Berlin spends 1 bn euros to buy back former public flats

Berlin authorities came under fire Friday for spending almost one billion euros to buy back 6,000 former public housing apartments that had been privatised, to bring down soaring rental prices.

Under the deal announced late Thursday, state-owned housing company Gewobag will repurchase the flats originally built as social housing from the 1960s to the 1990s.

The price tag of 920 million euros (about $1 billion) is more than double the 405 million euros the city-state had made when it privatised the properties in 2004, according to German media.

The mayor of the German capital, Michael Mueller, said the deal aimed at “keeping the rents in Berlin stable”.

The purchase marks the biggest such renationalisation undertaken by the city, where rents have doubled in the past decade.

Gewobag’s board member Markus Terboven said the deal with the private real estate firm Ado Properties would bring its housing stock to “around 68,000 apartments and secure living space for more than 10,000 more Berlin tenants”.

The far-right AfD party attacked the move as “a waste of money” and the business-friendly FDP accused Gewobag along with Berlin’s government of “participating in property speculation”.

“Gewobag now owes millions without having created a square metre of new living space,” the FDP charged on Twitter.

The latest purchase came months after the German capital’s authorities bought up 670 apartments along downtown Karl Marx Allee from a private owner, also in a bid to hold down rents.

Soaring housing costs have become a hot button issue in Berlin, leading some residents to ponder radical solutions, including campaigning for the seizure of housing stock from powerful landlords.

Alarmed by the trend, the Berlin city government in June agreed on the outlines of a draft law that would include freezing rents for five years from 2020.

The draft law, which is still being drawn up, would be aimed at preventing rent hikes for 1.5 million apartments, Berlin authorities said.