This article is part of a series of articles and dialogues that explore the intricacies of affordable housing to decipher ways of tackling the crisis.
Mr. Schuster always had direct contact with his landlord. But last month, he woke up to the news that the building where he had lived for the last two decades had changed hands. A large notice on the entrance wall informed on “renovation works” by the new owner. The next day, a scaffolding was erected on the facade. More striking than the blitz of actions is the reason why Mr. Schuster’s landlord, a good man in his eighties, decided to sell the property at such an advanced age.
The consequences of his sale are still uncertain for Mr. Schuster and his neighbors, but the prospects of staying in their homes are daunting. Not far from where I live, 90 tenants living in three different buildings in just one street encountered a similar destiny in 2023: a sudden house sale by a long-time landlord, no notice, renovation, higher rent, and eviction of tenants across the neighborhood. I live at the epicenter of Munich’s affordable housing crisis.
Last Sunday, I attended the event “Mietwahnsinn in München: Jetzt frag i!” hosted by DMB Mieterverein München e.V. (Munich Tenants’ Association). In the lead-up to the German general elections, a panel featuring local candidates from various political parties discussed the skyrocketing housing prices and answered questions from the audience about their plans to address the housing crisis. I listened as Mr. Schuster shared his story amid the discussions filled with concerns from distressed tenants, activists, and politicians about rent control, land speculation, and the lagging pace of new construction that is unable to meet demand.
I was not expecting the presence of real estate elites at an event organized by the tenant lobby, but, to my surprise, the voices of small and medium-sized landlords were notably absent. In Munich, small or medium-sized owners own around 50% of rented real estate. Given the complexity of the issue of affordable housing and the public’s anger, I can’t help but wonder, shouldn’t we be separating the wheat from the chaff?
After the event, Mr. Schuster shared with me that his landlord had begun to worry about the inheritance tax that would apply when the property passed to his partner (he has no children). Faced with this concern, the landlord decided to sell the building, fully knowing its impact on his long-time tenants; unfortunately, he left them in the dark. And so his angst turned into shame. But he is not to blame. Two years ago, a new tax inheritance law replaced the rateable property value with its market value to calculate the tax payment. This change has triggered dire consequences for small and medium-sized landlords.
“Back then, an heir could finance the tax through rent and keep the house. Today that is no longer possible,” explained Rudolf Stürtzer, chairman of the landlord association Haus + Grund, at an event in Munich last October. For instance, if someone inherited an apartment building valued at 2 million euros in Munich 20 years ago, they would have been liable for 380,000 euros in inheritance tax. In 2022, that tax burden would have skyrocketed to 2.3 million euros—an increase of 600%. During the same period, rents surged by approximately 40%. Savvy investors in the real estate market know how to exploit this situation, which pushes small landlords to the brink and fills the government’s coffers.
A month ago, I spoke with long-time activist Gerhard Metzger, active member of the activist housing group #Ausspekuliert in Munich. He brought to my attention the nonprofit organization Daheim im Viertel, which has 35 housing cooperatives and socially oriented housing companies under its umbrella. This nonprofit offers property owners options for transferring and managing their property through various means: selling the property to the foundation at a fair price, partial donations during the owner’s lifetime, life annuity or pension models, or transfer against usufruct or testamentary disposition. One of the pioneers of this model is the well-known local actor Wolfgang Fischer, who transferred his house to the Daheim im Viertel nonprofit, contributing to affordable housing in Munich and a more inclusive neighborhood—a well-maintained home with satisfied tenants.
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In Munich’s middle-class neighborhood of Sendling, a couple who prefers to remain anonymous owns a large, beautiful Jugendstil house. After purchasing the building more than twenty years ago, they discovered in the deeds that a Jewish couple, who were later murdered in a concentration camp, built the house. They eagerly participated in a remembrance initiative in Munich by placing two stolpersteine (stumbling stones) on their private property in front of the house to honor its former owners. Committed to both their house and neighborhood, they also had concerns about securing their property’s future. The last time I spoke with them, they mentioned that the building is now held in a family foundation, ensuring that their three children can keep the house without feeling pressured to sell.
On the other side of the city, another landlord I spoke to, who also wishes to stay anonymous, grew up in a five-story historic building in one of Munich’s upscale areas. He praises the excellent tax advice his family received 25 years ago. His mother structured her inheritance so that he could inherit the house after her passing without having to sell it to pay inheritance taxes. He acknowledges that he rents the apartment to high-earners who can afford to live in this prime location, yet he charges two-thirds of what tenants pay for apartments in a newly constructed building next door.
“The prices are rising so sharply that my indexed rents are below the market,” he estimates. However, he adds, “I’m glad I’m so moderate with the rent because mine is an old building, and there’s always something that needs maintenance.” He believes this approach fosters a harmonious balance with his tenants. “I feel conflicted because I was born into privilege, and I’m very grateful for that. On the other hand, I see how capitalism is damaging our world. I’m strongly in favor of rent control.”

As he faces a lawsuit with a problematic tenant who might eventually move out, he states he would not raise the rent if it helps find renters who are less contentious. When I asked about his main struggles as a landlord, he immediately mentioned how difficult it was to find a property administrator after the previous one ended their contract due to the challenging relationship with the problematic tenant. Recently, the court’s decision fell in the tenant’s favor, and he could keep renting, although the court recognized that his confidence was destroyed once and for all by the tenant’s behavior.
“The staff at property administrators are always caught between two stools, coping somehow with the demands of the tenants and the madness of getting hold of a handyman. You have to be robust regarding your psychological constitution,” he says. The other challenge is that he believes the craft industry in Munich is disappearing, and there is a significant lack of handymen. We agree that given the scarce affordable housing in the city, workers are considering moving out of town.
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Another anonymous landlord I spoke with owns several properties across Munich with her brother. “My father started renovating old buildings in Munich as a part-time job 50 years ago, and my brother and I were born into it,” she shares. “For the last 50 years, we’ve had tenants where everything runs smoothly. Normal rent increases, regular conversations, togetherness—a perfect world!” she remarks.
“As a landlord, you want happy tenants to ensure a pleasant living environment with minimal stress,” she assesses. However, she laments that this only happens in 80% of the cases. Dealing with feuding tenants is a daily reality for small and medium landlords. “In the last 30 years, we have tried to evict three tenants who live in 6m² rooms. We offered them larger apartments and even financial incentives to move out, but they refused! They have been unemployed since their student days and are known to the city due to numerous police complaints. The postman even refuses to deliver their mail. We have no means to evict them from the property. Sometimes, you have to question who truly owns the space,” she bemoans.
She and her brother have also encountered “rent nomads”—tenants who move in and never pay rent and then threaten to blackmail the landlord: “What will you pay me to leave?” She states landlords often end up paying because “otherwise, you could be in court for three years and end up not seeing a single euro.”
Amid public frustration over soaring prices for buying or renting, I asked her about the main challenges facing good landlords in Munich and possible solutions for affordable housing. “I believe bureaucracy is the biggest enemy,” she states. “The requirements for housing construction have become absurdly stringent. Many standard measures are enshrined in law without considering the consequences for both owners and tenants.”
She provides several examples: “It is great when fire protection standards are high, but compared to the rest of the world, we already had a higher standard—even 30 years ago—than other countries do today. It is so cost-intensive that maintaining affordable rents is not even feasible.” She also mentions, “Only this one new screw can be used in the elevator. It is the new standard that has to be gradually implemented. Costs suddenly explode because other spare parts no longer fit with this new screw.” I can see the anger in her responses, as she admits that she has sold some of their property to investment funds in the past, either for financial reasons or due to the difficulty of finding competent property administrators.
“The city wants affordable housing, but property taxes are rising steeply, and landlords pass these costs onto tenants. This creates the exact opposite effect—housing becomes even more expensive,” she explains. The tax authorities even assert that if a landlord doesn’t earn enough rent, they can claim that the landlord is making a gift or taking a profit. “I’ve experienced this before—so you can’t charge too little!” she states bluntly.
Monika Schmid-Balzert, deputy managing director of the DMB Mieterverein München e.V. (Munich Tenants’ Association), explains that if a landlord charges less than half the rent according to the rent index, the tax authorities only partially recognize their business expenses, such as maintenance and repairs, and they could face penalties. “This association demands that fair landlords be treated the same as everyone else concerning business expenses and even possibly receive tax advantages for charging affordable rents,” says Schmid-Balzert. “A city like Munich, with an extremely tight housing market, would not function without its many fair landlords.”
However, she points out that her association is committed to promoting comprehensive and affordable nonprofit housing. The Federal Cabinet reintroduced this regulation this year, allowing social enterprises, associations, and foundations to provide affordable housing in the future and benefit from tax relief offered to nonprofit organizations—provided the rent is below market rates. “However, this regulation does not go far enough for us; at the moment, it only helps existing nonprofit companies. For a new nonprofit housing organization to succeed, investment grants, extensive tax exemptions, and discounted public land for housing projects are essential,” says Schmid-Balzert.
I asked one of the landlords how easy it would be to transfer all their properties to their children. She offers a very pessimistic view: “That is extremely complicated. We first have to manage to transfer properties from my parents to us, but I don’t think it will be possible without selling them! I believe you need more than 300 units for it to be more tax-efficient. Overall, Germany is becoming increasingly unattractive to investors. It’s too expensive, too bureaucratic, and not welcoming at all. I’m also considering whether it would be best for my daughter to sell everything, invest, and live elsewhere.” However, I wonder, can the city of Munich afford to lose these good landlords?