Something unexpected has happened in German politics thanks to environmental protests, which could have significant consequences for millions. Berlin activists of "Expropriate Deutsche Wohnen and Co." and their supporters within political parties (the SPD, Greens, and Left Party) did not expect this: An indirect expropriation is coming, but in favour of the big property companies. Millions of small landlords will have to sell their properties to the big players.

This is due to other activists who are active not only, but especially in Berlin: Climate activists. The EU Parliament approved a draft directive from the EU Commission,1 according to which all residential buildings must achieve energy standard D by 2033. The association of private house and flat owners (Haus & Grund Deutschland) fears costs of €15,000 to €100,000 per residential unit.2

What exactly should happen if someone cannot afford it is up to the member states. Direct expropriation is hardly conceivable in Germany due to the protection of property under the Basic Law, but fines or even tax increases for houses with poor energy efficiency. This gives small landlords overwhelming incentives to sell up.

We must also consider the actions of large corporations such as Deutsche Wohnen and Vonovia, which can take out more loans and utilise scaling effects, such as for tradesmen's contracts. When the state steps in to help big corporations, financially or through other actions, problems arise, as in this case the indirect expropriation of the competition.

This is exactly what is happening here. The expropriation of small landlords will be followed by financial support for corporations. The housing industry associations will rightly tell the federal government that such high renovation costs can only be met through gigantic rent increases in purely economic terms.

The government will then subsidise the corporations to avoid mass protests, with a subsidy programme that ties some paperwork to the social importance of housing, but then transfers billions per year, raised as always through taxpayers' money or government debt. Green MEP Malte Gallée has spoken about such subsidy programmes.3

We are dealing with a privatisation of profits and socialisation of losses, which can now be observed in all areas of society. The big, politically well-connected companies benefit, as do the politicians in Berlin and Brussels and the big environmental protection organisations, who can sell the whole thing as a victory for climate protection. Everyone else loses.

It is paradoxical that unfair state support for large companies is usually accompanied by often equally unfair criticism of large companies, often from the same politicians. Let's not forget that the Green Party raves about small farmers and corner shops, while at the same time bombarding agriculture and food sales with so many rules and regulations that only large farms can afford to comply with them and the associated bureaucracy.

The catch is as follows: if you want small market players, you must trust companies and consumers. If you believe every farmer dumps manure into the stream without supervision, every shop puts out rotten meat, and every customer consumes this meat unseen, if you believe that every landlord would prefer to install only cardboard walls and every tenant turns the heating all the way up, then you should say straight away that you only want large companies linked to the state, because that is what you will get. This is the modern dilemma of capitalism in Germany.

We are increasingly facing a new version of the corporative state. The state, spurred on by environmental organisations and activists, is intervening everywhere one way or another, so businesses must participate in these authoritarian decision-making processes through their associations in order to only be economically damaged rather than completely destroyed.

This naturally favours larger companies, because the pensioner couple who have bought a flat at great personal expense to supplement their pension provision with the rent do not sit on the committees of housing industry associations and do not go in and out of ministries.

To change all this, however, it is not enough to scold politicians. The problem starts with us: if you ask a citizen whether, as a landlord, they would do without sensible and financially feasible renovations, or whether they would put themselves in intensive care by eating a mouldy steak, they will say no.

But if you then ask them whether other people would do the same, too many people say yes and beg for government intervention. However, if you then ask them whether other people would do the same, too many people say yes and beg for state interference. Only when we start to trust other people, and therefore the market again, can freedom return to Germany.

This article was written by Torben Halbe. Torben is a fellow with Young Voices Europe and a German writer and activist. He is the author of The True Life of Trees (WOLL-Verlag, 2017) and Freedom Without Free Will (WOLL-Verlag, 2020).

References

1 The EU Parliament votes for compulsory restructuring – and a major disadvantage for the Germans.
2 The next cost hammer for homeowners: the EU is planning mandatory renovations.
3 Green politician defends EU restructuring obligation.