Carsten Jung, the CEO of Berliner Volksbank, has raised serious concerns regarding the ongoing debate about the nationalization of private housing corporations as the Berlin election campaign intensifies. According to the head of one of Germany’s largest cooperative banks, this move represents a dangerous precedent. He warns that such a policy would trigger major economic disruptions, effects that would extend far beyond the Berlin real estate market, ultimately harming the investment climate across Germany. Furthermore, he argues that even if implemented, it would not lead to the creation of new housing units.
The election for the Berlin House of Representatives is set for September, and the issue of “affordable housing” has become the central theme of the political debate. The political party Die Linke supports a form of “societal ownership” which involves the expropriation of private housing companies. This initiative has been bolstered by the citizens’ initiative “Deutsche Wohnen & Co enteignen” which plans to push its own legislative draft through a public referendum.
This proposal suggests the removal of mortgage rights for up to 220,000 affected residential properties, most of which are likely financed by loans. Jung states that without these mortgage rights, banks would be forced to instantly demand the repayment of loans amounting to billions of euros. Given that the housing companies are slated to receive only a low compensation payment, this could potentially lead to bankruptcy for some of them.
Jung also believes that the resulting loss of confidence could negatively impact the Berlin budget. He suggests that a nationalization would likely have consequences for the region’s credit rating and, consequently, its future refinancing abilities. The state of Berlin would likely face higher surcharges when taking on new debt.
