Berlin's re-elected coalition of Social Democrats (SPD) and the Left Party-PDS have decided against selling any of the city's stock of 270,000 homes to ease its massive debts. Berlin has the highest per capita debt of any German state.
Berlin's re-elected coalition of Social Democrats (SPD) and the Left Party-PDS have decided against selling any of the city's stock of 270,000 homes to ease its massive debts. Berlin has the highest per capita debt of any German state.
In a coalition accord signed on Tuesday, the ruling parties stated that they favoured setting new profit targets for the capital's six residential property companies rather than a sale.
The German capital's six residential housing companies together made a net profit of about EUR 30.5 mln last year. Two of the six units reported losses. 'Thilo Sarrazin (Senator for Finance since 2002) wants the six companies to set targets to pay the city a regular dividend,' said Finance Senate spokesperson.
The Left Party-PDS opposed selling the city's property during the election campaign. The party claims that private equity funds may be attracted to buy Berlin-owned homes and recoup their investment by increasing rents. Residential properties were largely excluded from legislation to introduce real estate investment trusts (REITs) next year due to the same fears on the left of the Social Democratic Party (SPD).
In October 2006, Germany's highest court rejected Berlin's plea for financial help from Chancellor Angela Merkel's federal coalition, saying the city should sell assets. The city's accumulated debt will probably rise this year to about EUR 60 bn.
