In some places, such as Berlin, above, property buyers pay agents a fee as high as 6% of the purchase price.
Harriet Torry for The Wall Street Journal
With housing scarce and rents rising in cities such as Berlin, Munich and Hamburg, Germany’s government is seeking to tackle the high brokerage fees involved in renting a home.
Germany’s governing coalition of Christian Democrat conservatives and left-of-center Social Democrats pledged last year to introduce legislation that effectively would shift the burden of most broker fees from renters to landlords. A spokesperson for the new justice minister, Social Democrat Heiko Maas, said last week that he plans to present a draft law by late March, within his first hundred days in office.
Some realtors welcome the legislation, saying it will reduce criticism that many brokers get paid too much for doing too little. But other realtors fear it will threaten their livelihood and they accuse the government of enacting antibusiness legislation to curry favor with voters.
In Germany, renters typically pay the broker costs even if brokers are hired by a landlord to represent a property. That adds to the upfront cost of moving, and some low-income prospective tenants have complained they can’t afford it.
Nearly six out of 10 Germans rent rather than own their homes, according to the federal statistics office.
Under the planned law, Germany’s new government would require landlords to pay commissions if the owner hires the broker. Renters still would have to pay if they hire a broker to help them find an apartment.
To rent a new apartment, prospective tenants usually pay the agent a cash fee equal to two months’ rent. For purchases in some regions such as Berlin, property buyers pay agents a fee as high as 6% of the purchase price, while the seller pays nothing.
Nicole Blake, a software developer who moved to Berlin from London in 2008, said the cost to rent an apartment in Berlin left her “drained dry.”
The broker’s fee, security deposit of three months’ rent and news that most apartments come without furnishings or even a built-in kitchen came as a shock, Ms. Blake said. She said the broker seemed to do little more than advertise the property and put her in touch with the landlord.
“It kind of stung, because I really didn’t feel like [the broker] did anything to deserve that money. I’m calling everywhere, I’m running around. It was ridiculous,” the 35-year-old Ms. Blake said.
After Ms. Blake got the keys, she said the agent invited her for a cup of coffee to celebrate. “At the end, the bill came, and she didn’t pay for my coffee—I literally just paid her dozens of hundred-euro [bills] and I had to pay for my own latte!”
Germany’s relatively strong economy and low unemployment have been a draw for immigrants. But the influx of new arrivals has boosted demand for housing, driving prices higher. Over the past five years, home prices in the country’s main cities have risen 30%, according to online property portal ImmobilienScout24. Rents in urban hubs increased 13% in the same period—29% in Berlin.
The brokerage-fee structure in Germany is a greater burden for tenants and buyers than it is in neighboring countries. In France, the fee of two months’ rent is split between landlord and renter. In Spain, renters usually pay a one-month flat fee.
In the U.S., agents typically get paid a fee from the landlord calculated at around 10% of the first year’s rent. But in cities with tight supply and high demand for apartments like New York, renters often pay the commissions.
In Germany, prospective buyers or renters can even end up paying a fee to more than one broker for the same property if they aren’t careful. Often a number of agents act as vendors for the same property. Anyone who receives information on a residence from a broker—even verbally or via email—but buys or rents the same residence from a different broker can end up having to pay fees twice or even three times, according to Alexander Meier-Greve, a Berlin real-estate lawyer.
However, Mr. Meier-Greve also warned that changing the law to shift the fees toward landlords won’t necessarily lower costs.
“One shouldn’t forget that making the landlord instead of the renter pay the fee just shifts the economic calculation. Prices will increase because landlords want to amortize that cost—rental apartments won’t get cheaper that way,” Mr. Meier-Greve said.
Rising rents and property prices were a major issue during Germany’s recent election campaign, and the recently formed coalition government wants to cap rent increases for new leases at 10% of the average neighborhood rent, as well as change broker-commission norms.
Jürgen Michael Schick of IVD, a realtor association, said the proposed legislation on broker fees doesn’t contribute to a solution for the tight housing market. “What’s needed is new home building,” he said.
But Ring Deutscher Makler, another association of brokers, said it welcomes the legislation, saying such a move would weed out agents that give the profession a bad name.
“Whoever orders the music should have to pay for it,” RDM chairman Markus Gruhn said.
Write to Harriet Torry at email@example.com
Markus Gruhn is the chairman of Ring Deutscher Makler. A previous version of this article incorrectly gave his name as Erwin Gruhn.