Changes for tenants and landlords in Germany. Life in Germany. In 2025, important changes are coming to Germany’s housing market that will affect both tenants and landlords. These include new tax rules, stricter rent controls, and steps to improve energy efficiency and protect the environment. The changes aim to tackle issues like the rising cost of living and housing shortages, while also helping vulnerable households and reducing harm to the environment.
Throughout 2025, tenants and landlords will experience the impact of new regulations, from increased costs to potential benefits through subsidies and improved policies. Below, we break down the key changes shaping Germany’s real estate market and their effects on residents’ daily lives.
Increasing housing benefits
In 2025, housing benefit (Wohngeld) will increase by an average of 15%, providing households with around 30 euros more each month. This support is aimed at low-income earners struggling to cover rent or mortgage costs. Wohngeld is reviewed every two years to keep up with changes in housing market expenses.
Read also: What to expect in January 2025: Major upcoming changes in Germany
Property tax reform
Starting in 2025, the controversial property tax reform will take effect, two years after the forms were submitted. While some homeowners might see reduced taxes, most are expected to face an average increase of €1,000 annually.
For tenants, this could lead to higher expenses, as landlords can pass on property taxes through additional costs. Currently, tenants pay about 18 cents per square foot monthly for these taxes.
Strict rent controls
Rent control measures, or Mietpreisbremse, will continue until the end of 2025. These rules cap rent increases at 10% above the local market average and limit total increases to 20% over three years. Tenants can also claim back overcharged rent within 30 months of signing their contract, even without filing a prior complaint.
Housing crisis
By 2025, only 250,000 of the planned 400,000 homes will be completed, worsening the housing shortage. Growing demand from immigration and urbanization is straining the rental market, likely causing rent hikes and making it harder to find housing.
CO2 tax increase
In 2025, the CO2 tax will rise to €55 per tonne, increasing costs for homes relying on fossil fuels. Tenants will see these costs included in their additional costs (Nebenkosten), but for homes with low energy efficiency, landlords will be responsible for up to 95% of the tax.
Stricter regulations for wood stoves
From January 1, 2025, stoves installed between 1995 and 2010 must meet strict emission standards. Owners must either upgrade them or take them out of service. Non-compliance could result in fines of up to €50,000.
Mandatory smart meters
Starting in 2025, energy consumers using over 6,000 kWh annually, or those with photovoltaic systems, heat pumps, or EV charging stations, must install smart meters. These devices could cost households with high energy usage up to €20 per year.
Changes to the heating law
The recently introduced heating law may undergo significant changes. Currently, it provides subsidies of up to 70% for upgrading heating systems, but proposed amendments by the new government could reduce this to 30%.