Renting in Germany: why protection has turned into paralysis

Germany is a country of tenants. But decades of rent controls have split the market between protected insiders and those locked out altogether.

Photo by Felix Neudecker on Unsplash

Dear Reader,

Germany’s housing crisis is usually described as a problem of soaring rents. In reality, it is a problem of immobility — a system that protects long-standing tenants so well that it locks everyone else out.

Despite its importance, this issue has barely featured in the election campaign. Instead, debates about migration have crowded out a quieter but more consequential cost-of-living crisis: who can still afford to move, and who no longer can.

This has annoyed Lukas Siebenkotten, head of the German Tenants' Association, who thinks that migration is getting far too much attention.

“Rising rents are pushing more and more households to their breaking point. Half of tenants in large cities are afraid that they will no longer be able to pay their rent in the future,” he said this week.

In that spirit, this week’s newsletter takes a look at the crisis in Germany’s rental market and asks: just how bad is it… and can it be solved?

The first thing we need to understand is that Germany is a country of tenants.

Whereas most other Europeans own the roof over their heads, Germans prefer to move into a home that someone else (more often than not a company) has the deeds to.

Homeownership in Europe ranges from two thirds of all households in France to close to 95 percent in Romania. Only Austria, Germany and Switzerland buck this trend.

A nation of tenants — and a frozen market