The German property market before and after the elections

Are you a landlord or property owner in Germany? Are you planning to buy property soon? There are several things that will change after the election in Germany on the 26.09.2021 that you should pay attention to. This year’s election will be very exciting as it has never been so close in the past decades. We have no large party anymore with more than 35% of the votes. The current party with a majority is the SPD with around 26%* of voters.

Here is the overview about the current situation in Germany. The main parties are:

We have checked the different coalition options and are providing you as investors, landlords or homeowner’s the major results to be excepted:

Scenario 1:

Germany will have a left-wing government with a coalition of “SPD”, “Grüne” and “Die Linke” (currently they do have most voters in the polls) these would be the top 5 changes they would do for all property owners:

1. Country wide rent ceiling, like the failed rent freeze in Berlin, a bit less harsh which means you do not always have to lower existing rents, but you cannot let out for more than a fraction of your current rent. In major cities they look at €5-€6 per sqm average rent compared to €15-€25 market rents.
2. Capital gain taxes brake after 10 years will be cancelled. Now private landlords selling his property after 10 years is not paying income tax in Germany on that profit. Prices have doubled or tripled in the past 10-15 years for apartments in cities such as Berlin. This means you will pay 42-45% taxes on your profit after the election instead of 0%.
3. Increase of income tax from 42% to 45% and above. Less options to write of losses against investments into properties (modernisation costs, etc.)
4. Cost to change to renewable energy sources must be covered by the landlord rather than the tenants. This means the landlords must replace oil and gas heating systems and connect to renewable energy suppliers. Cost of heating will go up as renewable energy is more expensive and the investments into solar and wind energy are significant.
5. Land taxes will go up, currently in Germany the land taxes are very low (approx. €250 per year for a normal apartment). The federal government has given their provinces more power to change these rates as they wish.

Scenario 2:

Germany will have a social, green and liberal government with a coalition of “SPD”, “Grüne” and “FDP”. Currently they do have the majority of voters in the polls. These would be the top 5 changes they would do for all property owners:

1. Local rent regulations will stay as they are, but with more power for the councils to enforce them.
2. Capital gain taxes after 10 years might be cancelled in exchange of other advantages.
3. No increase of income taxes
4. Cost to change to renewable energy sources will be covered mainly by landlords but with tax advantages to write them off.
5. Land taxes will go up, but with tax advantages to write them off.

Scenario 3:

Germany will have a conservative, green and liberal government with a coalition of “CDU”, “Grüne”, “FDP”. Currently they do have the majority of voters in the polls. These would be the top 5 changes they would do for all property owners:

1. Local rent regulations will stay as they are but with more power for the councils to enforce them.
2. Capital gain taxes after 10 years will stay.
3. No increase of income taxes.
4. Cost to change to renewable energy sources will be covered mainly by landlords but with tax advantages to write them off.
5. Land taxes will go up, but with tax advantages to write them off.

Scenario 4:

Germany will have a Social-Conservative government with a coalition of SPD and CDU. Currently they do have the majority of voters in the polls. These would be the top 5 changes they would do for all property owners:

1. Local rent regulations will stay as they are but with more power for the councils to enforce them.
2. Capital gain taxes after 10 years will stay.
3. Increase of income taxes to approx. 45%.
4. Cost to change to renewable energy sources will be covered mainly by landlords but with tax advantages to write them off.
5. Land taxes will go up.

*Correct as of 20.09.2021