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HOUSING

EXPLAINED: The reasons why so many Germans rent rather than buy

Nowhere in the EU is a dream of buying one’s own home less relevant than in Germany. While there are several reasons why so many Germans decide never to take their first step on the property ladder, some experts say the German love of renting doesn’t make much sense.

EXPLAINED: The reasons why so many Germans rent rather than buy
A property to rent in Berlin. Photo: DPA/Bernd von Jutrczenka

Germany has the lowest level of property ownership in the EU, with just over half of the population owning their own home.

But while in many cultures – particularly in English-speaking countries – home ownership is an almost universal (if sometimes unattainable) dream, this is not always the case in Germany.

What is going on here? Why are Germans so content to rent?

Can Germans not afford their own homes?

According to the European Union’s statistical agency ‘Eurostat’, 51.1 of homes are owner occupied in Germany – well below the 70 percent European average.

This is quite a surprising statistic for the economic powerhouse of Europe. One would think that Germans would have few problems being able to buy their own homes.

Statistic: Home ownership rate in selected European countries in 2019, by country  | Statista

But the fact that the former communist countries Romania and Hungary have the highest home ownership rates on the continent (96 percent and 92 percent respectively) indicates that the correlation between economic strength and home ownership isn’t as strong as it seems.

Indeed, Germans are in a better position than many Europeans to buy.

Calculations in the Deloitte Property Index show that buying a property in Germany is comparatively cheap. The costs of a house is roughly equivalent to five pre-tax incomes, whereas in the UK the average house costs the equivalent of nine years’ salary.

But there are also clearly price concerns that make a big difference.

There are big differences in home ownership across the 16 federal states.

SEE ALSO: Here’s where rent prices are going up (and down)

The tiny state of Saarland in the southwest has the highest rate of home ownership in the country. Close to two-thirds (64.1 percent) of residents of the former coal-producing region live in their own properties.

At the other end of the scale is the capital city where less than every fifth person owns their home.

The wide gap between ownership in cities like Berlin and Hamburg and rural areas like the Saarland reflects a difference in property prices.

The Deloitte Property Index states that “the purchase price index between city property prices and those in the countryside gaps further than ever and continues to show the increasingly divergent development of purchase prices between urban and rural regions.

“Property prices in German metropolises such as Berlin, Frankfurt and Hamburg exceed the national average by half, while Munich records the highest German value at 130 percent.

Find your next place on The Local’s apartment rentals page, with listings available in ten major German cities

So, why are Germans not so keen on buying?

There are historical reasons for the German preference for renting.

After World War II, there was an acute need for living space, but little private money around to finance it.

“That’s why the state quickly built lots of rental housing and later slowly withdrew from the sector,” poverty expert Tobias Just told Business Insider in 2019. “Because the rents remained cheap for a long time, people also liked to stay in rental housing for a long time.”

One study looking at the low rate in Germany, found four major historical factors which have contributed to a preference for renting over buying: a large supply of high-quality social housing, a lack of subsidies for homeowners (unlike Spain or the Netherlands), strong protections for renters, and long-term stability of rental prices.

Germany has a strong system of rent controls that ensures that landlords can’t charge an arm and a leg for living space.

Hamburg and Berlin are two of many cities that have enacted “rental brake” laws in recent years to ensure that rents are tied to the quality and age of the property, while reflecting overall rents in the neighbourhood.

That all means that Germany has some of the most affordable rents in Europe – although prices are creeping upwards especially since Berlin’s rental cap law failed in 2021. 

“Rental costs per square metre in Berlin, at a relatively moderate rate, are lower than Frankfurt, Hamburg and lastly Munich, which charges the highest rents. But a comparison of European cities clearly shows how favourable the average rent level is in German cities,” comments Deloitte.

Then there are the hidden costs of buying. In Germany interest on mortgage payments is not tax deductible, as it is in other European countries.

And while it is true that rental prices have been increasing strongly in almost every German city in recent years, property prices have been rising even more rapidly.

Is this likely to change in the future?

Over the past two decades the number of Germans who choose to buy their own property has been slowly rising.

According to information published by the national statistics agency Destatis, the proportion of Germans who live in her own home has risen from 40.9 percent in 1998 to 46.5 percent in 2018.

Especially in recent years, buying has become a better investment.

A recent study by the Cologne Institute for Economic Research (IW), found that in 393 of 401 German districts, buying is now more profitable than living as a tenant.

For anyone moving house, “it is more attractive to invest in residential property than to rent,” says Michael Voigtländer, real estate economist at the IW.

SEE ALSO: Renting versus buying in Germany – What is actually cheaper?

One of the major reasons why buying is so attractive is the low interest rates that have been set by the European Central Bank over the past decade. These have made it cheaper than ever before to take out a mortgage.

According to analysis by the IW, even in German metropolises, where purchase prices have risen particularly sharply, home ownership is now the cannier choice.

In Berlin, living in your own home is currently about 35 percent cheaper than renting, while in Hamburg the figure is 43 percent, the institute estimates.

So over the next few years we can expect to see ever more Germans calling themselves Eigentumer and ever fewer calling themselves Mieter.

EXPLAINED:The words you need to know before renting a flat in Germany

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HEALTH

10 key things you need to know about healthcare in Germany

From the type of insurance you should get to how to find GPs and specialists, we've put together a guide to help foreigners in Germany navigate the healthcare system.

10 key things you need to know about healthcare in Germany

If you’re living in Germany or thinking of making it your home, you’re in luck. Germany’s healthcare system is widely regarded as one of the best in the world, and ranks above the OECD average on most key indicators as of 2023.

Navigating a foreign healthcare system can be a little tricky for any foreign resident, especially new arrivals. So we’ve created a guide to some of the most important aspects of Germany’s healthcare system. 

Do I need health insurance?

Yes. Health insurance is mandatory for all German residents, so you’ll need to take out a form of insurance even if your current policy from your home country covers you whilst in Germany. 

The German health insurance system operates through two co-existing insurance types; private and public.

If you’re working in Germany, you’ll need to be covered by one of the two. Some visas allow for a special expat insurance instead, however, there are specific requirements for this. 

How does public insurance work?

Public health insurance, or Gesetzliche Krankenversicherung (GKV), is the most common form of health insurance in Germany. The German Bundesministerium für Gesundheit (Health Ministry) estimates around 90 percent of the population are signed up to GKV funds.

If you opt for public insurance, you’ll pay a monthly premium to your health insurance provider, which is calculated according to your income. Your employer will also pay mandatory contributions to your insurance. 

You have free choice of your health insurance fund, with over 100 public health insurance funds to choose from. Each will provide you with different levels of benefits and coverage, so it’s wise to take a close look at the fine print for each option. 

READ ALSO: Can you switch from private to public health insurance in Germany?

Public health insurance pays for healthcare that is „sufficient, appropriate and economic“. This includes medical treatments, prescribed medications, vaccinations, psychotherapy, and allied health care. Your health insurance will also pay the cost of hospital treatments, if the need arises. 

While most treatment providers will charge the cost of your care directly to your health insurer, some healthcare costs require a co-payment. This includes prescriptions and hospital care, however, the co-payments are generally small and scaled to your annual income.

Your public health insurance will also pay you a sickness benefit, or Krankengeld, if you’re certified unfit for work for more than six weeks. 

If you’re coming to Germany to work for a company, this is most likely going to be the best form of insurance for you. However, if you earn over a certain amount, or are self-employed, you may have to opt for private health insurance. 

When you sign up to a public health insurer, you’ll be given the all-important Gesundheitskarte (health insurance card). It’s important to always bring this with you when accessing any healthcare services. It’s also helpful to carry it around all the time in case of an emergency. 

A German health insurance card.

A German health insurance card. Photo: picture alliance/dpa | Jens Kalaene

What about private insurance?

Private health insurance, or Private Krankenversicherung (PKV), is the other form of health insurance in Germany. 

If you’re self-employed, a small business owner, a freelancer, or work in the public service, you’ll most likely have to sign up for PKV, although there are still notable exceptions to this.

If you earn over the compulsory social insurance threshold – currently set at €69,300, according to the Verband der Privaten Krankenversichrung – you become eligible for private insurance. 

Premiums for PKV are calculated based on a risk assessment done by the insurer, and generally vary based on your age and health. It’s important to note you can be rejected by a private insurer if you’re deemed too risky to cover. This isn’t the case with public health insurance. 

If you’ve come to Germany with dependents, such as children or a spouse, they also aren’t automatically covered by your private health policy and will generally require separate premiums. 

READ ALSO: How creative freelancers can pay less for German health insurance

If you decide on private insurance, you’ll have to cover the upfront costs of seeing doctors, going to hospital and obtaining medication. You’ll be either fully or partially reimbursed afterwards by your insurer. 

PKV might not be for you if you hate being bogged down with admin tasks, as claiming the payments from the insurer means filling in forms in German, although there are some providers that offer services in English.

If you’re a member of a public health insurance fund, you can take out additional cover with a private insurer to cover you for certain benefits, such as comprehensive dental treatment. You’ll bear the cost of any additional coverage yourself. 

What about expat insurance?

Another option is expat insurance, also known as incoming insurance. It provides coverage for people newly arrived in Germany and is suitable for some visas without work contracts. 

Temporary expat insurance could act as a good stopgap if you’ve just entered the country, but it doesn’t provide as comprehensive a coverage as PKV or GKV.

Coverage varies across providers, and you’ll generally have to pre-inform them of appointments and other medical care and be reimbursed. 

However, if you’re planning on renewing or changing your visa soon, it’s worth mentioning that having expat health insurance isn’t sufficient. You’ll need to be covered by a public or private insurer for it to be approved. 

Finding a doctor 

If you don’t speak German, the prospect of finding a doctor might seem a little daunting. Fortunately, there are plenty of services to help you find a doctor who works in your native language. 

A site like doctolib.de is a fantastic resource for finding and booking appointments with a variety of different health practitioners, from GPs to cardiologists.  

READ ALSO: What you need to know about making a doctor’s appointment in Germany

How GPs work in Germany

General Practitioners, or Hausärtze, either operate by themselves as solo, practice-based physicians or within a medical centre. While registering with a local GP is encouraged, it isn’t compulsory. 

GPs in Germany can provide prescriptions, offer vaccinations, perform minor medical procedures and conduct routine check-ups. You’ll need to book an appointment in advance, but some GPs offer open hours where you can wait in the practice to be seen (and expect long waits).

E-prescription service Germany

A patient inserts their health insurance card into a card reader at a German pharmacy. Photo: picture alliance/dpa/Reuters/Pool | Annegret Hilse

Unlike many other healthcare systems around the world, GPs in Germany don’t act as a gatekeeper to more specialised care. While you won’t need to see a GP for a referral to a specialist such as a dermatologist or gynaecologist, there are a few specialities (such as radiology and laboratory services) which are exceptions to this. 

Seeing specialists

Free choice of medical practitioners is a core principle of the German healthcare system, so you’ll be able to pick and book appointments with specialists without a referral from your GP in many cases. 

When searching for specialists, you’ll likely see some specialists are only available to those who are privately insured or self-paying. Finding a specialist who works with publicly insured patients is possible, however the wait times will likely be a little longer. 

If you have any questions, your health insurer or your GP should let you know how you can access a specialist doctor. 

READ ALSO: How to get a faster appointment with a specialist doctor in Germany

What about the dentist?

Public health insurance doesn’t fully cover dental care. While basic dental is covered, such as a yearly checkup, many German residents rely on supplementary private insurance for more comprehensive dental treatments because care can be expensive.

However, you should check with your insurance to see what extra dental services are covered. For instance, some insurers contribute a one-off payment to supplement teeth cleaning, but they won’t explicitly tell you this information when you take out insurance. 

Pharmacies and medicine 

If you’ve been given a prescription by one of your physicians, your next stop should be at a pharmacy, or Apotheke to have it filled. 

You’ll typically have to present your Gesundheitskarte to the pharmacist, and depending on your health insurance you might have to make a co-payment for the medication. This will be a maximum of 10 euros and a minimum of five euros. 

If Sunday rolls around and you find yourself in need of a prescription, there are emergency pharmacies, known as Notdienst-Apotheke, which operate on a rotating schedule within one area or district. You’ll generally be able to find the schedule at your regular pharmacy or online.

If having prescriptions delivered to you works better, there’s a service called MAYD which will deliver anything you need from your local Apotheke to you.

READ ALSO: The new rules on digital prescriptions in Germany

Going to hospital  

Germany has a comprehensive hospital network, with most people able to reach an acute care hospital within 30 minutes by car. 

The quality of hospital will depend greatly on where you live. Federal states are responsible for hospital care, and some operate better hospitals than others. 

When you arrive at a hospital, you’ll need to have your Gesundheitskarte on you for the registration process. The hospital will need to know about your health insurance status for the billing process. 

It’s also important to note here that the disparity between public and private insurance is most apparent when it comes to hospital care. If you’re privately insured, you will generally have better access to more senior doctors, your own room, and be seen faster.

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