Drop in Number of Households Overburdened by Housing Costs
For many years, housing costs have been the subject to very intense public debate. Lawmakers introduced a flurry of new regulations in recent years, especially in the area of landlord-tenant law, thereby encouraging the impression that housing costs keep exacerbating the financial strain on German households. Yet the truth of the matter is that the trend has reversed itself, as an analysis by the Federal Statistical Office (Destatis) just revealed.1
The findings suggest that the percentage of households overburdened by housing costs dropped from 16 percent in 2014 to 14 percent in 2019. The threshold the Federal Statistical Office applies to determine strain is whether the proportion of household income spent on housing costs exceeds 40 percent.
Housing Costs Consume Smaller Share of Household Income
The average chunk that housing costs take out of the household income has also declined slightly between 2014 and 2019. While German households spent 27 percent of their income on housing costs in 2014, the ratio was down to 26 percent by 2019. Housing costs of renters include the basic rent plus service charges, whereas those of owner-occupiers include the maintenance of their homes.
Contrary to the impression conveyed by the public debate, the majority of tenants do not feel that their rents are excessive. According to a survey conducted by the consultancy firm Analyse & Konzepte Immoconsult, 61 percent of German tenants consider their rents reasonable. In fact, 13 percent believe that their rent level is low. Only one in five tenants is of the opinion to be paying too much for rent.2
Perception of Housing Cost Burden Losing its Edge
The analysis by the Federal Statistical Office also shows that the personal perception of the own housing cost burden in Germany has become more relaxed lately. In 2014, as many as 17 percent of all Germans felt they were heavily burdened financially by housing costs. In 2019, by contrast, only 12 percent of the respondents shared this perception.3
For buy-to-let investors and landlords, this is principally good news. For it shows that the housing cost burden in Germany is generally easing, thereby relieving the political pressure to keep revising the regulations of German landlord-tenant law.