A vote on whether the German capital should confiscate apartments from big corporate owners highlights the regulatory risks associated with large institutional housing investments.

Berlin’s tenants are trying to evict large landlords and on 26 September voters in Germany’s capital will decide whether to expropriate any landlord that owns more than 3,000 properties in the city. A clause in the German constitution allows for the move, but it hasn’t been tested before. It would affect real-estate investment trusts including Deutsche Wohnen - which owns 116,000 properties in Berlin and is currently the target of an €18bn takeover bid. 

Berlin attracted global attention last year when it introduced rent controls (Mietendeckel), which set rent limits in different areas of the city and stopped all rent increases for five years. It came into effect on 30 January 2020, and the rent reductions started on 23 November 2020. 

However, after hundreds of thousands of tenants saw their rent reduced, with some saving several hundred euros per month, on 15 April 2021 the constitutional court in Germany said that the rent controls are unconstitutional, Berlin did not have the right to make this law, and it was never therefore valid. Because of this, many people must pay the money they have been saving back to their landlords.