Land Grabbers

Swatting the Real Estate Locusts

bremen_stadtmusikanten_roger w_flickr
The city of Bremen wants to keep real estate speculators at bay by introducing new taxes and rent control. Here a picture of Bremen City Hall with a statue of the famous Bremen Town Musicians, based on a Grimm fairy tale.
  • Why it matters

    Why it matters

    With its new real estate tax plans, the Bremen government could chase away potential investors needed to help the city overcome its housing shortage.

  • Facts


    • The Bremen coalition government is calling for punitive taxes on companies that purchase apartment buildings on a large scale.
    • Critics say property owners will divest their Bremen holdings before the tax is introduced and that there are loopholes that will still allow profit-driven firms to speculate in real estate.
    • Bremen already suffers from a shortage of housing and the new rules may not address that issue.
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Bremen has never been seen as a mecca for real estate speculators, and local politicians are determined to keep it that way with a new tax proposal.

An agreement earlier this month by the new coalition government of the center-left Social Democratic Party and the Greens aims to stop housing in the city-state from becoming “an object of speculation.”

Sales prices and rents have increased only moderately over the years in the northern German city, compared to metropolises like Berlin, Hamburg or Munich. Last year, for instance, rents increased by only 0.3 percent while condominiums rose by 1.5 percent, according to real estate market research firm F+B Forschung und Beratung.

The government said in a statement it is considering introducing “a ‘locust tax’ to sharply curtail the acquisition of land by real estate locusts.” Ten years ago, then-SPD Chairman Franz Müntefering first used “locust” to criticize investment companies for their ruthless appetite for strong returns.

The tax would come in the form of a higher property transfer tax, which would increase from the current 5 percent to 19 percent for buyers of properties with more than 50 residential units. It would also come on top of rent controls to be introduced at the end of the year.

“Driving investors out of the market is a dangerous game.”

Michael Voigtländer, Cologne Institute for Economic Research

The Greens support the SPD initiative. “We have the same problems as other cities,” said Ralph Saxe, spokesperson for the Bremen Greens’ state executive committee. “Investors are buying apartments on a large scale.”  Many of those investments, he argued, are not always in the best interest of the renters.

The politicians, however, intend to invite the various interest groups to a hearing before introducing the measure.

Among the interest groups planning to attend is the consulting firm Dr. Lübke & Kelber, whose business manager Ulrich Jacke called the plan “a really crackpot idea.” Mr. Jacke is convinced investors would divest their holdings in Bremen before the tax is introduced since the locust tax could be as high as 14 percent.

“Driving investors out of the market is a dangerous game,” warned Michael Voigtländer, a real estate expert at the Cologne Institute for Economic Research, or IW, pointing to a housing shortage in Bremen,

Bernhard Zentgraf, chairman of the Lower Saxony Bremen State Taxpayers Association, said the planned tax would “not be pratical,” noting that “it could also apply to municipal companies.” However, Michael Schick, president of the real estate brokers association, IVD, expects an exemption clause for city housing companies.

“We only want to hit the speculators and not scare off normal investors,” Mr. Saxe said.

Ulrich Ropertz, business manager of the German National Tenants’ Association, has a positive view of the plan, which he views as “an attempt to control with taxes.” He added that large investors often pay no property transfer tax when purchasing apartment buildings. The legal tax trick is not to buy the building, but rather acquire a 95 percent share of the company owning the building. Then, no taxes are due.


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Jens Hagen is an editor for finance and economic policy at Handelsblatt. Reiner Reichel has been working for Handelsblatt since 1995 and covers real estate, closed-end fund and system models. To contact the author: and

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