Germany housing market: Rents rise as experts call for tax reform

Germany is facing renewed pressure in the housing market as rents have risen by 1.2 percent in the third quarter compared to the previous quarter, according to a study by the Kiel Institute for the World Economy. On an annual basis, rents increased by 3.6 percent. The most significant price hikes were observed in Berlin and Düsseldorf.

In response to the housing crisis, Marcel Fratzscher, President of the German Institute for Economic Research (DIW), has called for increased taxation on assets. He argued that the state should implement higher taxes on land and property, noting that owners have benefited significantly from recent price increases. Fratzscher also suggested that the government should abolish exceptions to inheritance tax and provide energy cost subsidies for low- and middle-income earners.

On the legislative front, Federal Justice Minister Stefanie Hubig is pushing for stronger tenant protections, including tightening the rent brake and limiting short-term rental contracts. However, these reforms face political opposition from the Union, leading to a legislative stalemate in the Bundestag.