Plans in Berlin: Banks: Socialization can make real estate loans more expensive

Banks in Berlin warn that the planned association of apartments could lead to higher costs for tenants, homeowners, and those purchasing property. Jens Tolckmitt, CEO of the Verband Deutscher Pfandbriefbanken, expressed concern that the initiative would exacerbate the housing shortage in the city. "No square meter of housing will be created, and private lenders who could fill the gap would be driven away," Tolckmitt said.

The association represents around 50 real estate financiers, including Deutsche Bank, Commerzbank, and savings banks. Tolckmitt argued that the planned association of apartments could become a burden for consumers instead of easing the real estate market. "If ground debts are permanently excluded in an association, bank credit securities would no longer be secure, as the initiative Deutsche Wohnen & Co. plans to seize," he criticized.

"All the more expensive will be cost-effective secured real estate financing – not only for housing corporations, but also for private households seeking the dream of home ownership." Left, Green, and Social Democratic parties in Berlin plan to associate private apartment corporations with a minimum of 10,000 apartments in the capital, with compensation, according to their preliminary paper.

Leftists argue that low rents in state-owned housing would have a dampening effect on the entire market. "If trust in the legal and economic system is at stake," Tolckmitt warned, "banks will carefully consider what they will finance with apartment construction after an association." "Such a signal from Union, Green, and Red in Berlin is dangerous for the whole German location."

"It is about the trust in the reliability of our legal and economic system. Once the option of association is taken, it is over." Tolckmitt called for more haste from the federal government on the planned federal law against confiscations. "A rapid federal clarification is needed." Every month of uncertainty weighs down the image of the Federal Republic as an investment location worldwide.

Union and Social Democratic leaders in the Bund agreed in July to regulate through federal law that the nationalization of private rental housing stocks through association laws at state level would no longer be possible. But there is no draft law yet, only a decision by the coalition council.