London, 23 October 2026 — EBM Newsdesk Analysis — By Katie Winearls
Europe’s largest residential landlord is facing a political threat to its biggest market. Vonovia could take a hit of up to €8bn from plans by Berlin’s incoming left-wing coalition to take large private housing portfolios into public ownership, according to the Financial Times.
The SPD, Greens and Die Linke have agreed a joint paper that would allow the city to take over flats from companies owning more than 10,000 apartments in Berlin. Compensation would be capped at €16bn in total, with a formal bill planned for mid-2028. Vonovia owns about 140,000 flats in the city, so most of its Berlin portfolio would be in scope.
How Berlin Got Here
The idea is not new. In 2021, 59% of Berliners voted in a non-binding referendum to take over the holdings of large private landlords. That vote was a backlash against rents that had soared as the city became one of Europe’s hottest property markets. A government-appointed expert commission concluded in 2023 that landlords could legally be expropriated and compensated below market value, under a rarely used clause in Germany’s constitution.
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SubscribeThe previous CDU-led city government stalled, passing only a framework law. But Die Linke’s strong showing in this year’s state election has put the plan back on the table. Housing affordability has become one of the most explosive political issues across the continent, as EBM’s Weekend Read on Europe’s great housing crisis set out.
Markets Take Fright
Investors have reacted badly. Vonovia’s shares are trading around €16.50, just above their 52-week low. Morgan Stanley this week downgraded the stock to “underweight” and cut its price target from €25 to €14. Jefferies also cut its target, citing financing costs, property valuations and regulatory risk. JPMorgan is holding its “overweight” rating, betting the plans will fail in court.
The company has also hit back in practical terms. Chief executive Luka Mucic has paused new residential projects in Berlin, citing a lack of investment certainty. The roughly 1,000 flats already under construction will be finished. Vonovia says the plans have no legal basis and are unconstitutional, and it expects them to fail in court. Its nine-month results are due on 4 November, according to its investor relations calendar.
Timing makes the pressure worse. Landlords are heavily indebted, and the global bond sell-off has pushed up their borrowing costs just as property values remain under strain. Yields have broken records not seen since 2002.
A Federal Fight
Berlin may not get the final say. Germany’s federal coalition agreed in July to draft a law blocking states from taking private rental housing into public ownership. No draft has been tabled yet, and some legal experts doubt a blanket ban would survive constitutional scrutiny. A long court battle looks likely whichever way it goes.
The politics are hard to ignore. With the far right surging, as the AfD’s 44% win showed, mainstream parties are under pressure to show voters they can fix the cost of living. Meanwhile, Chancellor Friedrich Merz is trying to persuade global companies to invest in Germany, as he did at this week’s Berlin summit with Nvidia. Threatening to seize private property sends the opposite signal.
Where This Goes
Expropriation will not fix Berlin’s housing shortage. It does not build a single new flat, and it has already caused Vonovia to stop building. The €16bn cap also looks unrealistic: Berlin’s own auditors have estimated the full cost at far more, and the city is already short of money. The more likely outcome is years of legal uncertainty that freezes investment just when the city needs more homes. For Vonovia, the political risk now has a price, and markets are charging it. Until the courts or Berlin’s finances kill the plan, that discount will stay.
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