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Germany sees record high rent increases in 2023

Germany's big cities have seen record-high rent increases for the first quarter of 2023, a new study has revealed.

Published: 17 April 2023 11:28 CEST
Updated: 17 April 2023 12:30 CEST
Stuttgart city centre
Stuttgart's city centre, as pictured in February. Photo: picture alliance/dpa | Marijan Murat

Between January and March 2023, the nationwide asking rents for existing flats rose by 7.4 percent, and 7.7 percent for newly built flats, according to a new assessment from real estate platform Immoscout 24.

As compared to a year ago, nationwide asking rents for existing properties rose by up to 12 percent and for new builds by up to 20 percent.

In addition to noticeable price increases, the demand and the competition for flats has been particularly high, wrote Immoscout 24. As a result, people were increasingly looking for a new place to live in the suburbs of larger cities.

READ ALSO: Why Germany wants families to move to the countryside

Extreme increases

Flat hunters in Germany’s seven largest metropolises were most affected by price hikes, wrote the real estate platform. 

“Berlin and Stuttgart are recording extreme increases of around eight and nine percent for new rental flats within the first quarter, which have never been seen before,” Immoscout 24 managing director Gesa Crockford told the Frankfurter Allgemeine Zeitung (FAZ). 

In Berlin, asking rents for existing flats have reached a record high of €12.56 per square metre, while Munich is by far the most expensive at €18.44. The national average sits at €8.01.

READ ALSO: 

For newly built rentals, flat seekers will have to dig deeper into their pockets: nationwide the average is currently €11.01 per square metre, and the numbers creep up to €17.64 in Berlin and €22.30 in Munich.

Prices also went up for buyers

Meanwhile, the market for buy-to-let properties has recovered somewhat, following year-on-year price declines of up to 10 percent at the end of 2022. 

Across Germany, asking prices for existing and new flats stood at 2.3 percent higher in the first quarter than in the previous quarter. 

The average asking price for existing owner-occupied flats was €2,778 per square metre and €3,992 for those which were newly constructed.

Munich also holds the title of the most expensive city for apartment buyers, with square metre prices at €7,346 for old and €9,443 for new flats.

Properties with a poor energy efficiency rating, however, saw prices decrease slightly, Crockford told FAZ.

She added that it was hard to forecast how costs for buyers would develop in the coming year, but that “In the metropolises, I would not assume there will be falling prices.”

Vocabulary

noticeably – spürbar

metropolitan area/conurbation – (der) Ballungsraum 

condominium/owner-occupied flat – (die) Eigentumswohnung

Asking rents – (die) Angebotsmiete

We’re aiming to help our readers improve their German by translating vocabulary from some of our news stories. Did you find this article useful? Let us know.

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READER INSIGHTS

How foreign residents in Germany are winning rent reductions

Rent is often the biggest expense for foreign residents in Germany. Even though there are rent controls in some cities, tenants can still be charged too much. Readers shared how they managed to get a rent reduction.

Published: 2 May 2024 14:57 CEST
How foreign residents in Germany are winning rent reductions

The Local asked readers whether they have tried to reduce their rents in Germany, and to what end. 

Of the readers who responded, nearly half said they had never tried to reduce their rent. Among the other half of respondents, many said they either wanted to reduce their rent or were currently in the process of trying to have it reduced. 

About 18 percent of respondents to our survey said they had successfully reduced their rents in Germany before.

Why do residents want rent reductions?

Germany notoriously has the lowest rate of home ownership in Europe, which has long been attributed to being a country with high real estate prices and relatively low rents.

But this means that a large number of German residents are directly affected by rising rents. Low-income individuals living in urban hubs where rents have been rising rapidly in recent years are particularly vulnerable.

According to Germany’s statistical office (Destatis), 11.8 percent of the population was overburdened by housing costs as of 2022 – meaning these households spent more than 40 percent of their income on housing.

Unsurprisingly, a number of readers cited inflation and cost-of-living increases as the primary reason they wanted to try for a rent reduction.

READ ALSO: How to grow your savings in Germany during high inflation

A couple of readers noted that their current rent prices are making their living costs too high.

Rothe, 29, who lives in Aachen, says she can’t bear her current rent but is stuck in a contract.

Similarly, Lucas, 35, who lives in Horb am Neckar said he wants to reduce his rent to balance his expenses following the recent cost-of-living hikes. He says he’s tried to negotiate with his landlord, who doesn’t care to do so.

While landlords are unlikely to grant a rent reduction based on inflation or cost-of-living increases, there are a few reasons you can legitimately demand a rent reduction in Germany.

Make sure your rent isn’t exceeding the price brake limit

The rent price brake (Mietpreisbremse) isn’t perfect, but it’s arguably Germany’s strongest protection for tenants against rising rents. 

It’s designed to prevent landlords from raising rents to ‘unreasonable’ levels, but with no central agency for enforcement, the burden falls on tenants to demand legal rents.

READ ALSO: German rent brake to be extended until 2029: What you need to know

Andrew, 62, successfully reduced the rent he pays for his flat in Berlin’s Gesundbrunnen area with the rent brake rule. After he realised the “rent was high for the location”,  he contacted his tenant’s association.

He thought that his landlord responded in a reasonable manner: “They thought the condition of the flat justified the higher rent and paid a friendly visit to point out the features,” Andrew said.

“We countered that the features were all quite old and that the previous tenants had been on a lower rate.”

Mieten runter "rents down"

The words “Rents down” are graffitied on the wall of a rental building. About 75% of Berlin rents are set illegally high, a legal expert told The Local. Photo: picture alliance/dpa | Monika Skolimowska

The rent brake prohibits landlords from setting rents more than 10 percent above a local average value, which is recorded in a local rent price index. You can find your local rent price index by searching for the German term “Mietspiegel”, along with the name of your city or region.

Here is one for Berlin, which allows you to calculate your rent index based on your current address and a few factors such as the area of your flat and how old the building is etc.

Andrew recommends joining a tenants’ union and using an online calculator to check if your rent is reasonable. He also says you should be prepared to negotiate and to compromise where necessary.

Gerson, 50, who lives in North Rhine-Westphalia, also found that his current rent was too high for his location. He says he is currently looking for a company that can assist him with the process to demand a rent reduction.

David, 57, in Berlin said he believes his rent is “illegally high” compared to other and he has hired a lawyer to go through the process of trying to get a rent reduction. 

There are also legal service providers that can help with renters’ issues in Germany, and some that even specialise in winning rent reductions with the rent price brake. You can find some of them through an online search. You may want to look for one that will initiate the process at no cost to you. Some will even complete the service with no cost to tenants, applying their fees instead to the landlords at fault in the event that they win a rent reduction.

READ ALSO: Why are Berlin rents soaring by 20 percent when there’s a rent brake?

It’s also worth noting that the rent price brake only applies to rental markets that are considered highly competitive. So it applies to most of Germany’s big cities, but may not apply in suburban or rural regions.

Overcharged by faulty measurements

Rents prices in Germany are usually calculated according to a price per metre of living space. Therefore, in some cases, it may be worth double checking that your living space has been calculated accurately.

One reader, who didn’t wish to be named, told The Local that he had previously reduced his rent for an apartment in Düsseldorf in this way.

“We had a small attic apartment with slanted walls,” the reader said. “The total square metres of the apartment were based on measurement from wall to wall. However, walls had to be straight to a height of at least 1.2 metres before the slanted side can begin [or else] the total square metres start from the point where the vertical height of 1.2 metres is available.”

After he learned about this requirement he measured the apartment, and found that his own rent had been based on a measurement of the floor plan, not the legally defined living space. Then he contacted his tenants’ association, which sent an architect to confirm the measurements.

Initially sceptical, his landlord sent another architect to check the measurements. But when it was confirmed, his rent was lowered accordingly. “Turned out that we had to pay for about 10 square metres less all in all,” the reader said.

This incident was 15 years ago, and these types of regulations can vary from region to region.

His advice to readers is to check up on the local regulations that may apply to your situation. 

In other cases, some renters have been able to negotiate rent reductions for other inconveniences – such as excessive noise, for example.

READ ALSO: How to get a rent reduction for problems in your German flat

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