How does a house swap work – economics

Too many stairs, too big, too far away from the grandchildren: once the children are out of the house, many seniors find themselves wanting a smaller, more suitable place to stay. For families, the situation is exactly the opposite: most of them need more and more space over time and are often desperately looking for an affordable, larger apartment. Or a house with a garden. So why not just swap?

What sounds like a great solution for everyone is not that easy to implement. Pitfalls await tenants willing to change – and in the end they usually end up with a significantly higher new rent. Clear legal regulations or even a legal right to exchange could help to relieve the strained housing market, as Jutta Hartmann, spokeswoman for the German Tenants’ Association, demands. So far nothing has come of the federal government’s consideration of creating tax incentives. The idea: Anyone who clears out their own home that has become too big and rents it out to a family at a fair price should be able to claim their own rent for tax purposes. According to the Haus & Grund owners’ association, the rental income should then remain completely tax-free. So far, swapping has been rather difficult for owners who would like to give up big for small. And above all, expensive.

Lots of need, few opportunities

According to the Federal Statistical Office, around 8.6 million people, or 10.5 percent of the population in this country, lived in overcrowded apartments in 2021. Families with at least three children are particularly affected, especially in large cities. At the same time, six percent of renter households live in spacious apartments with a lot of space, for example singles in a four-room apartment, including many seniors over 70, as a current study by the German Economic Institute (IW) showed. But anyone who would like to swap with others will quickly be thwarted, criticizes tenants’ association spokeswoman Hartmann. This starts with the search for exchange partners. Online brokerage portals such as or help with this. For example, if you want to expand, you can list your apartment there, with photos, size, number of rooms, extras and rent amount – but then you have to hope that someone actually offers an alternative in the desired location on the desired date for exchange and your own apartment without a balcony and elevator too still finds it good. What makes the search more difficult is that for every household that wants to downsize, there are five that want to expand, according to the tenants’ association’s experience. If there is actually a match, there are also tricky legal hurdles to overcome. Either the parties enter into each other’s rental agreements. Or they conclude preliminary agreements that lead to new rental agreements. In any case, the landlords on both sides must agree. Exchanges are impossible without their consent. In the worst case, termination and the loss of your previous place of residence follow.

Sword of Damocles rent increase

The biggest hurdle: If you live cheaply and want to swap big for smaller, you won’t usually save a cent but will pay a lot more. The open market rental prices displayed on the platforms are only snapshots. They are likely to rise after the exchange. “That can end up being significantly more than before, sometimes three to four times the current rent,” Hartmann points out. Experience has shown that net rents would be significantly increased in the event of a new lease. “That’s where everything fails. If there were legal requirements that rents weren’t allowed to rise upon exchange, the model would be a real solution to the housing shortage,” says Hartmann. A look at Austria shows that legal certainty when exchanging apartments is very possible.

Easier to change in urban housing

Tenants of municipal or municipal housing associations have significantly better exchange chances. There are already successful placement exchanges for them, such as The landlord’s approval is not necessary for a change within the portfolio. And the prices per square meter also remain largely unchanged. However, the same applies here: If you free up a large, very cheap apartment, for example for a young family, and move into a smaller one with more current rental prices, you must also expect a higher rent burden. Many housing companies therefore offer seniors financial incentives and bonuses if they free up a large place to live.

Owners also have to reckon

Even for owners, an exchange can be difficult, points out Gabriele Heinrich, board member of the Association of Property Owners (WiE). Because everyone can only sell once they have found something new that suits them, the search for a suitable exchange item is often a lengthy process – and expensive to boot. A smaller city apartment can be more expensive than an unrenovated, outdated house in the country. In addition, real estate transfer tax and other additional costs are incurred when exchanging. Both parties ultimately purchase a new property. Brokers involved charge commission. There are often additional expenses for modernization or renovation. Those willing to exchange should also be aware of the fact that the monthly house fee that arises in a homeowners’ association (WEG) is usually higher than the additional costs of a rented apartment

So check carefully who is swapping

“Anyone who is faced with a decision to exchange should think carefully about the consequences,” advises Heinrich. Changing from your own house to a WEG and vice versa could be a direct hit – or a total flop. What seniors in particular imagined would make everyday life easier often brings unexpected stress and bitter disappointment. They no longer have to climb stairs, their home is closer to their grandchildren and requires less work. “Long-time homeowners have no idea what it means to suddenly live in an apartment building,” is Heinrich’s experience. Anyone who has been able to decide everything on their own all their life is now dependent on co-owners. It is important to endure coordination processes with neighbors and to bow to the decisions of the majority. Anyone willing to exchange should definitely study the declaration of division and deal with the legal background, advises Heinrich. Alternative: Rent out your own house or condominium that has become too large and look for a smaller rental apartment.

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