Altbau vs Neubau: What’s the difference and which should I rent in Germany?

It's more than just a question of their age and style; the type of building you live in in Germany can affect everything from your heating costs to your rental fee.

House facades of different eras in the Kreuzberg district of Berlin.
House facades of different eras in the Kreuzberg district of Berlin. Photo: picture alliance / dpa | Wolfgang Kumm

The obvious difference between Altbau and Neubau is their age. Generally, German tenant law classifies buildings constructed before 1949 as Altbau, while income tax law defines it as any building built before 1924.

However, you can often tell which category a building falls into just from the style. Altbau typically have features such as masonry walls, wood-beam ceilings, and boxed windows, while Neubau typically feature concrete walls and ceilings, as well as composite and insulated glass windows.

If you’ve dreamed of living in a beautiful building with a huge front door and ornate flourishes in the staircase, the Altbau life may be for you.

Though many Neubau are plainer to look at, some of the more modern ones may come with extras like air conditioning, a roof terrace, or a gym.

READ ALSO: Six confusing things about renting a flat in Germany

Heating and insulation

Speaking of air conditioning, the insulation and heating is one of the differences between Altbau and Neubau that’s likely to have a bigger impact on your quality of life. 

The typical high ceilings of the Altbau create a nice atmosphere but can also be difficult to heat, while the older buildings are also less energy efficient. 

This means that if you go down the Altbau route, you should check which renovations have been carried out, particularly on windows. A recently renovated and well-insulated Altbau means you could combine the ornate flourishes without having to choose between high heating bills and wearing three jumpers through the German winter.

READ ALSO: EXPLAINED: The hidden costs of renting in Germany

Neubau are more likely to be heated using central heating, which means you don’t need to carry out annual services or modernisations of the gas boiler — par for the course with most Altbau and older Neubau, and occasionally at the tenant’s own expense.

Within Neubau, there are differences depending on exactly how ‘new’ the building is, with those built in more recent decades most likely to have a high standard of soundproofing and insulation (and to have smarter floor plans and more modern perks like car parking), and those from the 1950s to the 1970s running the risk of the same issues as many old buildings.

If you are renting an apartment in a brand-new build, the energy efficiency and insulation will meet modern standards, but here there are extra considerations: new builds tend to experience cracks in the walls and other issues in their first few years while the building ‘settles’.

Rent, rights and operating costs

The age of the building you are renting can have a significant impact on your rights as a tenant.

If you’re renting an Altbau and find that some of the building’s features don’t quite live up to the modern standards you are expecting, it can be difficult to force your landlord to carry out the necessary modernisations.

In cases where tenants have found mold developing due to poor ventilation, drafts around windows, humid basements, sub-optimal sound insulation and heating systems, German courts have often sided with the landlord and ruled that they are not obliged to create a modern standard of living in an Altbau.

However, renters of an Altbau apartment can generally expect to pay less than for a Neubau.

According to a government report on Germany’s housing and real estate industry from July 2021, rents for first-time occupancy apartments cost an average of €11.29 per square metre nationwide and an average of €13.25 per square metre in the major cities.

Apartments for relet built in 2000 or later also have high average rents – from €11.81 per square in the big cities metre to €7.85 per square metre in rural communities.

Altbau apartments are cheaper on average in Germany, with an average cost of €9.46 per square metre, though in big cities, they can reach an average cost of €10.73 per square metre.

READ ALSO: Do I need to repaint the walls when moving out of a German flat?

Overall, the age of the building is just one factor to weigh up along with the specific details of the individual properties you’re looking at: total price including rent and operating costs; quality of renovations; how much the style suits you; whether the landlord seems reasonable and responsive; and location. 

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How Germany’s property boom could be slowing down

Prices continue to rise steeply in the German property sector - but experts are seeing signs of a trend reversal.

How Germany's property boom could be slowing down

What’s going on? 

The Federal Statistics Office has just released its latest figures on property prices – and let’s just say it’s not great news for would-be buyers. 

In the first quarter of 2022 – from January to March – house prices shot up by an average of 12 percent compared to the previous year. It was the fourth time in a row that properties had gone up in value by more than ten percent in the space of a year. If these latest figures are anything to go by, Germany’s property boom is still in full swing.

Nevertheless, there are few things about the property market in the Bundesrepublik that are giving experts pause for thought. 

The first is the fact that, from quarter to quarter, property prices don’t seem to be rising as rapidly as they were last year.

READ ALSO: How soaring German property prices are out of reach for buyers

In fact, from the fourth quarter of 2021 (September to December) to the first quarter of 2022, the cost of buying a flat or a detached and semi-detached house only went up by around 0.8 percent. 

In the previous two quarters, prices had risen by 3.1 percent and 4.1 percent respectively.

“This indicates a slight weakening of the dynamics,” the Statistics Office said. 

The second issue is that, with interest rates on the up, demand has all but collapsed. The third issue is the concerns of the Bundesbank that property prices could well be over-inflated. 

Does that mean people aren’t buying property right now?

Kind of. In any case, far fewer people were seeking out places to buy in the first few months of 2022 than they were throughout 2021.

According to the online property portal Immoscout24, the demand for properties for sale in the first quarter of 2022 dropped by 17 percent within one year.

Adverts for residential properties are staying up for far longer than they used to, and sellers are having an increasingly tough time finding buyers.

High-rise buildings in Erfurt

High-rise flats and older buildings make up the Erfurt skyline. Photo: picture alliance/dpa | Martin Schutt

Instead, it seems like Germans are returning to their age-old love affair with renting rather than buying. This could partly be to do with the fact that interest rates look set to rise over the coming years, making cheap mortgage deals increasingly hard to come by. 

“These developments could have a dampening effect on price trends in the medium term,” said ImmoScout24 managing director Gesa Crockford. This could offset the slight uptick in interest rates.


So what’s the outlook? 

Not all too rosy, unfortunately. Though prices could continue to rise in the medium term, some experts believe that the property boom will slow down after a decade or so. 

This is partly due to stuttering construction rates: at the moment, the construction industry is struggling against some serious headwinds, from ultra expensive building materials to endless supply bottlenecks. 

Germany’s Central Bank (the Bundesbank) has been warning for some time that property prices are inflated beyond their actual value.

In cities in particular, prices are between 15 and 30 percent above a level that can be justified by longer-term economic and demographic factors, the Bundesbank stressed in February.

This trend was amplified by the Covid pandemic, which saw people increasingly seeking living space outside of the cities where supply is scarce. 

Experts from German bank LBBW also say they expect a price correction if interest rates continue to rise strongly and the economy fails to recover. 

In this scenario, LBBW believes that price declines of 20 to 25 percent are possible.

Of course, this may not apply to all regions of the country equally. There tends to be big differences in price trends, for example, between the former East and West of Germany. 

One other area that’s still going strong is the buy-to-let market. While demand for homes for personal use is slipping, it seems there’s still a big appetite for so-called “capital investments” that are occupied by renters.

READ ALSO: EXPLAINED: The German property tax declaration owners need to know about