The real estate market in one of the most powerful economies in Europe is undergoing a major shift. History has shown Germans would much rather rent their homes than buy them, which may explain the country’s 43 percent home-ownership rate in 2013. However, this trend has recently shifted in a way that could impact global mobility down the road – particularly the way assignees go about finding a place to live.

A nation of renters
According to a recent article by digital business news outlet Quartz, Germans began renting in the 1930s and 1940s. After West Germany was established in 1949, the government created its first housing law. The law was designed to boost the construction of houses, and by 1956, the nation cut its housing shortage in two. Few Germans had enough money for a down payment on a house, though. The mortgage market was weak, so banks required citizens to front large sums of money for home ownership. As a result, the renting trend was born.

History has shown Germans would much rather rent than buy their homes, which may explain its 43 percent home-ownership rate in 2013. “History has shown Germans would much rather rent than buy their homes, which may explain its 43 percent home-ownership rate in 2013.”


Cheap rent has been a real estate mainstay for many years in Germany, partly because rent increases are capped at 15 percent over three years. Regulations prevent any increase in rent whatsoever during a tenant’s first year. For those living in urban areas where demand is high, new rent prices will be capped at 10 percent more than the area average, thanks in part to new rent brake legislation signed by Prime Minister Angela Merkel’s cabinet in January, national news outlet DW reported.

Government legislation in Germany traditionally favors renters over homeowners, which isn’t surprising considering this demographic has represented a large portion of the population for many years. For example, the German government does not allow homeowners to deduct mortgage-interest payments from their taxes; a sharp contrast to the benefits of homeownership in the United States.

Times are slowly changing
Despite the federal regulations favoring renters and cheap rent prices, real estate trends appear to be changing in Germany. According to the Cologne Institute for Economic Research, Germany experienced a sharp increase in the number of people buying homes between 2009 and 2013. This trend is largely due to the fact that people are taking advantage of low interest rates throughout the country. What’s more, foreign investors are showing great interest in the nation’s real estate.

Although there is legislation capping rental prices at 10 percent above market average in urban areas, that only limits price increases so much year over year. Research from the VDP Association of German Mortgage Banks found rent for newly leased apartments rose 4.6 percent year over year between the third quarter of 2013 and 2014, Bloomberg recently reported.

That, in conjunction with low interest rates and easy financing for property purchases, has home ownership growing in popularity in Germany. Home values have climbed 5.2 percent from last year, and multifamily housing also jumped more than 7 percent in value. Assignees relocating to Germany can take advantage of low-interest rate mortgages, particularly in Eastern Germany. The CIER’s five-year analysis of 402 German counties revealed that side of the country is a highly feasible region for buying a property. Assignees relocating to Germany can take advantage of low-interest rate mortgages, but need to ensure they consider all of the financial impacts. Higher down payments are usually required from expats because they represent a higher financial risk. Additionally, consideration must be given towards disposing of the property and any potential capital gains tax that might be owed if they relocate again.

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Vice President, Global Services Tammy is responsible for GMS’ regional operations teams in North and Latin America, EMEA, and APAC. Tammy provides over 14 years of leadership experience in the areas of international assignment management, global network management, global consulting and business development. Her experience in global mobility includes new client implementations, policy and compliance development, global compensation and billing, vendor management, case management, and real estate home sale/purchase programs. Tammy travels extensively and studied abroad in Switzerland, Chile, Peru, Dubai and Abu Dhabi.

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