Law & Politics
Housing policy in Friedrichshain-Kreuzberg
Pre-emption rights in Berlin: How the rent cap renders boroughs unable to act
The rent cap has made pre-emption purchases unprofitable for Berlin's municipal housing companies. In Friedrichshain-Kreuzberg, a controversial cooperative is now exercising pre-emption rights worth millions without secured financing.
Peter Guthmann
The borough-level pre-emption right is one of Berlin's sharpest housing policy tools. In designated conservation areas (Milieuschutzgebiete), boroughs can use it to pull apartment buildings off the open market. But with the rent cap, this model is on the verge of collapse. Purchase prices for apartment buildings remain high, and the capped rental income no longer covers refinancing. For the municipal housing companies (WBGs), these acquisitions are no longer viable.
Municipal buyers drop out
Until now, the state-owned WBGs were the primary pre-emption buyers. That strategy has run out of money. The high acquisition costs cannot be covered by limited rental income. To keep the pre-emption policy alive, the red-red-green coalition is looking for alternatives and has found one in a cooperative with a dubious history.
The "Diese eG" as a controversial partner
In Friedrichshain-Kreuzberg, building councillor Florian Schmidt (Greens) is relying on the cooperative "Diese eG." Originally founded to save a swimming pool, it was taken over by members of the Left Party and repurposed for housing policy. It now serves as a vehicle for property purchases that the municipal companies cannot afford. The problem: financing for pre-emption rights already exercised, worth millions, was not secured at the time of exercise. Due installment payments have already been missed.
Risks for sellers and tenants
Finance Senator Matthias Kollatz (SPD) contradicts Schmidt's claim that there were firm financing commitments. The necessary Senate resolutions came in August 2019, months after the borough had created facts on the ground. Under the financing model, tenants are expected to buy cooperative shares of around 500 EUR per sqm and accept rent increases to enable bank loans. For owners looking to sell apartments in Berlin, this means unpredictable delays. Transactions stall, and sellers bear the risk that purchase contracts fall through because of unsecured financing.