this demand outright, as Giffey has done. Even if the vote is only to be understood as a “signal” that something drastic be done, that signal must be respected and acted upon.

Whether expropriation is truly voters’ demand or not, the referendum result is a signal that voters are beginning to recognise that corporations which seek to maximise their own profits do so at renters’ expense. This is an important sea change that politicians like Giffey must not ignore. The referendum’s message is clear: to reject the supremacy of the market which has brought housing insecurity to hundreds of thousands across Berlin and contributed to a cost-of-living crisis now enveloping Germany.

Aotearoa, too, is facing a similar crisis, driven by the cost of food, fuel and housing. Politicians must show they are responsive to these issues. Otherwise, they risk alienating voters from democratic processes as they increasingly feel those are unable to deliver on anything other than the concerns of shareholders or the needs of large corporations.

The powers of Auckland Council are limited compared to those of the Berlin state government and the Auckland housing market is much less concentrated in the hands of corporate landlords. Nevertheless, Auckland Council faces some of the same issues. Housing affordability must urgently be addressed. Increasing housing density and removing parking while boosting public transit will reduce both housing costs and emissions. While the privileged complain about a consultation to remove some on-street parking, the living standards of hundreds of thousands of people are threatened by the ongoing cost-of-living crisis. A continuing failure to deliver on these issues fundamentally risks undermining Aucklanders’ belief in not just their elected representatives, but in the political system as a whole.

Keep going!
Image: Archi Banal
Image: Archi Banal

SocietyMay 22, 2022

Get ready for an emergency alert

Image: Archi Banal
Image: Archi Banal

On Sunday evening mobile phones nationwide will ring noisily as if an emergency were happening – a test-run for when the real deal unexpectedly hits. But how does it work and can you opt out? 

Between 6 and 7 o’clock tonight, your cell phone will spring to life, emitting a loud noise as an alert is broadcast nationwide: “This is a test message for the Emergency Mobile Alert system. No action is required. Sent by [User Agency name]. Visit civildefence.govt.nz for more information about Emergency Mobile Alert.” It’s the kind of alert that,during an actual earthquake, a manhunt or even a pandemic, could mean the difference between keeping safe and being at risk of serious harm.

Don’t worry though – barring any actual emergency freakishly occurring in that very hour, it’s just the National Emergency Management Agency (Nema) testing what’s known as the emergency mobile alert system. “The nationwide test is a way to check our systems, the cell towers and your phone’s ability to receive an emergency mobile alert, so we have confidence it will perform as it should in an emergency,” says Gary Knowles, director of Civil Defence Emergency Management.

A disaster preparedness survey from 2021 found that 90% of New Zealanders either received an alert or were near someone that did last year. Knowles expects a similar proportion to receive an alert on their phone during tonight’s test. For people who have endured, for example, the severe flooding that hit Westport and the Buller District earlier this year, Sunday’s test alert will be just the latest in a series they’ve received. For others, it’ll come as a surprise. Here’s everything you need to know about the emergency mobile alert (EMA).

So who presses the send button?

The following government agencies are the only ones authorised to send alerts:

  • the police;
  • Fire and Emergency;
  • Ministry of Health;
  • Ministry for Primary Industries; and
  • Nema.

The 16 local civil defence emergency management groups, responsible for emergency management in their areas, are allowed to send alerts too. Nema is the system’s “custodian”, responsible for monitoring its use and effectiveness, managing improvements, coordinating meetings and reporting to an oversight governance committee. A protocol agreed to by the agencies establishes that they must use the system “consistently, cautiously, and effectively” in an emergency, and they must not use it in “any way which is unlawful or fraudulent, abusive (eg, spamming any person or group of persons), or contrary to any written directions or instructions” from Nema. An alert message will identify the agency sending it.

What circumstances trigger an alert?

Besides scheduled test alerts, agencies will press send only where there is a serious threat to your life, health and property. Natural disasters are the first that come to mind – earthquakes, volcanic eruptions, tsunamis, wildfires and floods – but terrorist attacks, armed offenders at large, seriously contaminated drinking water or outbreaks of a deadly virus can count.

At the same time, any authorised agency has to judge whether an alert is appropriate. The protocol states that agencies will issue only “high-priority alerts”. Some criteria, such as how certain and severe the emergency is, and how urgent the response must be, help guide that decision, especially where the information available is incomplete or there’s some doubt about the situation. Other considerations include whether the public would expect to receive an alert or they feel “over-alerted”. And sometimes, an alert might be issued where it doesn’t qualify as a high priority – including where it’s important to keep communication lines open with affected areas.

How does the system work?

Depending on the nature of the emergency, the most relevant authorised agency will lead the response by determining which areas are affected and then creating an alert. Targeted cell towers will then broadcast the alert to affected areas, using a dedicated signal that is more reliable in an emergency, especially when increased traffic overloads telecommunication networks. In some cases, people who are actually safe may also receive the alert. The EMA protocol states it is preferable to “over-alert” a target area because a precise boundary is not achievable in cell broadcasting.

Do I need to subscribe or download an app?

Neither. All you need is a mobile phone capable of receiving an alert. For Apple users, devices running on iOS 11 or later, or those models no earlier than the iPhone 5s, are capable. For Android users, a range of brands will receive the alert. Make sure your phone is switched on and that your operating system is up-to-date. Unlike text messages, emergency mobile alerts are secure and don’t need recipients’ private details, and they don’t use your phone number or collect information about you. However, you can’t opt out of receiving them as they are designed to keep you safe in emergencies.

Does the emergency mobile alert system replace other channels of communication?

It’s a vital channel to keep New Zealanders safe and informed in an emergency, but it doesn’t replace other existing communication lines such as TV, radio, social media, local civil defence groups or your own intuition. In many cases, people will receive alerts via more than one channel, which makes sense – no form of technology is completely failsafe, says Knowles, the Civil Defence Emergency Management director. “If you feel your life is in danger, don’t wait for an official warning. Remember – if an earthquake is long or strong, get gone.”

What language is an alert written in?

Only English. As the EMA is an additional line of communication, people whose first language isn’t English can and should still rely on other channels, especially ethnic-specific broadcasters or social media community group pages. In 2017, Nema signed memoranda of understanding with radio and TV broadcasters to help disseminate information in the event of an emergency.

I’m part of the sight and hearing-impaired communities. Does the system include me too?

If your mobile phone has accessibility features that meet your needs, then you should be able to receive an alert. Deaf and hearing-impaired New Zealanders have recently been able to access emergency preparedness information through New Zealand Sign Language (NZSL) translation videos. Nema and Deaf Aotearoa launched the translations during NZSL week earlier this month, across getready.govt.nz, the agency’s website to get people prepared for emergencies. Its information is also available in audio, large print and “Easy Read”, a type of communication using clear, easy-to-read everyday words, bolstered by images and pictures.