German Tenant Association Warns of Soaring Rents Amidst Property Tax Reform
The Hessen Tenant Association (Mieterbund Hessen) has expressed concerns about the potential for rising rents as a result of the nationwide property tax reform. The association’s chairman, Gert Reeh, has stated that municipalities heavily rely on property tax revenue, particularly in light of their current financial difficulties.
"Property tax is one of the most significant sources of income for municipalities, along with business tax revenue," Reeh said. "And since municipalities are currently facing financial constraints, it is likely that property taxes will be increased."
"Numerous cities and municipalities have yet to determine their tax rates for 2025," Reeh explained. The tax rate, or Hebesatz, determines the amount of property tax that property owners must pay based on their property’s assessed value. Property owners have the option of passing on these tax expenses to their tenants.
Reeh urged Hessian municipalities that have not yet set their tax rates for 2025 to refrain from further increases. "Such a move would disproportionately affect already burdened tenant households and further exacerbate the already high cost of living," he warned. "This could lead to an increase in the poverty rate."
"In metropolitan areas, over 50% of household income is often dedicated solely to rent payments," Reeh pointed out.
A survey released in January by the Taxpayers’ Association (Steuerzahlerbund) revealed that property taxes were increasing in hundreds of Hessian municipalities at a rate exceeding the state’s recommendations. The Hessian Association of Cities and Municipalities (Hessischer Städte- und Gemeindebund) had previously acknowledged in December that higher property taxes were expected in many municipalities, citing increased operational costs, rising personnel expenses, and the burden of additional responsibilities.
However, the Hesse City Council (Hessischer Städtetag), which represents larger cities in the state, recently advised its members not to exceed the recommended tax rates set by the state’s financial administration.
Property tax is a crucial source of revenue for municipalities, enabling them to fund essential services such as schools, kindergartens, and public spaces. The reform aims for revenue neutrality, ensuring that municipalities collect approximately the same amount of property tax revenue in 2025 as they did in 2024.
