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Red Flag: What Deutsche Wohnen’s sale could mean for you

Berlin’s biggest landlord is set to be swallowed up by Vonovia, the biggest in Germany. As Nathaniel Flakin explains, this isn’t good news for tenants.

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On Monday evening, Berlin’s biggest landlord announced that it will disappear. Deutsche Wohnen controls 113,000 housing units in the city, and surveys show that roughly half of Berliners think the company should be “socialised” and put into public ownership. But that’s not what this is about. Instead, Vonovia, the biggest landlord in Germany, announced that it intends to purchase its biggest competitor. The deal, which will cost €18 billion, would create a mega-landlord with half a million apartments in Germany. In Berlin, Vonovia already owns 43,000, so the new company would control 150,000.

What does this mean for the campaign to expropriate Berlin’s biggest landlords? It is called, after all “Deutsche Wohnen enteignen.” But as spokesman Michael Prütz told the Berliner Zeitung, “this changes nothing about our perspective.” The actual name of the campaign is “Deutsche Wohnen und Co. enteignen.” The referendum will be calling for the socialisation of any company with more than 3,000 apartments in Berlin. So even before the fusion, Vonovia was already on the list.

The monopolisation and associated name changes might cause some temporary confusion. But the campaign just announced that it collected 197,000 signatures in the first three months. They have one month left and intend to reach 250,000. They need 170,000 valid signatures to get the initiative on the ballot. In a referendum, about 30 percent of signatures are declared invalid, because the signer lacks German citizenship, is not registered in Berlin or is under 18. And that is a crazy rule, when you think about it — if everyone in Berlin needs to pay rent, why shouldn’t they be allowed to vote on housing policy?

Many renters are going to understand instinctively that market consolidation is not good for us. As the tenants’ association points out, if Vonovia spends €18 billion to swallow Deutsche Wohnen, that money will have to come from somewhere — where else than from renters?

Berlin mayor Michael Müller of the SPD said the plans were accompanied by “important statement of social policy.” The companies announced they would implement a kind of “voluntary rent cap” — they would limit rent increases to 1 percent per year until 2024, and only in line with inflation until 2026. But is that a good deal for Berliners, after rents in the city have doubled in the last decade? This would include no legal guarantee — the companies could break their promise whenever they want to. Plus, it’s important to remember that legal restrictions — the “local reference rent” — limit rent increases to just over 1 percent, anyway. So the companies are presenting what they have to do anyway as some kind of rent.

If Vonovia spends €18 billion to swallow Deutsche Wohnen, that money will have to come from somewhere — where else than from renters?

It’s worth looking at Vonovia’s business model to better understand what it will mean for renters. Even if the corporation does keep down the net rent (what Germans call the Kaltmiete or “cold rent”), it systematically jacks up charges for heating, cleaning and other services, thus raising the actual rent (Warmmiete or “warm rent”).

In 2018, an investigation by Der Spiegel described Vonovia’s “dubious methods” and “incorrect charges” for everything from clearing snow and making repairs to collecting trash. Renters were presented with incomprehensible bills for horrendous amounts. A normal landlord will pay outside companies to do maintenance work, and thus keep costs low. But Vonovia relies on “insourcing” — a total of 350 wholly owned subsidiaries perform these services. So the company has its renters pay extortionate service fees — and this money flows straight back to the company.

Der Spiegel collected examples from renters across Germany. As soon as Vonovia takes over a building, the costs for groundskeeping might jump by 70 percent, the costs for trash collection by 164 percent, or the cost for winter services by 1900 percent. And that doesn’t even mean the services get provided. A company like Vonovia can charge for having checked that a lightbulb works — who knows if they did? In one building described in the article, the renters have to pay €43,000 per year for a Hausmeister — but he was only in the building for 47 days a year. Renters who object to these charges are often successful. But since the process of getting a lawyer is so nerve-racking, many renters just go along.

The long story short is that Vonovia’s incredible profits do not only come from rents. This kind of barely legal extortion is what the SPD is offering.

As a cherry on top of this pseudo-social “offer,” the new companies are offering to build 13,000 new apartments and sell 20,000 apartments to Berlin. Why would we need to expropriate, some may ask, when we can get 20,000 with no fuss?

But these companies haven’t built many apartments. Vonovia / Deutsche Wohnen is offering 20,000 for sale, but won’t they be the ones that are full of asbestos or otherwise in need of expensive renovations? And what will the price be? Berlin privatised almost 200,000 apartments in the 2000s — it could very well be buying back formerly public housing at two or three times the price. Vonovia would presumably expect to get market prices. Socialisation according to Article 15 of the German constitution, in contrast, demands compensation based on “an equitable balance between the public interest and the interests of those affected” — so far less than market prices.

An investigation described Vonovia’s “dubious methods” and “incorrect charges” for everything from clearing snow and making repairs to collecting trash. Renters were presented with incomprehensible bills for horrendous amounts.

The bottom line is: if it would be good to have the city buy 20,000 apartments, then it would clearly be better to put more than 200,000 apartments into public ownership — at a much lower price.

Some people will object to expropriation because we need to protect “private property” and “law and order.” But public broadcaster rbb24 just published a reminder that the boundaries between the realty sector and the mafia are fuzzy. Gijora Padovicz, the speculator who was responsible for the eviction of the queer feminist house project Liebig34 and also of the homeless camp at the Rummelsburger Bucht, is exploiting refugees by getting them to pay thousands of euros in “finders’ fees” in order to access housing. They then might end up in apartments without running water or heating.

Thousands of Berlin police have been mobilised to help Padovicz by evicting so-called “squatters.” Have you ever seen such a massive police operation to stop illegal practices by landlords? It’s almost as if the police were not there to defend “law and order,” but only the interests of a tiny minority of capitalists. So even if a publicly owned, democratically controlled housing company doesn’t sound like your cup of tea – would you prefer Berlin’s housing market be controlled by mega-corporations or the mob?

This announcement changes nothing. As renters in Berlin, we are still faced with the same question: do we want our rent going into the pockets of investors, where it disappears into tax havens? Or do we want it going to public housing companies that invest in new affordable housing?