Deutsche Wohnen Faces Potential Expropriation in Berlin

Deutsche Wohnen SE is facing renewed political and regulatory risk as Berlin’s prospective governing coalition—comprising the Linke (Left Party), Grüne (Greens), and SPD (Social Democrats)—plans to pursue the expropriation of large private landlords. The proposal, detailed in a joint policy paper, targets companies holding more than 10,000 residential units within the city limits.

The plan allows landlords to retain a base of 10,000 units, with any holdings exceeding that threshold subject to expropriation in exchange for compensation. According to Linke co-leader Elif Eralp, approximately 160,000 additional units could come under municipal ownership, with the stated goal of stabilizing rental costs. The proposed legislation explicitly excludes cooperatives and community-oriented housing initiatives, as well as properties constructed after January 1, 2021.

The legal basis for this unprecedented move rests on Article 15 of the German constitution, which permits the “socialization” of property with appropriate compensation. The coalition intends to present draft legislation by mid-2028, with a one-year period for constitutional review before implementation. The maximum compensation is capped at €16 billion, a figure described by Eralp as “very realistic.”

This development echoes previous concerns regarding political intervention in Berlin’s rental market, notably the debate surrounding a 2022 referendum on expropriation that ultimately lacked the required voter turnout. The current plan, while framed as a more targeted approach with a defined compensation scheme, still introduces substantial uncertainty for Deutsche Wohnen and other large landlords operating in the city. The potential financial impact hinges on the final scope of the legislation and the valuation of the expropriated assets.

The most significant data point is the proposed compensation cap of €16 billion, and the timeline for the proposed legislation in mid-2028. The impact on Deutsche Wohnen’s portfolio will depend on the final details of the law, but the potential for significant asset disruption and financial cost positions the company within a rapidly evolving and politically charged regulatory landscape.