In political and public debate, the practices of large housing corporations are repeatedly brought up, even though they own only a small portion of the rental apartments in Germany. By far the most important group in the German rental market is not corporate entities, but private landlords—more than 60 percent of rental units, corresponding to approximately 14 million households, fall into this category. This is the finding of the latest ACCENTRO Housing Costs Report, which is compiled annually in collaboration with the German Economic Institute (IW).
In large cities, the share of private landlords is slightly smaller at 50 percent, while in small towns, four-fifths of all rental apartments are owned by private landlords. The next-largest group of landlords consists of housing cooperatives, which account for about 18 percent of rental apartments nationwide, followed by private companies with a share of around 11 percent. Municipal housing companies account for only about 6 percent of rental apartments.
Owning a Home to Rent Out Is Worth It
The number of private landlords increased by about 750,000 households between 2010 and 2018, which the IW interprets as a sign that many private households took advantage of the attractive conditions for purchasing residential property as an investment. Particularly in major cities, the number of private landlords rose by about one-third during this period.
The Accentro Housing Costs Report also shows that owning a home to rent out is worthwhile—for the report, the IW compared the housing costs of renters with those of owner-occupiers of condominiums and found a cost advantage for owner-occupiers of just under 50 percent. As the IW explains in the study, this advantage can also be applied to landlords, since it means that rental income exceeds the monthly mortgage payments.
Private landlords are among the highest-income households
According to the IW, 93 percent of private landlords had a positive income from renting and leasing in 2017, meaning that their gross rental income exceeded the costs of maintenance and modernization. For just under 20 percent of households that rent out property, income from renting and leasing ranged from zero to 2,500 euros; for another 20 percent, it ranged from 2,500 to 5,000 euros; and for about 17 percent, it ranged from 5,000 to 7,500 euros. One in ten landlord households even earned more than 20,000 euros.
Consequently, it comes as no surprise that households that rent out properties tend to be among the highest-income households in Germany. In 2018, 44 percent of private landlords belonged to the top 20 percent of households by income. Twenty-five percent belonged to the fourth quintile of the highest-income households in Germany. You can download the ACCENTRO Housing Costs Report for free here: Housing Costs Report
