Germany’s Homeownership Gap Widens as Coalition Pushes Through Sweeping Labour and Tax Changes
Published on 07/05/2026 at 06:41 | Redaktion boerse-global.de
A new study puts a sharp spotlight on a persistent divide: only 44 percent of German households own their home, compared with an EU average of 70 percent. Published on 4 July 2026 by the Cologne-based Institute of the German Economy (IW), the analysis calculates that self-occupiers in metropolitan areas lose roughly 87,000 euros over 15 years against landlords on an asset worth 300,000 euros. The reason, says IW expert Michael Voigtländer, lies in far more generous depreciation rules available to property investors. He calls for tax-free allowances on property-transfer tax to make owning a home attractive again.
That call lands in the middle of an ambitious reform push. On 2 July 2026 the coalition committee of the Union and SPD approved a 34-point package billed as “getting Germany back on its feet.” Several measures directly target the labour market. The requirement to present a doctor’s certificate will return from the first day of illness, effectively scrapping the option of a phone-based sick note. The German Institute for Economic Research (DIW) sharply criticises the move. DIW labour expert Daniel Graeber says no proven link exists between remote sick notes and high absentee rates; the new rule risks overwhelming GP surgeries and raising infection risks.
Other employment changes include lengthening fixed-term contracts without cause to a maximum of 48 months, with up to six renewals permitted, applicable to new hires until the end of 2030. For high earners – those earning at least 177,450 euros a year – dismissal protection is relaxed. The flat-rate tax on minijobs jumps from 2 to 5 percent. To encourage job mobility, severance payments received for a swift job change will enjoy tax advantages. Meanwhile, Sunday and public-holiday bonuses stay tax-free up to an hourly wage of 75 euros.
Tax rules for home offices are also tightening. The Federal Fiscal Court (BFH) now demands that self-employed workers document their home-office costs within ten days. Missing the deadline means losing the deduction for business expenses. Until recently, an annual collection of receipts sufficed. Those who cannot meet the tight window can fall back on the annual flat-rate allowance of 1,260 euros. Germany’s finance ministry sees no need to soften the requirement. Tax experts warn that small traders and freelancers in particular face significant administrative hurdles.
The coalition also trimmed the popular Handwerkerbonus, which subsidises tradesmen services for private households. From 2027 the subsidy rate will drop from 20 to 15 percent of labour costs, capping the maximum tax benefit at 900 euros, down from 1,200 euros. The IW warns the cut may boost undeclared work. The question now, analysts say, is whether hiring skilled tradespeople will still make financial sense for homeowners.
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