“Rent is money down the drain” – “buying has become far too expensive.” Both are as wrong as they are right. Here is the logic, not the answer.
Purchase costs on top of the price
Costs you never get back: real estate transfer tax 3.5–6.5 % by state; notary and land registry about 1.5–2 % (statutory fees); estate agent negotiable, regionally mostly 6–7 % in total incl. VAT – since 23 December 2020 the buyer of a flat or single-family house pays at most half if the seller instructed the agent (§§ 656c, 656d BGB); if you instructed the agent yourself, that cap does not apply.
| State | Transfer tax |
|---|---|
| Bavaria | 3.5 % |
| Baden-Württemberg, Lower Saxony, Rhineland-Palatinate, Saxony-Anhalt, Thuringia | 5.0 % |
| Bremen, Hamburg, Saxony | 5.5 % |
| Berlin, Hesse, Mecklenburg-Western Pomerania | 6.0 % |
| Brandenburg, North Rhine-Westphalia, Saarland, Schleswig-Holstein | 6.5 % |
Example Hesse, €350,000 with agent (3.57 % buyer’s share): €21,000 + about €6,000 + €12,495 ≈ €39,500, a good 11 % on top; without agent just under 8 %.
Equity and affordability
Rule of thumb: all purchase costs from your own pocket plus 10–20 % of the price (consumer advice centres: 20–30 % plus costs). The monthly instalment should not exceed 40 % of net income. See Mortgage basics.
Running costs tenants do not pay
Maintenance – at least €1 per m² per month as a reserve, or the Peters formula: construction cost per m² × 1.5 ÷ 80 years (about €47/m² a year at €2,500/m²); property tax, building insurance, Hausgeld for flats; and interest, which like rent is gone. Repayment builds wealth. So compare rent vs. interest + running costs + maintenance, not rent vs. instalment.
Price-to-rent ratio
€350,000 ÷ (€1,100 × 12) = 26.5 annual rents
Common reading in German guides: below 20 cheap, 20–25 moderate, above 25 rather expensive, 30+ very expensive. A rule of thumb ignoring interest rates, location and life plans – but a ten-second reality check.
Price trend
Destatis’ house price index, Q2 2026: +0.6 % year on year, +0.3 % on the quarter. Detached houses in big cities +0.7 %; in sparsely populated rural districts flats −1.8 %, houses +1.0 %. Sideways, regionally mixed – not a forecast.
The comparison logic
Buying: equity and costs gone, then interest, maintenance, tax; at the end a (hopefully) debt-free home of unknown value. Renting: rising rent, but the equity stays and the difference could be saved. The outcome hinges on assumptions nobody knows. Support schemes exist – Wohn-Riester, KfW loans – named only. Property brokerage is my § 34c GewO field (Private clients); the decision to buy remains yours. Whether and what suits you is something to clarify with an adviser licensed for that purpose.
How to proceed
- Total price = purchase price + costs for your state.
- Check equity: costs plus 10–20 %?
- Form the price-to-rent ratio.
- List full monthly costs.
- Run the 20-year comparison with a licensed adviser.
General information, not legal, tax or investment advice. Sources: Real Estate Transfer Tax Act and state laws (rates 2026), German Civil Code (§§ 656c, 656d BGB), Court and Notary Costs Act, Federal Statistical Office (press release no. 336, 24 Sep 2026), consumer advice centres and independent consumer guides – as of October 2026. Got a specific property in mind? Get in touch.
