Comeback of employer-provided housing

A familiar concept is resurfacing

As early as the Industrial Revolution, entire districts were built for employees of major companies, such as Siemensstadt in Berlin. In the 1970s, there was another building boom for employer-provided housing—around 450,000 units were constructed at that time. Today, however, only about 100,000 remain in Germany. But that number may soon rise again.

Even now, several large companies are once again providing a significant number of employee apartments, including Deutsche Bahn and the real estate divisions of BASF, VW, and Audi. The federal government also intends to build housing for public-sector employees. This marks a shift, as most employers had previously distanced themselves from the concept, considering employee housing too administratively burdensome in a relaxed housing market.

A benefit for employers: employee retention

One argument in favor of employer-provided housing is the shortage of skilled workers. Attractive compensation packages are crucial for attracting top talent. Individuals in socially important professions—such as hospital nurses and childcare workers—often cannot afford high rents. Employer-provided housing offers meaningful relief.

Generally, today’s concepts have little in common with the employer housing of the late nineteenth century. The focus now is on young professionals and employees whose salaries, particularly in large cities, are often insufficient to secure adequate housing.

Renting from an employer does, however, involve a degree of dependency. If an employee changes jobs, they may also need to give up their apartment. At some companies, though, the rental agreement is independent of employment status.

Tax advantages for employer-provided housing

Employer-provided housing is also attractive from a tax perspective, as certain tax relief measures apply. Until a few years ago, employees had to pay tax on the difference between the reduced rent for an employer-provided apartment and the local market rent as a monetary benefit.

This is no longer required, at least as long as the rent for the employer-provided apartment is not more than one-third below the local comparable rent. The employer does not need to be the owner of the apartment; it is sufficient if the company has rented it or has occupancy rights.