Foreigners pay higher rent than Germans, census reveals

A new report from the Federal Statistical Office (Destatis) based on the 2022 census reveals a striking reality in Germany’s housing market: foreign nationals are paying on average 9.5% more in rent per square meter than their German counterparts. While this might seem surprising, digging deeper into the data uncovers several factors contributing to this gap, from apartment size to tenancy length and location.

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The Numbers at a Glance

• Foreign nationals pay an average net cold rent of €7.75 per square meter in 2022, compared to €7.08 for Germans.
• 25% of foreigners live in apartments smaller than 60 sqm, more than double the 12% of Germans in similarly small homes.
• Small apartments command a hefty premium, renting at 15.6% higher rates (€8.01 vs €6.93 per sqm).
• On average, foreigners occupy 85.7 sqm apartments, while Germans live in larger homes averaging 109.6 sqm.
• Homeownership is also a key factor: over 54% of Germans own their home, but only 22% of foreigners do

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The Size and Location puzzle

The biggest reason behind higher rents is the size of apartments that foreigners tend to occupy. Smaller apartments generally cost more per square meter because fixed costs and demand dynamics raise prices. For example, a 40 sqm apartment will typically cost more per square meter than a spacious 100 sqm apartment.

Foreign nationals often live in smaller spaces because of economic factors, family size, or availability. Many newcomers or immigrant families start with smaller, more affordable apartments before upgrading as they settle. Smaller units are often in denser, more central urban locations where rents are naturally higher.

Additionally, foreigners are more likely to live in rental housing rather than own property. This means they don’t benefit from the stability and often lower housing costs associated with homeownership.

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Does tenancy duration explain the gap?

Long-term tenants often benefit from lower rents due to rent control laws and lease renewals. Germans, on average, tend to stay in one home longer, 51% have lived at their address for 10 years or more, compared to just 20% of foreigners. But even when controlling for tenancy length, foreigners still pay more rent per square meter.

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This shows that the rent gap isn’t just about how long someone has lived in their apartment, foreigners consistently face higher rents regardless.

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Higher rents across all city types

You might expect this rent gap only in big cities like Berlin or Munich, but it exists across Germany, in both large metropolitan areas and small towns:

• Large cities (100,000+ inhabitants): 7.3% higher rents for foreigners
• Medium-sized cities (50,000 to under 100,000 inhabitants): 6.6% higher
• Smaller cities (10,000 to under 50,000 inhabitants): 9.3% higher
• Small towns (<10,000 inhabitants): 10.6% higher

This consistent pattern indicates systemic issues in the housing market affecting foreign nationals nationwide, whether in urban or rural settings.

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Key factors behind rent disparities for foreigners

Several factors could help explain why foreign nationals pay more:

1. Market Inequality and Information Gaps: Newcomers often lack access to local rental networks or negotiation experience, making them more vulnerable to higher prices
2. Higher Demand in Affordable Segments: Foreign nationals frequently compete for limited affordable housing, which drives up prices in smaller units and dense rental markets.
3. Discrimination and Bias: Studies such as the 2020 European Union Agency for Fundamental Rights (FRA) report have shown that ethnic and immigrant backgrounds can lead to unequal treatment and barriers in housing access, affecting rental prices and opportunities.
4. Preference or Necessity for Central Locations: Many foreign nationals live near workplaces, schools, or community hubs, often in areas with higher demand and prices.
5. Higher Share of Renters: Foreign nationals are more likely to rent rather than own homes, making them more exposed to fluctuating market rents without the stability and cost benefits that come with homeownership.

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The 2022 census data highlights a significant inequality in the German housing market, foreign nationals pay higher rents across the board, live in smaller apartments, and are less likely to own their homes.  Recent trends show that housing prices across Germany have been steadily rising, further intensifying the affordability challenges for all renters, including foreign nationals. This upward price pressure exacerbates the existing rent disparities and competition in the housing market. Policymakers and housing advocates must address these disparities to promote fairer, more affordable housing options for all residents of Germany.