d.i.i. Deutsche Invest Immobilien AG

Dear investors,

Since the previous edition of d.i.i. View, the topic of additional costs has not lost any of its explosiveness - on the contrary. These days, millions of households are receiving mail from their suppliers, and many citizens are realizing for the first time what the explosion in energy prices means for them personally. Although the federal government has launched a number of support measures, the increase in costs affects us all - and quite a few families see their financial existence threatened.

In order to cope with a difficult situation, it is not enough to complain about it. If you want to take the right measures, you have to recognize and quantify their true extent. The d.i.i. has therefore commissioned a study from the Cologne Institute for the German Economy that analyzes the development of additional costs in Germany in detail. We would like to thank the authors of the study, Prof. Dr. Michael Voigtländer and Pekka Sagner, for their excellent work, and present the most important results to you in this issue of d.i.i. View.

They show that the development of additional costs leads to a significant loss of prosperity. Political measures must therefore primarily protect low-income households. Housing companies also have options to reduce the burden on their tenants, for example with a forward-looking procurement policy and consistent energy-saving renovations. While such measures have been part of d.i.i. 's DNA for years, this potential remains unused by other players.

Kind regards, yours

Dirk Hasselbring
Head of Fund Business

Additional housing costs in Germany –
a ruthless inventory

The development of energy costs is extremely politically and socially explosive. There is a risk that a significant proportion of German private households will get into serious financial difficulties due to the explosion in heating costs. The third report “Ancillary housing costs in Germany” commissioned by the d.i.i. from the German Economic Institute is therefore focused this year on so-called warm additional costs. In this issue of d.i.i. View we summarize the results.

Key findings:

  • The advance payments for warm additional costs have increased by an average of 48 percent within a year.
  • In apartments heated primarily with gas, the increase is 56 percent.
  • The considerable additional financial burden means that an ever larger proportion of the available apartments are no longer affordable for households.
  • Lower-income households are particularly hard hit by this - government support must therefore be focused on them.
  • In the long term, the development of additional heating costs significantly increases the incentives for energy-saving renovations.

The Russian attack on Ukraine and the subsequent sanctions against Russia have led to large parts of gas and oil deliveries to Germany being stopped. The result is exorbitant increases in gas and heating oil prices. The vast majority of households in Germany are directly affected by this. Because more than half of German apartments are currently heated with gas, almost a quarter with heating oil.

Import prices for natural gas in October were almost 110 percent higher than a year earlier. The producer price for light heating oil was more than 84 percent higher.

d.i.i. Deutsche Invest Immobilien AG
d.i.i. Deutsche Invest Immobilien AG

This has a direct impact on household energy costs. These also include electricity costs, which rose by 26 percent in October compared to the same month last year. Overall, the increase in household energy costs amounts to 55 percent. The so-called cold additional costs, which include building cleaning and elevator maintenance, as well as the net cold rents, have also increased, albeit more moderately.

The advance payments for warm additional costs usually lag behind the energy prices on the market. The evaluation of apartment advertisements shows that they have been steadily increased over the past twelve months. On average and across all types of heating, the increase in the most recently observed month of September 2022 compared to the same month last year is 48 percent. However, the increase differs depending on the type of heating. For apartments heated with gas, discounts rose by 56 percent. For heating oil, on the other hand, the increase was a below-average 43 percent, although its producer prices also rose sharply. This can be explained by the fact that landlords have not yet ordered new oil because the oil tanks are full and the increased prices are taken into account later.

d.i.i. Deutsche Invest Immobilien AG
d.i.i. Deutsche Invest Immobilien AG
d.i.i. Deutsche Invest Immobilien AG

In absolute numbers, the additional costs for a 75 square meter apartment increase by 506 euros per year. If you heat with gas, the additional costs are 568 euros. For larger apartments, the financial burden on tenants is correspondingly greater - additional costs of an average of 783 euros are expected.

The so-called cold additional costs have also increased in the past twelve months, although to a lesser extent than heating costs. They are driven by general inflation and higher labor and material costs. With an average of nine percent, they contribute significantly to the increased total rental costs. The net rent also increased, by six percent. Overall, there is an increase in total rent of almost eleven percent.

Regional differences

In almost all districts, advance payments increased in the third quarter compared to the same period last year. However, regional differences can be seen in the extent of the increases. With the exception of Thuringia, advance payments for heating costs rose less sharply in eastern Germany than in the west. A possible reason for this could be the higher proportion of apartments that are heated directly with fossil fuels. Natural gas is used relatively frequently in the northwest, while the proportion of gas is lower in the east and south. In the south, the proportion of apartments heated with oil is relatively high, while in the east, district heating is more common. In Hesse and Rhineland-Palatinate, advance payments have so far been adjusted upwards by more than 40 percent on average. In Mecklenburg-Western Pomerania and Saxony, the adjustments in the third quarter were 28.2 and 23.3 percent and were therefore the lowest in a comparison of the federal states. The larger share of district heating in the east could have had a dampening effect on landlords' price adjustments and costs for tenants.

A larger proportion of apartments are no longer affordable

The study also addressed the question of the extent to which the increased overall rents have affected the affordability of the apartments on offer. To do this, the income development was compared with the higher rents, differentiated between single households and families of four. Overall, for both groups it was found that a significantly lower proportion of the apartments on offer were still affordable than a year before. However, the decline was greater for families than for singles.

In both groups, households with lower incomes are particularly hard hit. Last year, the lowest-income 20 percent of families in half of the districts were able to afford 37 percent of the apartments on offer with four or more rooms; this year it was only 28 percent - a decline of nine percentage points.

Regardless of the question of feasibility, the affected households essentially have the following options to deal with the worsened situation:

  • You can try to reduce the overall cost burden by heating less.
  • You can try moving to a smaller or lower quality apartment with a lower overall rent.
  • They can spend a higher proportion of their income on rent.

All alternatives mentioned mean a loss of prosperity. In addition, implementation is likely to be a challenge in many cases, given tight budgets, limited offerings, the specific needs of families with children in particular, and rising costs in areas other than housing.


The study shows that the combination of rising new contract rents and significantly higher heating costs is causing a shortage of affordable housing. This has particularly dramatic consequences for low-income households. Not only is the supply of affordable housing particularly low for them, the reduction in residual income for other expenditure items is also particularly noticeable for them.

State support measures should therefore focus primarily on the lowest-income households. The federal government has already introduced various instruments for this purpose, including the so-called gas price brake, which caps the price of 80 percent of previous gas consumption at a certain price. A one-off payment or the reform of housing benefit can also provide particular relief for households in the lower income range.

However, it is foreseeable that energy prices will remain high in the longer term. It is all the more important that housing companies consistently use the options available to them to minimize the impact on their tenants. This includes a forward-looking procurement policy. For example, long-term framework agreements with suppliers can noticeably reduce the burden on tenants. The high additional costs also create significantly stronger incentives to modernize buildings in terms of energy efficiency. In order for this potential to be used, the right political framework is required, such as a predictable funding policy, but also an adjustment of the rules for modernization levy to the increased interest and construction costs.

Your investment in safe hands

dii - residential real estate

Dirk Hasselbring
Managing Director of
d.i.i. Investment GmbH

T: +49 611 950168 161
E: hasselbring(at)dii.de

dii - residential real estate

Dominik Schott
Head of Asset Management
d.i.i. Deutsche Invest Immobilien AG

T: +49 611 950168 44
E: schott(at)dii.de