12 must-knows to save money in Germany's heated up housing market

Overview of the German housing market

Overall, the German housing market is very heated up, especially in larger cities and the Western part of the country.

Affordable, central, and well-maintained homes are in high demand and usually attract many prospects. Depending on your budget, (time) constraints, and willingness to compromise, be prepared to spend several weeks to find your dream home, sign the paperwork, and move into your new apartment or house.

Most Germans live in relatively small apartment buildings with up to ten apartments. About 25% of Germans live in larger apartment buildings or high-rise buildings, and about a third lives in houses. On average, only two people live in one household, and about 20% of Germans live alone.

The average net cold rent in Germany is 7.11 € (~ 7.67 USD) per square meter, with Munich (20.48 €/sqm), Frankfurt (15.75 €/sqm), and Stuttgart (14.74 €/sqm) being the most expensive cities in Germany. On the other hand, the least expensive cities in Germany are Plauen (4.95 €/sqm), Chemnitz (5.50 €/sqm), and Gera (5.60 €/sqm).

12 must-knows for tenants and homeowners in Germany

Housing in Germany may be a little different than what you are used to in your home country.

1. Number of rooms: the kitchen, bathroom, and hallway do not count towards the total number of rooms, e.g., a 2-bedroom home has two rooms plus kitchen, bathroom, and hallway. Sometimes, 0.5 rooms are counted, e.g., when a home has an open-plan kitchen and living room. En-suite bathrooms are not common.
2. Measurements: home sizes are generally given in square meters (1 sqm = 10.76 feet).
3. Floors: the ground floor (Erdgeschoss, Parterre) is counted as zero, the first floor (1. Stock) is the first floor above the ground (up the stairs or elevator). Mezzanine apartments (Hochparterre) and basement apartments (Souterrain) are uncommon. Apartments and houses typically have a basement (Keller) and/or attic (Dachboden) where tenants/owners have storage space and shared space, e.g., to do laundry.
4. Furnished homes (Möbliert): can be 1.5-3 times compared to the price of an unfurnished room, apartment, or house. Unfurnished homes are common, meaning you will have to purchase everything from a bed and desk to a refrigerator and TV.
5. Built-in kitchen (Einbauküche): if you rent an apartment or house, the landlord is legally obliged to provide provisions for water, electricity (and gas), but not a fully fitted kitchen. Some homes come with a full kitchen, some don’t – make sure to clarify this beforehand.
6. Compensation payment (Abstand, Abstandszahlung): the previous tenant may have bought built-in closets, kitchen, or other home equipment and may offer this to you (as the new tenant or buyer) for a compensation payment. Don’t feel obligated to purchase any items and negotiate if you do, but keep in mind that another potential tenant or buyer will make the compensation payment happily.
7. Net cold rent/rent with operation costs (Kaltmiete/Miete inkl. Nebenkosten): net cold rent is the basic rent without any operating costs (Betriebskosten) or extra expenses like internet. Rent with operating costs includes building insurance, trash collection, sewage, taxes, etc.) – the landlord will typically balance the operating costs once per year and refund you the difference or ask for additional payment. Keep in mind that operating costs do not include personal expenses for water and electricity (required) as well as internet and household insurance (optional) – you will have to buy these from local providers with a separate contract.
8. Brokerage fee (Maklerprovision): when finding a home through a real estate platform or agent, a brokerage fee may apply (typically 1.5-2 times net cold rent plus VAT). Make sure to consider this before making a decision.
9. Mietpreisbremse (rent control): to cool off the heated housing market in Germany rent control was implemented in 2015: rent for a new lease may only be up to 10% above the local comparative rent according to the rent index. If there is no rent index, the new rent may only be up to 20% above the local comparative rent. To find the rent index for your city, search online for “Mietspiegel" together with the name of your city. If you are already renting a home, any rent increase above comparative rent must be justified as it is otherwise ineffective – the tenant association (Mieterschutzbund) can advise and help in such cases (fees may apply).
10. Graduated rent (Staffelmiete): while landlords are bound to the local rent index, they may add a graduated rent section in your lease, which is not regulated by law.<br /> Important: make sure to read such a section carefully and consider the pros and cons before deciding.
11. House rules (Hausordnung): If you rent a home, the lease you sign typically comes with an extensive list of rules (e.g., quiet times, ventilation to prevent mold), which must also be signed.
12. Deposit (Kaution): while there is no law that requires the payment of a deposit, it is basically an unwritten law. However, by law, the deposit for a rented apartment may not exceed three months’ rent (net cold rent) and must be deposited in a separate account with interest.

Next, let’s look at determining which type of accommodation is best for you and your family.

What is right for me: shared room, apartment, or house? Rent or buy?

If you are moving to Germany as a migrant (skilled workers, student), an important step in starting your new life abroad is finding the right room, apartment, or house that fits your needs and personal situation.

Students may prefer to rent a room in a shared apartment (WG, Wohngemeinschaft) or student accommodation (Studentenwohnheim) as they are cheaper than renting or buying an apartment or house.

Migrant workers – whether single, married, or with children – may prefer the privacy of their own apartment or house. In this case, you should ask yourself whether you want to rent or buy a home. If you are new to Germany, it makes sense first to get a temporary place to arrive, start your new job, and get a feeling for the different districts in your city. You could consider getting a guesthouse or vacation rental for the first few days or weeks.

Whether you want to rent or buy a home is a personal decision. It depends on your budget and circumstances (e.g., how long you plan to live in Germany or are you looking for an investment).

In general, there are no restrictions for expats and migrants to purchase an apartment or house in Germany. However, in Germany, people tend to rent homes rather than buy them. The homeownership rate is only approximately 47%. This may be due to a cautious investment mentality and an overall good public retirement system.

How to find and rent an apartment/house in Germany

Whether you have decided to rent a shared room, an apartment, or a house, your search typically starts online. Germany’s largest real estate portals are ImmoScout24, Immowelt, and WG-gesucht, where you can search and filter according to your preferences or post what you seek. When you interact online, always be cautious: there is a variety of scams around real estate.

Besides, you can join expat and real estate groups dedicated to your city on social media. If you are coming to Germany with a work visa, your employer and/or new colleagues might also be able to assist you with the search. And more than that, you may be eligible for a relocation allowance (Umzugspauschale).

Renting an apartment/house in Germany in 10 steps

To find and rent your ideal home in Germany, simply follow these straightforward steps:

1. Search for a suitable home (real estate platforms, social media, co-workers, etc.) and consider your personal situation: proximity to your work, environment (residential, entertaining), schools and daily amenities, etc.
2. Make an appointment for a personal viewing. Although recently online showings have become more available, it is advisable to view the property in person if possible to ensure that the place is legitimate and to identify potential defects and issues.
3. If you like the home, submit your application to the real estate agent or landlord (see below).
4. If the landlord accepts your application and both parties agree, prepare the sign of the lease.
5. Do a walk-through of the apartment with the landlord and record all deficits, inventory, and remarks in writing. Record the meter reading (Zählerstand) of water and electricity.
6. Make sure to read the fine print of the lease (duration, notice period, graduated rent, etc.) and, if necessary, have a confidant or lawyer who is proficient in German assist you.
7. Sign the lease.
8. Pay the brokerage fee and deposit (if applicable) and the first month’s rent.
9. Get the keys to your new home: Congratulations!
10. Arrange contracts with suppliers for water and electricity (required) as well as internet and household insurance (optional).

Tip: everything you have in writing will save you problems later on. Even if it may take longer, write up any agreements and things to note and have all affected parties sign the paper.

7 typically required documents to rent a home in Germany

As the German property rental market is heavily contested, it is advisable to have commonly requested documents at hand (print out, digital):

• Application form (individual per landlord/real estate agent)
• Copy of your passport and residence permit
• Copy of your current address registration (if applicable)
• Copy of your work contract
• proof of regular income (e.g., copy of bank statements of the last 3 months) or rent guarantee (e.g., by a family member)
• Certification from current/previous landlord (if applicable), indicating you have no outstanding rent (Mietschuldenfreiheitsbescheinigung)
• Copy of your credit score (Schufa)

Tip: If you have a pet, make sure to clarify with the landlord beforehand whether you are allowed to keep one in your home. The landlord may add additional sections to your lease, e.g., insurance for your pet or repair of damages caused by your pet.

Keep in mind: The German recycling system can be tricky. Depending on your city, trash will be collected on various days outside the apartment building. Usually, it is separated by paper, hard plastic and metals, organic waste, and other waste. Glass is separated by color, and the containers may not be outside your apartment building but are usually nearby. Large trash (Sperrmüll), e.g., furniture and electronics, must be disposed of at a special waste site or by making an appointment with the district administration. Do not litter in Germany, and dispose of your waste incorrectly – it’s very frowned upon!

The German immigration experts at Nioomi are happy to assist you with finding and renting the apartment or house of your dreams in Germany. Email or call us today to start your new life in Germany.

Buying a home in Germany: taxes & expenses

The initial steps when buying a property in Germany are the same as when you are renting a place.

If you buy an apartment or house, make sure to keep the following aspects in mind:

1. Check your budget and allow extra for unforeseen expenses. If necessary, apply for a mortgage.
2. A Notary fee will apply – typically 1.5%-2% of the purchase price.
3. Real estate transfer tax applies – 3.5%-6.5% of the purchase price, depending on the state.
4. Finally, a land registration fee applies (Grundbucheintrag) – typically 1.5%-2.5% of the purchase price.
5. Annual expenses include property tax (Grundsteuer), all operational costs, chimney sweeper, etc.

The German relocation experts at Nioomi are happy to assist you with finding and purchasing your dream home in Germany. Contact us today to start your new life in Germany.

Disclaimer: Nioomi compiles information on a variety of topics around moving to and living in Germany. However, Nioomi cannot provide financial or legal advice. Please always conduct your own research and consult a legal expert before making any decisions. Likewise, Nioomi does not act as a real estate agent or brokerage but connects interested parties to licensed real estate agents and brokerages.

Key takeaways

• Germany’s housing market is heated up. Most Germans rent an apartment.
• Have your application folder (Copy of passport, residency permit, proof of income, credit score, etc.) ready when viewing properties.
• German law favors the tenant. If you have any problems, the tenant association (Mieterschutzbund) can facilitate (fees may apply).