Critics argue the increase places a disproportionate burden on property owners and may soon lead to legal action.
Property Owners Decry Sharp Increase in Tax Rate
Rudolf Stürzer, chairman of the Munich-based homeowners’ association Haus & Grund, has voiced sharp criticism: “The city has gone far beyond what’s reasonable. While the Bavarian Ministry of Finance recommended a property tax multiplier of 760%, Munich’s city council approved 824%.” This decision, he says, contradicts the principle of revenue neutrality that was meant to guide the tax reform.
Although the tax is levied on property owners, Stürzer warns that the financial impact could ultimately fall on tenants, as landlords are likely to pass on the increased costs through rent. Several political parties, including the SPD and the Greens, are now calling on the Bavarian state government to implement a centralized transparency register, similar to those in other German states. Such a registry would allow citizens to view property tax rates set by local governments across the state.
New Tax Model and Rate Combine to Raise Bills
According to Stürzer, approximately two-thirds of the association’s members are now paying more in property tax than before. He attributes this not only to the increased multiplier but also to a new valuation model introduced by the Bavarian government. The new model, known as the Flächenmodell, calculates tax based solely on land and building size rather than location. As a result, owners of centrally located properties may see lower assessments, while the city compensates for potential revenue loss by increasing the tax rate.
The move appears aimed at avoiding budget shortfalls, but critics say the city’s decision undermines the intent of the tax reform, which was to remain neutral in its financial impact on citizens.
Concerns Over Housing Development and Market Stability
Stürzer also warned that the tax hike, combined with a recently updated rent index, could severely hinder residential construction in the city. “The new rent index is problematic. It claims rents in older buildings have decreased, which seems highly implausible to us,” he said during the association’s annual general meeting.
The organization is now considering legal action against the new rent index, arguing it prevents landlords from setting economically viable rents. Stürzer concluded, “Affordable housing doesn’t come from overregulation. It comes from building new homes.”
The debate over Munich’s property tax hike underscores broader tensions in Germany’s housing policy, as cities attempt to balance budgets while ensuring fair housing practices—a balance that, for many residents, now seems in jeopardy.
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