Monday, 5 October 2026
Berlin could face substantial long-term budget costs if it transfers large privately owned residential portfolios into public ownership, according to new modelling by the German Institute for Economic Research (DIW Berlin). The analysis comes as the city continues to struggle with housing supply, rising rents and the question of how to expand affordable accommodation.
DIW examines a potential transfer of around 240,000 apartments held by major residential companies. Rather than presenting a single cost estimate, the institute models different combinations of compensation, rents and borrowing conditions. Its calculations assume that Berlin would finance capital equivalent to 20% of the compensation while a newly established public entity would borrow the remaining 80%. Financing costs are assumed at 4% for Berlin and 5% for the housing organisation, with repayment over 50 years.
Under these assumptions, compensation of EUR 21 billion combined with average rents of EUR 8 per sqm would require approximately EUR 366 million annually from Berlin’s budget. At a EUR 29 billion valuation, the annual contribution rises to around EUR 791 million. Reducing rents to EUR 7 per sqm increases those figures to approximately EUR 541 million and EUR 966 million respectively, while compensation of EUR 29 billion and rents of EUR 6 per sqm would result in an estimated annual requirement of EUR 1.14 billion.
The calculations are scenarios rather than forecasts of what Berlin would ultimately pay. Previous assessments of the affected residential portfolios have produced substantially different valuations, ranging from EUR 8 billion to more than EUR 30 billion. The eventual financial consequences would depend on the compensation methodology, borrowing costs, rental policy, operating expenditure and the structure established to own and manage the properties.
The debate is taking place against a weakening construction pipeline. Berlin completed 11,027 homes in 2025, the lowest annual total since 2015. Of these, 9,524 came from new construction and another 1,503 from work involving existing buildings. Berlin’s total housing stock stood at approximately 2.07 million units at the end of 2025, having expanded by only 0.5% during the year.
DIW argues that transferring existing properties into public ownership would change their ownership and potentially their rental conditions but would not directly increase the number of apartments in Berlin. The institute also raises concerns about the possible effect on future development, given the importance of private residential companies to construction. Housing companies accounted for an average 42% of Berlin housing completions between 2008 and 2025 and 46% in 2025.
The researchers also consider how lower rents across a large publicly controlled portfolio could affect the functioning of the wider rental market. They argue that tenants benefiting from below-market rents could become less likely to move, reducing the number of homes returning to the market, while demand for access to the lower-priced stock could increase. These are economic assessments rather than established consequences of a future Berlin programme, and the outcome would depend on how any policy was designed and implemented.
DIW therefore places greater emphasis on expanding housing supply, including easier conversion of suitable commercial properties, faster approvals, simplified construction requirements and greater development of land already designated for housing. The study highlights the central financial trade-off facing Berlin: transferring a substantial share of existing rental housing into public ownership could provide greater rent protection for current occupants, but depending on compensation and financing terms it could also require hundreds of millions of euros in annual public funding without directly adding new homes to the city’s constrained housing stock.
