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The Berlin Borough Buying Out Private Landlords

Fearful of rising rents, the municipality is asserting its right to block investors from buying apartment buildings. Other cities across Europe are sure to watch how this plays out.
A street festival in Kreuzberg, Berlin.
A street festival in Kreuzberg, Berlin.Fabrizio Bensch/Reuters

To stop landlords from hiking up rents, one Berlin borough is taking drastic action: blocking the sale of a building and buying it up for the government. Earlier this week, the inner-city borough of Friedrichshain-Kreuzberg announced that it wouldn’t allow a privately-owned tenement to be sold to an international investor. Instead, officials are directing the sale toward a state-owned independent housing association committed to affordable rents.

The move came after tenants campaigned to block the sale, fearful that the prospective buyer, a shell corporation registered in Luxembourg, would raise rents beyond a level they could afford. The borough’s move—blocking a building’s sale simply because it fears potentially extreme rent rises—would be illegal in some places. In Berlin, it’s possible because of national “neighborhood protection” laws that give boroughs a right of pre-emption if the sale of a building in an area of high housing stress risks displacing its tenants. The move is not just possible, in fact, but increasingly common.