Tenants with new rental contracts are still facing high service charges, despite a slight dip in heating costs this year. According to the German Economic Institute (IW), the average cost per square meter for heating and hot water in September 2023 is €1.67, a 4% decrease from the previous year. However, ancillary costs, such as cleaning and municipal fees, have risen by 3%, reaching €1.78 per square meter - two cents more than in 2022.
The cost of warmth has significantly increased since 2021, with gas and heating oil prices soaring by approximately 43%. This surge is partly due to the energy crisis triggered by the Russian invasion of Ukraine, which forced Germany to find alternative energy sources (like liquefied natural gas) that were more expensive.
To cope with these higher costs, some landlords have raised discounts for cold service charges. Yet, these discounts have not been enough to offset the increased energy prices for tenants. The growing demand for energy-efficient homes, driven by regulations such as the Gebäude-Energie-Gesetz (GEG) and the European Union's Energy Performance of Buildings Directive, is impacting rental prices in Germany.
Concurrently, the desire for smart home features and energy-efficient renovations is driving up demand for technologically advanced rentals, which command higher rents and resale values. Berlin, in particular, has seen smart homes renting for 8% more than traditional ones, while properties with EV charging access have witnessed a 10% increase in resale value.
Despite efforts to regulate rents in Germany, such as the "Mietpreisbremse," rental prices are expected to climb by 4-6% by 2025. The country's housing market remains significant, as over 52% of its population resides in rented accommodation. Political parties such as the SPD and Greens are advocating for further rent regulation to safeguard tenants' interests.
[1] Germanwatch. (2022). Insights: The Energy Crisis and the Consequences for Climate Protection in Germany. [2] Deutsche Welle. (2022). Germany's Rent Control Measures Questioned, Even by Greens. [3] Allianz Real Estate. (2021). Germany Real Estate Market Trends: 2021 & Beyond. [4] Deutsche Welle. (2022). Green Party: Rent Control in Germany Is "Running Out of Steam".
