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Housing in Germany: Why are fewer young people buying their own homes?

The number of young people buying homes in Germany is falling. So who is buying property – and where?

Housing in Germany: Why are fewer young people buying their own homes?
Homes in Stuttgart, Baden-Württemberg, where home ownership is most common in Germany. Photo: DPA

Home ownership in Germany has remained at around 45 percent since 2010, but there are changes in who is buying properties.

Fewer young people are buying homes and there's a significant drop in first-time buyers, while older people continue to purchase property, according to a new study by the Institut der deutschen Wirtschaft (IW) in Cologne on behalf of the Bausparkasse Schwäbisch Hall.

The IW found the home ownership rate for 25-34 year olds in Germany has fallen from 17 percent in 2010 to 12 percent in 2017. At the end of the 1990s, that figure was much higher at 23 percent.

READ ALSO: Where in Germany it pays to buy your own home

Meanwhile, the home ownership rate has also dropped by five percentage points between 2010 and 2017 in the 35-44 year olds age group.

During the same time frame, the proportion of 65-74 year olds who own their homes rose by two percentage points to 58 percent.

The study also found the number of self-employed people buying homes has gone up, while less civil servants are entering the property market.

Why are some people not buying homes in Germany?

Researchers said the downward trend in some categories could reflect changing demographics in Germany due to increased migration, especially around 2015 during the height of the refugee crisis.

Or it could be down to the fact young people are choosing to study longer and that means they are entering into the job market later in life “which could lead to a later purchase of residential property”, the researchers said.

It's also difficult for people, especially younger generations, to save enough money to get a foot onto the property ladder in the first place.

Banks now demand a higher deposit to secure a mortgage while purchase prices are rising steadily. In some cases, these prices are simply too high for potential homeowners to afford.

Homes in Brandenburg. Photo: DPA

That's shown in the significant drop in first-time buyers. Between 1998 and 2002, the number of first-time buyers was still at a level of around 700,000 households per year in Germany. But in 2016 and 2017, there were fewer than 400,000 households per year – about 1 per cent of all homes.

However, buying a home is an attractive option (if you can save the money beforehand) due to low interest rates. And it could pay.

The household income of those who moved from a rented home to their own property has increased. In 2010, the average net income was €3,000 euros and in 2017 it was just under €4,000. 

READ ALSO: It's not that hard: The beginner's guide to buying a property in Germany

Where do people buy homes in Germany?

In rural parts of Germany, the ownership rate is higher than in urban regions. In 2017, more than half (51.1 percent) of households in rural areas lived in their own home. In the cities, that number was 42.8 per cent.

The highest home ownership rate of all Germany's 16 states in the latest figures from 2017 is in Baden-Württemberg. Just over 54.4 percent of all households live in their own property in the wealthy southern state.

It’s closely followed by Lower Saxony which has a 54 percent rate.

In eastern Germany, the home ownership rate remained below the German average of about 45 percent.

Berlin has by far the lowest home ownership rate with about 18 percent.

In a Europe-wide comparison, Germany ranks second last when it comes to property ownership – Switzerland is the only country where fewer people buy property.

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EXPLAINED: How to sublet your apartment in Germany

If you’re going away for a period of time or want to cut your living costs, subletting your flat can seem like an appealing option. But there are a lot of things you need to consider first. We break them down.

EXPLAINED: How to sublet your apartment in Germany

What is subletting?

A subletting arrangement is when a subtenant is allowed to use the main tenant’s apartment, or part of it, in return for payment.

Having visitors in your home, even for a period of up to six weeks, does not count as subletting and you do not have to inform your landlord. But be careful: If the visitor starts paying rent, this becomes a sub-letting arrangement and if the visitor stays more than six weeks in a row, you have a duty to inform your landlord.

READ ALSO: The most expensive (and cheapest) cities in Germany to rent a room

If close family members such as parents, children, partners or spouses move in with you, this is also not a subletting arrangement and is considered part of the normal use of the rented property. 

However, you should inform your landlord of such a change in circumstance, not least because at some point the new person living in your apartment will at some point need to register with the local authorities.

Do I have to tell my landlord?

Yes. Regardless of whether you are just subletting a room or your whole apartment, you have to inform your landlord and, in most cases, you are required by law to obtain the landlord’s permission to sub-rent. This applies for whatever time period you want to sublet for: whether it’s for a weekend or for six months. 

One exception to this rule is if you rent a room in a WG (shared accommodation) and all of the tenants are equal parties to the contract. In that case, it’s possible to sublet individual rooms without having to get permission from the landlord, but you should still inform them.

If you try to rent out your place or a room without your landlord’s permission and get found out, you could face legal action, or be kicked out of your apartment before the agreed notice period. 

READ ALSO: REVEALED: The most – and least – popular landlords in Germany

Can the landlord refuse to let me sublet?

If the main tenant has a so-called “justified interest” in subletting part of the apartment, they can demand that the landlord agrees to the sublet and even take legal action or acquire a special right of termination of the rental contract if they refuse.

However, this right only applies to a sublet of part of the apartment and not the entire space within the four walls – in this case the landlord is within their rights to say no to the sublet. 

When subletting part of an apartment, a justified interest must be for an important reason such as a needing to move abroad temporarily for a job or personal reasons, or a partner moving out and the tenant no longer being able to cover the rental costs alone.

In general, landlords shouldn’t refuse your request to sublet unless there are good reasons – for example if the apartment is too small. 

The landlord can’t reject your subletting application without good reason and if they do, you can gain a special right to terminate your rental contract, and can even sue for your right to sublet. 

What information will I need to give my landlord? 

Whether you are subletting a room or the whole apartment – you’ll need to give your landlord the following information:

  • Who is moving in
  • How long you will be subletting for
  • For what reason you plan to sublet

If you want to set up a WG (Wohngemeinschaft or shared flat) as the main tenant, you should discuss this with the landlord beforehand, as it may be worth changing the apartment status to a shared apartment in the main rental agreement. That way, you won’t have to send a new application every time a new roommate moves in.

Do I need a special rental contract?

If you are going to subrent your apartment, it is definitely worth having a contract. 

A contract between the main tenant and the subtenant is completely separate from the contract between the main tenant and the landlord, so all responsibilities arising from the sub-rental contract will fall on you and not the landlord. 

A man fills in the details of a rental contract by hand. Photo: picture alliance / dpa | Armin Weigel

At the same time, as the main tenant, you will still be liable to your landlord for any damage caused by the subtenant, so it is best to put a clause in the sub-rental agreement that outlines how this will be covered, and also to make sure that your subtenant has personal liability insurance. 

There are plenty of websites that offer templates of sub-rental contracts for you to use, and you should make sure your contract includes the following information:

  • The personal details of the subtenant
  • The sub-rental cost and any service charges
  • When these are to be paid
  • Which rooms may be used
  • How many keys have been handed over
  • Details of a possible deposit
  • The condition of the rented apartment
  • House rules, such as no smoking, pets, etc.
  • Liability for possible damages

How much can I charge?

You can usually negotiate the sub-rental price yourself, but you should be careful not to overstep the rental limit per square metre for your area. If you charge over this amount and your subtenant finds out, they have the right to demand the local square metre rental price and you may have to refund them the total amount of overcharged rent.

If you sublet a furnished apartment, you can add a surcharge based on what you will be leaving in your apartment. You should also factor in the energy and water costs.

READ ALSO: Everything you should know about renting a furnished flat in Germany

Do I have to get consent from the local authorities?

In some cases, you will also need to get permission to sub-rent from the local authorities to rent out your place. 

If you sublet in Berlin or Frankfurt, for example, and you want to advertise your flat for holiday rentals, you have to get approval first.

A wooden judge’s hammer lies on the judge’s bench in the jury courtroom in the Karlsruhe Regional Court. Photo: picture alliance / Uli Deck/dpa | Uli Deck

If you go ahead and rent on a site like Air BnB without approval, you can expect to pay a hefty fine. Though the highest possible fine of €500,000 is unlikely, there are numerous reports of people getting fines in Germany of several thousand euros.

Another important thing to remember is that, if you make more than €520 profit in a year from sub-renting, you have to include this in your tax declaration.

Can the landlord demand I pay extra?

If a landlord allows subletting, they can also demand a share of the extra income from the main tenant. The amount of the surcharge cannot exceed 25 percent of the sublease, however.

Useful Vocabulary

to sub-let – Untermieten 

sublease agreement – (der) Untermietvertrag

termination without notice – (die) fristlose Kündigung

ban on misuse – (das) Zweckentfremdungsverbot

special right of termination – (das) Sonderkündigungsrecht

justified interest – (das) berechtigtes Interesse

personal liability insurance – (die) Haftpflichtversicherung

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.