A family in a village 18 kilometres outside Würzburg. Two professional salaries - a military vehicle engineer and an economist - and still not enough to rent a bigger apartment where they actually want to live. A 59-year-old woman in Hamburg who knows with mathematical certainty that when she retires in eight years, she will no longer be able to afford the apartment she has lived in for over two decades. A 27-year-old man, born and raised in Hamburg, searching the rental portals and turning up zero results for anything under 700 euros with at least 30 square metres of floor space.
These are not stories of poverty. They are stories of Germany's rental market, the largest in Europe, breaking in ways that now reach well into the middle class.
The numbers behind these stories are stark. The average asking rent for a newly listed apartment in Germany sat at 10.92 euros per square metre in 2024. The average rent on existing contracts was 7.62 euros. That gap - nearly 3.30 euros per square metre, or roughly 43 percent more for the same walls and floors - is the engine of the crisis. It means that moving homes, for almost any reason, instantly costs you significantly more money, often for less space.
In Hamburg's Eimsbüttel neighbourhood, asking rents on new listings have reached almost 16 euros per square metre. In the autumn months of 2025, national asking rents rose by 4.5 percent - almost double the broader rate of inflation at the time.
The background
Germany is, by European standards, a nation of renters. More than half the population lives in rented accommodation, a proportion higher than almost any other wealthy country. This was not an accident. After the Second World War, Germany built a massive stock of affordable housing - social housing, cooperatives, and publicly owned apartments - that kept rents stable for decades and allowed the country to urbanise without pricing its workers out of the cities they worked in.
Social housing refers to government-subsidised apartments with controlled rents, available to people who earn below a certain income threshold. At its peak, Germany supported building an annual average of around 240,000 social housing units in the 1960s and still 150,000 in the 1970s. That model was deliberately wound down. The SWR documentary that forms the basis of this story puts the construction numbers plainly: in 1973, 700,000 new apartments were built on the territory of what was then West Germany alone. By 2022, the number for all of reunified Germany had fallen below 300,000. The trend has continued downward since.
Social housing followed the same trajectory. On the territory of the old West Germany, there were nearly four million social housing units. By 2020, new social housing approvals had fallen to barely 23,000 units, increasing only slightly to 37,000 in 2024 - a shadow of what was possible in the postwar decades. Today, across all of Germany, there is roughly one million social housing units left. According to a recent study by the Social Housing Alliance, Germany in 2025 is already missing around 550,000 apartments, particularly social housing and cheap rental properties.
The Mietpreisbremse - the rent brake, Germany's system of rent control on existing tenancies - was introduced to cap how much landlords could charge when reletting apartments. The cap is set relative to a local benchmark called the Mietspiegel, a kind of official average rent. But the rent brake has significant gaps: it does not apply to new construction, and it does not apply to furnished apartments rented on fixed-term contracts.
That second exemption has become a growth industry.
What is actually happening
Germany's housing market has split into two tiers that move at radically different speeds. Tenants in long-standing contracts sit on rents that are, by market standards, cheap. Tenants who must move face prices that bear almost no relationship to what their neighbours pay.
This gap creates what economists call a lock-in effect - a situation where staying put is so obviously better than moving that people simply do not move, even when their lives change and their housing no longer fits. The SWR data illustrates this with a demographic snapshot: people aged 25 to 44 have on average 44.7 square metres per person. People aged over 65 have 68.5 square metres each. The older group is not richer. They are simply locked in to apartments they have occupied for decades, which now represent a financial asset they cannot afford to trade.
The knock-on effect plays out in human terms throughout the documentary. A couple in their 50s in Hamburg, living comfortably in a large family apartment, have two adult sons - one of whom has returned home because he cannot find his own place. The parents cannot downsize because a smaller apartment would cost more than what they currently pay for a larger one. So a 27-year-old man lives with his parents in a city he grew up in, not for lack of income or effort, but because the arithmetic does not work.
Meanwhile, the supply side is deteriorating further. In 2024, the number of newly built dwellings declined by 14.42 percent year-on-year to 251,937 units - driven primarily by rising interest rates and escalating construction costs. Building permit approvals fell to their lowest level since 2010. Pure construction costs in major German cities now exceed 4,630 euros per square metre. Including land, the figure reaches around 5,400 euros. To cover those costs, a developer needs a basic rent of at least 18 euros per square metre - too expensive for anyone on an average income.
What fills the gap is speculative conversion. In Leipzig, the documentary profiles an investor who takes three-bedroom family apartments and, by installing plasterboard partitions, converts them into five furnished rooms for students - renting each at prices over 30 euros per square metre. One resident pays 475 euros per month for a room measured at 17 square metres for utility billing purposes. Because the apartment is classified as furnished and rented on a fixed term, the rent brake does not apply. The investor declined to speak to the ARD journalists but has appeared on an online platform presenting himself as a legitimate property entrepreneur.
This is not a marginal practice. Seventeen percent of all advertised apartments in Germany are now furnished and fixed-term, putting them outside rent control. In Munich, that share has reached one in three listings.
The money trail
Germany's housing market did not arrive here by accident. It was steered here, over roughly three decades, by a series of decisions that treated apartments primarily as financial assets rather than as infrastructure.
The most consequential of those decisions was privatisation. Since the 1990s, over a million publicly owned apartments - units that local governments and states had used to keep rents stable - were sold to private firms. The scale of that transfer is difficult to reverse. As one urban policy expert explains in the documentary: buying those stocks back now, at current market prices, would be financial madness. "We sold the investment of generations relatively quickly," she says. "And now, if we want to correct that, it is again a generational project."
The privatisation created companies like LEG Immobilien, formerly the state housing company of the German state of North Rhine-Westphalia. Sold off in 2008 and listed on the stock exchange in 2013, LEG now owns over 170,000 apartments, making it Germany's second-largest residential landlord. In its 2024 financial results, LEG reported that its key earnings indicator improved by 10.6 percent to 200.4 million euros, with the company's CEO noting that "earnings per share have risen continuously even in the past years of crisis in the real estate industry." LEG proposed a dividend of 2.70 euros per share for 2024, an increase of 10.2 percent, representing a full distribution of free cash flow to shareholders.
The company's own annual report states: "The demand surplus is good for our business." In plain terms: because Germany does not have enough apartments, LEG can rent even poorly maintained units at high prices and still turn a profit.
The documentary presents images from LEG properties in Monheim, a city of around 40,000 people in North Rhine-Westphalia, where the company controls approximately 2,500 to 2,600 homes - a significant portion of the local rental market. Reports gathered from local newspapers across 26 German cities describe mould, broken lifts left unrepaired for extended periods, persistent water damage and heating systems that failed for weeks at a time. One resident's son describes filing an online repair request that was marked as resolved without anyone having visited the apartment.
LEG responded to the allegations in writing, declining to speak on camera.
The investment logic is straightforward. Spending on maintenance reduces the money available to pay shareholders. In a market where demand vastly exceeds supply, a landlord can defer repairs almost indefinitely without losing tenants. The housing shortage is, for a company like LEG, not a crisis to be solved. It is a business condition to be managed.
Ricarda Pätzold from the German Institute for Urban Affairs describes large financial investor ownership of housing as "a mortgage on the social housing supply mission" - because the capital that could fund maintenance and new construction is instead extracted and distributed to shareholders.
What people are doing about it
Some responses are legal challenges. Susanne, a Berlin renter who pulled out her rent index and discovered her landlord was charging nearly 800 euros more per month than the regulated maximum, notified her landlord of the violation. Shortly afterward, she received an eviction notice on the grounds that the landlord needed the apartment for personal use - a common mechanism called Eigenbedarfskündigung, meaning a termination based on the owner's own housing need. Susanne fought the eviction in court. The notice was dismissed and her rent was reduced. What she is left with is the knowledge that asserting a legal right triggered a legal threat.
The Berlin Tenants' Association analysed 550 recent such cases and found that roughly one in ten eviction notices based on owner-occupancy claims were probably false - the owner never actually moved in. The legal burden of proof currently falls on the tenant to demonstrate fraud.
Friedrich Moll, the Leipzig resident who had been renting one of the converted rooms for 475 euros per month, eventually moved out and filed a complaint with public prosecutors under a section of German economic law that criminalises exploiting housing emergencies to extract excessive rents. The threshold under that law is a rent more than 50 percent above the local reference rate. The case was still with the state prosecutor at the time of filming.
The countervailing model - not legal challenge but structural alternative - is the housing cooperative. In Tübingen, the city government has since the 1990s refused to sell public land to the highest bidder, instead running what is called a Konzeptvergabe - an award process based on what a developer proposes to do with the land, not simply how much they offer to pay. Former industrial sites and military bases have been converted into mixed developments with building communities, cooperatives and social housing. The result is a patchwork of small urban developments where rents are tied to actual costs, not market rates, and where the design of the buildings - including modular walls between apartments - allows households to resize their homes without moving.
There are around 2,000 housing cooperatives in Germany today, with approximately 2.9 million members and five million residents benefiting from cooperative housing. These cooperatives invest around 1.7 billion euros in new construction annually. That figure sounds large until compared to the scale of what is needed.
In Munich - the city with the highest rents in the country - a foundation called "Daheim im Viertel" offers property owners a way to remove their buildings from the speculative market permanently. Owners transfer their properties to the foundation, which is exempt from inheritance tax as a charitable body. The previous owner retains the right to live there for life. Rents for existing and future tenants are set at cost, not market rates. By the time of filming, 83 apartments had been transferred to the foundation, with negotiations underway on another 47.
The bottom line
Germany built its postwar prosperity partly on cheap, stable housing that allowed workers to live near their jobs without spending most of their wages on rent. It then spent three decades dismantling that system - selling off public housing, cutting social housing construction, and allowing the rent gap between existing and new tenancies to widen until moving became a financial penalty rather than a normal life event. The result is a market that now traps people where they are, regardless of whether the housing fits their lives. Forty-five percent of participants in the ARD survey said they had once decided not to move because they could not find anything suitable. Forty-nine percent said they wanted to move and did not dare because of prices. The mechanism works: it is just working against the people who live in it.
Timeline
- 1973 - West Germany completes 700,000 new residential units in a single year, the peak of the postwar housing construction era
- 1990s - German federal and state governments begin selling over one million publicly owned apartments to private firms; Tübingen begins its alternative land-allocation model
- 1995 - Reunified Germany completes 600,000 new residential units
- 2008 - LEG Immobilien, formerly the state housing company of North Rhine-Westphalia, is privatised and sold
- 2013 - LEG is listed on the Frankfurt stock exchange
- 2022 - Germany completes fewer than 300,000 new residential units, less than half the 1973 figure; social housing approvals reach barely 23,000 units nationwide
- 2024 - Average German asking rent for new lettings reaches 10.92 euros per square metre, compared to 7.62 euros on existing contracts; new home completions fall a further 14.4 percent to 251,937 units; building permits hit their lowest level since 2010; LEG raises its shareholder dividend by 10.2 percent
- Autumn 2025 - National asking rents rise 4.5 percent, nearly double the general inflation rate; 17 percent of all advertised German apartments are now furnished and rented on fixed terms, outside rent control
- March 2026 - SWR documentary on the ARD #besserwohnen campaign airs, drawing on months of data collection and testimony from renters across Germany
Summary
Who: Renters across Germany, including middle-income families and people approaching retirement, alongside large private landlords such as LEG Immobilien and smaller speculative investors in cities like Leipzig
What: A structural rental housing crisis driven by decades of declining construction, the privatisation of public housing stock, and a two-tier rent market that penalises anyone who moves; the gap between rents on existing and new tenancies has become so large that moving is a significant financial loss for most households
When: A long-running structural problem that accelerated sharply from the 2010s onward, with asking rents rising 4.5 percent in autumn 2025 alone
Where: Nationwide, with acute pressure in Hamburg, Berlin, Munich and Frankfurt, but increasingly visible in smaller cities and rural areas where housing was previously considered affordable
Why: The combination of a construction collapse, the sale of over one million public apartments since the 1990s, and a legal system in which rent controls have significant gaps that investors have learned to exploit systematically