Rent or Buy a Home in Germany: The Honest Calculation
Buying a home beats renting and investing the difference only with a low Kaufpreisfaktor (price ÷ annual cold rent) and a long horizon. In the calculator's model at a 4.4% rate, the threshold is about 18 over 10 years and about 20 over 20–30 years. In Hamburg, Munich, Frankfurt and Berlin the factor is 30–33 (2025).[1] At that factor the renter ends up with more capital in the model, in every scenario and at every horizon in the table below.
Run your own numbers in the buy-or-rent calculator →
Who this is for: the Island/Ladder phase (2+ years in Germany), with a stable income and plans to stay in the city for 10+ years.
Is renting in Germany secure?
Yes. Open-ended leases are the norm. A landlord can give ordinary notice (ordentliche Kündigung) only with a legitimate interest under § 573 BGB, such as Eigenbedarf (the landlord needs the flat for themselves or their family).[2] The notice period grows with the length of the tenancy: 3, 6 or 9 months (§ 573c BGB).
Germany is the only EU country where tenants outnumber owners: 53% of residents rent (2024).[10]
The wish to buy after moving here often comes from the country of origin. There, for decades, a flat was the only asset that survived devaluations and frozen deposits. The capital gap in the calculator shows what the feeling of "a home of my own" costs with your numbers.
What does buying cost on top of the price?
Kaufnebenkosten (purchase costs) are 5–12% of the price in 2026. Banks rarely finance them: the buyer pays them from their own capital.[6]
| Cost | Rate (2026) | Note |
|---|---|---|
| Grunderwerbsteuer (property transfer tax) | 3.5–6.5% | 3.5% in Bavaria, 6.5% in North Rhine-Westphalia, Brandenburg, Saarland and Schleswig-Holstein[4] |
| Notary and Grundbuch (land registry) | 1.5–2% | Fees are fixed by the notary fees act (GNotKG); they can't be negotiated[3] |
| Maklerprovision (agent's fee) | 0–3.57% | Since 23 December 2020 the buyer pays at most half if the seller hired the agent[5] |
| Total | 5–12% | One-off, from your own money |
- Transfer tax
- 6.0%
- €24,000
- Notary and registry
- 2.0%
- €8,000
- 3.57%
- €14,280
Berlin: transfer tax €24,000 + notary and registry €8,000 + agent €14,280 = €46,280 (11.6% of the price)
Rates for 2026. Notary ≈ 1.5% and registry ≈ 0.5% (GNotKG); agent: the buyer's share (§ 656d BGB).
Example for Berlin (2026): a €400,000 flat means €24,000 in tax, €8,000 for notary and registry, and €14,280 for the agent. That is €46,280 in total, or 11.6% of the price.
What is the Kaufpreisfaktor, and what counts as high?
The Kaufpreisfaktor (price-to-rent ratio) is the purchase price divided by the annual cold rent of a comparable flat.[7] Its inverse is the gross rental yield: a factor of 25 means 4% a year, a factor of 33 about 3%. Finanztip considers a factor up to 20 relatively affordable and above 25 expensive.[8]
According to Baufi24 for the second half of 2025, gross yields are 3.02% in Hamburg, 3.22% in Munich, 3.24% in Frankfurt and 3.36% in Berlin, which is a factor of 30–33. The average across the 50 largest cities is 4.1% (a factor of about 24); Chemnitz is at 5.9% (a factor of 17).[1] In the first half of 2026 the average yield rose to 4.17%: rents are rising faster than prices.[9]
Factor 26.7, gross rental yield 3.8%, zone over 25
| City | Factor | Gross yield |
|---|---|---|
| Hamburg | 33.1 | 3.02% |
| Munich | 31.1 | 3.22% |
| Frankfurt | 30.9 | 3.24% |
| Berlin | 29.8 | 3.36% |
| 50-city average | 24.4 | 4.10% |
| Duisburg | 19.8 | 5.05% |
| Chemnitz | 16.9 | 5.90% |
Zones are Finanztip rules of thumb, not a verdict. Asking prices and rents: Baufi24, H2 2025.
At what Kaufpreisfaktor does buying pay off?
In the calculator's model at a 4.4% rate, buyer and renter end up with equal capital at a factor of about 14 over 5 years, about 18 over 10 years and about 20 over 20–30 years.
The model compares unrecoverable costs. For the owner, that is interest, running costs and the lost return on their own capital; for the renter, rent and moves. Loan repayment stays the owner's capital.
Year one, per month (calculator defaults: €300,000 flat, 55 m², comparable rent €1,250, factor 20):
| Item | Buy | Rent |
|---|---|---|
| Mortgage interest (4.4%) | €1,071 | — |
| Running costs: the part of the Hausgeld (payment to the owners' association) that a landlord can't pass on to tenants, building reserve, Grundsteuer (property tax), small repairs | €210 | — |
| Renovation reserve for the flat | €139 | — |
| Cold rent | — | €1,250 |
| Moving reserve | — | €48 |
| Unrecoverable | €1,420 | €1,298 |
| Loan repayment (stays your capital) | €501 | — |
Tenants usually pay Grundsteuer (€29 a month) too, through the Nebenkosten (service charges on top of rent, § 2 BetrKV);[21] the model assigns it to the owner only and so slightly understates the result of buying.
On top of that, the owner put in €40,000 of own cash on day one, €34,710 of it Kaufnebenkosten. The renter invests the same sum and the monthly difference. Buying catches up because the flat gains value, rent rises and interest falls as the loan is repaid.
Break-even factor by horizon:
| Assumptions | 5 years | 10 years | 20 years | 30 years |
|---|---|---|---|---|
| Base: 4.4% rate, 1.5% price growth a year, 6% portfolio return a year | 14 | 18 | 20 | 21 |
| Rate 3.4% | 16 | 21 | 23 | 23 |
| Rate 5.4% | 12 | 16 | 18 | 19 |
| Price growth 2.5%, return 5% | 16 | 23 | 26 | 27 |
| Price growth 0.5%, return 7% | 12 | 16 | 17 | 18 |
| Renter invests half the difference | 13 | 23 | 28 | 26 |
| Bavaria (3.5% tax), no agent | 17 | 21 | 22 | 22 |
Calculated with the buy-or-rent calculator on its defaults (Berlin, agent, 10-year fixed rate, the renter moves every 7 years, tax on fund income included); each row changes one assumption. Over 5 years the threshold is 12–17; each percentage point of the rate moves it by 2–3 factor points.
If the renter invests only half of what they save, the threshold over 10–30 years rises to 23–28. A mortgage works as forced saving: if you invest irregularly, that is an argument for buying.
Can you keep the money for a purchase in ETFs?
Yes, as long as the purchase is more than 3 years away: then it is ordinary long-term money. With less than 3 years to go, money in shares may not have time to recover from a fall, and the contract sets the payment date.
Example: a €400,000 flat in Berlin needs €46,280 in Kaufnebenkosten and an €80,000 down payment (20% of the price), €126,280 in total. A 30% fall in your Depot (brokerage account) leaves €88,396. The Kaufnebenkosten don't shrink, so the whole fall lands on the down payment: €42,116 instead of €80,000, or 47% less. The loan grows from €320,000 to €357,884, and the rate rises with the loan share.[6]
Payment deadlines don't depend on the market. Grunderwerbsteuer is due one month after the tax assessment, and until it is paid you won't be entered in the Grundbuch as the owner (§§ 15, 22 GrEStG).[16]
Even without a fall, you will have less at the purchase than your Depot shows: tax on gains from an equity fund is 18.46% (2026, without church tax).[17]
The 3-year line is Geldchen's editorial benchmark for the investment horizon; the law doesn't set it. The savings checklist uses it too. Where to keep such money is covered in Bonds. If you take money out of the Depot in parts over the last years before the purchase, the result depends less on one bad month.
What to check before buying?
Checks before buying: own capital, the loan payment, the reserve after the purchase and residence status.
| Check | Benchmark | Why it matters |
|---|---|---|
| Own capital | Kaufnebenkosten + about 20% of the price | The bank doesn't finance Kaufnebenkosten; a larger loan share means a higher rate[6] |
| Loan payment | Up to 35–40% of net income | The Verbraucherzentrale (consumer advice center) calls 40% the upper limit[6] |
| Reserve | Counted after the purchase, with the full loan payment in your expenses | A Sonderumlage (special levy on the owners) is due on the date the owners' meeting sets |
| Status | Permanent residence or a long permit | With a temporary residence permit, banks often ask for more own capital |
An owner needs an emergency fund more than a renter does: you can't cut a loan payment by moving to a cheaper flat, and selling takes months. Own capital you declare to the bank doesn't count toward the emergency fund. Its size, taking ALG I (unemployment benefit) into account, is covered in Unemployment Benefits.
A flat buyer also takes on the building's risks. If the owners' association's reserve (Erhaltungsrücklage) doesn't cover a roof or a facade, the owners' meeting sets a Sonderumlage. You can ask the seller for the meeting minutes (Protokolle der Eigentümerversammlung) and the size of the Erhaltungsrücklage before the deal: they show which repairs are coming.[18]
What does the notary check, and who checks the rest?
A notary is mandatory in Germany but neutral: the notary makes sure the contract is lawful and doesn't check the price, the building's condition or your financing.[19] Other specialists check the rest:
| Question | Specialist | What to keep in mind |
|---|---|---|
| Loan size, choice of bank | Verbraucherzentrale (Baufinanzierungsberatung, mortgage advice) or a Honorar-Immobiliardarlehensberater (fee-based mortgage adviser) | Both charge for advice. A fee-based adviser (§ 34i Abs. 5 GewO) is paid only by you; a loan broker gets a commission (Provision) from the bank[20] |
| Condition of the building and the flat | Bausachverständiger (independent building surveyor) | Inspection before signing |
| Draft contract | Lawyer or Verbraucherzentrale | If the seller is a company or a developer, the notary sends the draft at least 2 weeks before signing (§ 17 Abs. 2a BeurkG)[19] |
| Letting, selling within 10 years, leaving Germany | Steuerberater (tax adviser) | Tax on rental income and on the gain from a sale[15] |
FAQ
This is not legal or financial advice.
How many years do I need to live in a home I buy for it to pay off?
In the calculator's model (4.4% rate, 1.5% price growth a year, 6% portfolio return), buying overtakes renting and investing in year 8 at a factor of 16, in year 10 at 18, in year 15 at 19 and in year 20 at 20. The "Break-even factor by horizon" table above answers the reverse question: at what factor buying catches up with renting exactly at the end of the period. The exact break-even is 20.5 for 30 years (rounded to 21 in the table) and 20.6 for 40 years. So above 20.6, that is already at 21, buying doesn't overtake renting even within 40 years. Check your own numbers in the calculator.
What happens if I buy and leave Germany after 5 years?
The Kaufnebenkosten don't come back: for a €400,000 flat in Berlin that is €46,280.
When you sell, you can end the loan early (§ 490 BGB), but the bank charges a Vorfälligkeitsentschädigung (compensation for lost interest); its size depends on the remaining debt and the difference between rates.[13] Without that compensation, you can repay the loan at the end of the fixed-rate period, or, with a fixed period longer than 10 years, 10 years after payout with 6 months' notice (§ 489 BGB).
A gain from selling within 10 years is tax-free if you lived in the flat yourself in the year of sale and the two years before.[15]
With rates above 4%, does buying make sense at all?
Yes, if the Kaufpreisfaktor is low. In the calculator's model at a 4.4% rate, buying pays off at a factor of about 18 or lower over 10 years and about 20 over 20–30 years; at 5.4%, at 16 and 18–19. In September 2026 the average rate with a 10-year fixed period is 4.2–4.3%, a 15-year high.[14] One percentage point is about €200 a month on a €240,000 loan.
Does the Mietpreisbremse change the math in favor of renting?
Partly: it slows rent growth but doesn't freeze it. In cities with a housing shortage, the Mietpreisbremse (rent cap) allows a new lease at most at the ortsübliche Vergleichsmiete (local comparable rent) plus 10%. The Bundestag extended it to 31 December 2029.[11] Exceptions are new buildings and comprehensively modernized flats. Over a year, new-lease rents rose 3.2% and home prices 1.9% (Q2 2026).[12]
Sources
- DAS INVESTMENT (February 2026). "Mietrenditen steigen leicht – aber nicht in den Metropolen" (Baufi24 Mietrenditeatlas, H2 2025). https://www.dasinvestment.com/baufi24-mietrenditeatlas-mietrendite-steigt-leicht-aber-nicht-in-den/
- Bürgerliches Gesetzbuch (BGB, as of 2026), § 573 "Ordentliche Kündigung des Vermieters", https://www.gesetze-im-internet.de/bgb/__573.html; § 573c "Fristen der ordentlichen Kündigung", https://www.gesetze-im-internet.de/bgb/__573c.html
- Finanztip (as of 2026). "Kaufnebenkosten beim Hauskauf" (notary and Grundbuch, GNotKG). https://www.finanztip.de/baufinanzierung/nebenkosten-hauskauf/
- Haufe (as of 2026). Grunderwerbsteuer: rates by federal state, https://www.haufe.de/immobilien/wirtschaft-politik/grunderwerbsteuer-laender-nehmen-rekordsummen-ein_84342_508990.html; Bremen at 5.5% since 1 July 2025: https://www.service.bremen.de/dienstleistungen/grunderwerbsteuer-9673
- BGB (as of 2026), § 656d "Vereinbarungen über die Maklerkosten" (split of the agent's fee since 23 December 2020), https://www.gesetze-im-internet.de/bgb/__656d.html
- Verbraucherzentrale (as of 2026). "Immobilienfinanzierung: So berechnen Sie, was Sie sich leisten können". https://www.verbraucherzentrale.de/wissen/geld-versicherungen/bau-und-immobilienfinanzierung/immobilienfinanzierung-so-berechnen-sie-was-sie-sich-leisten-koennen-5822
- Homeday (2026). "Vervielfältiger: Kaufpreisfaktor berechnen". https://www.homeday.de/de/immobilienbewertung/vervielfaeltiger-kaufpreisfaktor/
- Finanztip (as of 2026). "Mieten oder kaufen: Was lohnt sich für Dich?". https://www.finanztip.de/baufinanzierung/mieten-oder-kaufen/
- Baufi24 (18 August 2026). "Baufi24-Mietrenditeatlas: Bruttomietrenditen steigen auf 4,17 %". https://www.baufi24.de/presse/pressemitteilungen/mietrendite-trend-082026/
- Eurostat (2026). "68% of people living in EU households own their home" (2024 data). https://ec.europa.eu/eurostat/web/products-eurostat-news/w/ddn-20260205-1
- § 556d BGB (Mietpreisbremse, as of 2026), https://www.gesetze-im-internet.de/bgb/__556d.html; extension to 31 December 2029: Deutscher Bundestag (2025), https://www.bundestag.de/dokumente/textarchiv/2025/kw26-de-mietpreisbremse-1084786
- vdp (August 2026). "Uneinheitliche Entwicklung der Immobilienpreise" (vdp property price index, Q2 2026). https://www.pfandbrief.de/uneinheitliche-entwicklung-der-immobilienpreise/
- Finanztip (as of 2026). "Vorfälligkeitsentschädigung". https://www.finanztip.de/baufinanzierung/vorfaelligkeitsentschaedigung/; §§ 489, 490 BGB (as of 2026), https://www.gesetze-im-internet.de/bgb/__489.html, https://www.gesetze-im-internet.de/bgb/__490.html
- Biallo (September 2026). "Bauzinsen auf 15-Jahreshoch: Was Käufer jetzt tun sollten", https://www.biallo.de/baufinanzierung/news/bauzinsen-15-jahreshoch/; Interhyp (10 September 2026). "Zins-Update September: Bauzinsen über vier Prozent", https://www.presseportal.de/pm/12620/6349741
- Einkommensteuergesetz (EStG, as of 2026), § 23 "Private Veräußerungsgeschäfte". https://www.gesetze-im-internet.de/estg/__23.html
- Grunderwerbsteuergesetz (GrEStG, as of 2026), § 15 "Fälligkeit", https://www.gesetze-im-internet.de/grestg_1983/__15.html; § 22 "Unbedenklichkeitsbescheinigung", https://www.gesetze-im-internet.de/grestg_1983/__22.html
- Investmentsteuergesetz (InvStG, as of 2026), § 20 "Teilfreistellung", https://www.gesetze-im-internet.de/invstg_2018/__20.html; Finanztip (as of 2026). "ETF Steuern". https://www.finanztip.de/indexfonds-etf/etf-steuern/
- Verbraucherzentrale (as of 2026). Guidebook "Eigentumswohnung". https://www.verbraucherzentrale.de/buecher-und-ebooks/eigentumswohnung
- Beurkundungsgesetz (BeurkG, as of 2026), § 17, https://www.gesetze-im-internet.de/beurkg/__17.html; Notar Dols, Berlin (as of 2026). "2-Wochen-Frist gemäß § 17 Absatz 2a BeurkG". https://www.notar-dols-berlin.de/notar/immobilienrecht/2-wochen-frist-gemaess-%C2%A7-17-absatz-2-a-beurkg/
- Gewerbeordnung (GewO, as of 2026), § 34i, https://www.gesetze-im-internet.de/gewo/__34i.html; Verbraucherzentrale Berlin (as of 2026). "Baufinanzierungsberatung". https://www.verbraucherzentrale-berlin.de/geld-versicherungen/bau-und-immobilienfinanzierung/baufinanzierungsberatung-15330
- Betriebskostenverordnung (BetrKV, as of 2026), § 2 No. 1 (Grundsteuer is one of the operating costs passed on to the tenant), https://www.gesetze-im-internet.de/betrkv/__2.html