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HEALTH

What to know about Germany’s long-term care insurance hikes

Germany has agreed on a controversial long-term care reform that will see people - especially those without children - pay more towards insurance.

Published: 16 June 2023 17:16 CEST
A care worker helping a patient in Germany.
A care worker helping a patient in Germany. Photo: picture alliance/dpa | Sebastian Gollnow

What is care insurance and who pays it?

All workers in Germany pay compulsory care insurance, or Pflegeversicherung, throughout their working lives and as pensioners. 

At the moment, the contribution rate for employees with children is 3.05 percent of their salaries or pensions, while people without pay 3.4 percent. As a rule, the employer pays half the contributions for long-term care insurance.

Freelancers can also choose to pay voluntary care insurance, though they generally have to bear both the employer and employee portions of this.

READ ALSO: What foreigners need to know about old age care in Germany

Those who pay care insurance have access to financial support with social care in their old age, or whenever they need it. 

How are contributions changing?

According to the law passed by the government in the Bundestag and approved by state leaders in the Bundesrat on Friday, long-term care insurance will go up in Germany. 

From July, people with children will pay 3.4 percent of their gross income for long-term care, up from 3.05 percent (although it will depend on how many children people have – more on that below). At the same time, the additional fee for childfree people will be increased from 0.35 to 0.6 percentage points to a total of 4 percent of their gross income.

Why are contributions going up?

According to Federal Health Minister Karl Lauterbach of the Social Democrats, the increase is needed because of rising costs. The reform he’s drawn up is intended to provide financial security for long-term care insurance until 2025.

The hike in contributions should bring in additional revenue of about €6.6 billion per year. But if this is not enough, the law also contains a decree authorisation for the federal government to further adjust the contribution rate.

READ ALSO: What you need to know about the complicated world of German insurance

It is viewed by some as controversial that people without children have to pay more than mothers and fathers. 

However, the Federal Constitutional Court ruled in 2001 that a premium increase for people without children is allowed.  

German Health Minister Karl Lauterbach SPD

German Health Minister Karl Lauterbach (SPD) speaks at an event run by the Social Affairs Association in Berlin. Photo: picture alliance/dpa | Christophe Gateau

The reasoning behind this is that people who are not raising children have a lower financial burden than those who do, and those with children may rely on care insurance in older age less than childless people because their children are likely to foot some of the care (or help with bills). 

What else is changing?

The government’s law also implements a ruling by the Federal Constitutional Court that parents with several children should be relieved from paying too much in long-term care insurance.

Parents’ contributions will decrease with the number of children they have. From the second to the fifth child under 25, they will pay 0.25 contribution rate points less per child.

Meanwhile, the care allowance for those in need of care at home, which was last increased in 2017, is to be raised by 5 percent at the beginning of 2024. Subsidies for inpatients at care homes are also to go up next year.

From 2024, support for people who are temporarily unable to work due to the care needs of a relative will also be expanded. In future, relatives will be able to claim the care support allowance for up to 10 working days per care case per calendar year.

What’s changing with pensions?

The Bundesrat on Friday also passed a pension increase. For the second year in a row, there will be a hike for the 21 million pensioners in Germany.

In western Germany, the payments will increase by 4.39 percent and in eastern states by 5.86 percent.

For a monthly pension of €1,000, pensioners in the west will see about €44 more, while those in eastern German states will see around €60 extra per month.

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PROPERTY

Who pays broker’s fees on property in Germany – and how much do they cost?

One of the major hidden costs of buying and selling property in Germany is the estate agent's commission, or broker's fee. We look at some of the unusual rules around it - and how much you can expect to pay.

Published: 17 September 2024 16:25 CEST
Who pays broker's fees on property in Germany - and how much do they cost?

There are many areas of life in which things in Germany function just that little bit differently – and buying a house is no exception.

Though the buoyant property market in the Bundesrepublik makes it an attractive place to buy, anyone looking to get their foot on the housing ladder should consider the hidden fees they might incur.

Beyond interest rates, taxes and fees for notaries and translators, one major outlay is the estate agent’s commission, which can sometimes stretch to thousands of euros.

Here’s what to know about these hefty fees and how you might be able to lower them. 

Who pays commission on property transactions in Germany?

If you come from another European country or somewhere like the United States, you may be used to a system in which the seller pays the broker’s fee. This intuitively makes sense because the estate agent is there to market the property, liaise with buyers and ultimately get the best price for the seller – so it makes sense that the seller should pay for these services.

Until recently, however, it was the buyer who was responsible for paying the entirety of the estate agent’s commission in Germany. That meant that these fees – which could be as high as seven percent of the purchase cost – were added to the mountain of extra costs buyers had to contend with, from notary fees to land transfer tax.

READ ALSO: The hidden costs of buying a house in Germany

Luckily for buyers (but less so for sellers), this was changed under a law that came into force at the end of 2020. Since then, costs are generally split 50/50 between buyers and sellers.

However, there are some details that are important to note here. If the seller commissions the estate agent to help them sell their home, they are technically liable for the costs but must pay a minimum of 50 percent. 

If the buyer commissions the estate agent to find them a home, the same rules apply the other way around: the buyer is liable for the costs but can obtain a maximum of 50 percent from the seller.

In each case, the side that commissioned the broker must prove they have paid their share before the other side is liable to pay theirs. 

How much do estate agents’ fees cost in Germany?

Commission on property sales varies from state to state but is generally set at between 5 and 7 percent of the purchase price.

According to online portal ImmobilienScout24, these were the standard rates that applied in each of the federal states in 2024, with the number in brackets representing a 50 percent share of the costs:

Baden-Württemberg: 7.14 percent (3.57 percent)

Bavaria: 7.14 percent (3.57 percent)

Berlin: 7.14 percent (3.57 percent)

Brandenburg: 7.14 percent (3.57 percent)

Bremen: 5.95 percent (2.97 percent)

Hamburg: 6.25 percent (3.12 percent)

Hesse: 5.95 percent (2.97 percent)

Lower Saxony: 4.76 – 5,95 percent or 7.14 percent, depending on the region. (2.38 – 3.57 percent)

Mecklenburg Western-Pomerania: 5.95 percent (2.97 percent)

North Rhine-Westphalia: 7.14 percent (3.57 percent)

Rhineland-Palatinate: 7.14 percent (3.57 percent)

Saarland: 7.14 percent (3.57 percent)

Saxony: 7.14 percent (3.57 percent)

Saxony-Anhalt: 7.14 percent (3.57 percent)

Schleswig-Holstein: 7.14 percent (3.57 percent)

Thuringia: 7.14 percent (3.57 percent)

If it’s hard to gauge how much this means in real terms, we can take the example of two properties: a €200,000 apartment and a €500,000 family home.

In the state of Hesse, a buyer splitting the broker’s fee equally with the seller would pay €5,940 to buy the €200,000 apartment and €14,850 to buy the €500,000 house.

In pricier Berlin, meanwhile, the same buyer would pay €7,140 on the €200,000 apartment and €17,850 on the €500,000 house.

READ ALSO: Is autumn 2024 the right time to buy a property in Germany?

Here’s where it gets more complicated, however: under German law, you are technically free to negotiate the commission with your estate agent.

That means that, especially in areas with stiff competition, you may be able to secure a better deal. 

Do I always have to pay commission in Germany? 

Not always. In fact, as a seller, you’re perfectly free to sell your property privately without enlisting the help of a real estate agent.

The benefit of this, of course, is that you can potentially save thousands of euros in fees, both for yourself and any prospective buyer. 

On the flip side, though, you will need to take the entire job of the estate agent on yourself, from marketing the property to liaising with potential buyers and finally closing the deal.

Real estate agent Germany

A real estate agent talks to prospective tenants at an apartment viewing. Photo: picture alliance/dpa | Tobias Hase

There can also be some upfront costs involved in commissioning things like floor plans and professional photography, as well as the time you’ll need to invest in learning all the procedures and preparing relevant documents for notary – to name just a few examples.

Ultimately, though, it’s up to you to decide whether the expense of working with a professional broker is worth it in the end. 

As a buyer, there are also some situations where you’ll see the words ‘provisionsfrei’ – or commission-free – written in a property listing.

This is fairly common in new-build properties, where the developer may sell the homes directly to interested buyers. More rarely, an existing property may be listed without commission, making it a more attractive proposition.

In both cases, it’s possible that commission has been built into the purchase price, so you may not necessarily be getting a better deal.

Another case where you’re likely to be able to avoid commission as a buyer are so-called Kapitalanlagen – or buy-to-let properties. 

READ ALSO: Should you think about purchasing a buy-to-let property in Germany?

These tenanted properties are designed to be bought as investments: buyers can enjoy additional rental income over time and, ideally, will also make money when they come to sell the property several years later.

For this reason, costs are generally kept slightly lower for the buyer by eschewing the standard broker’s commission. 

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