Lower Saxony: Property tax reform brings significant cost increases!

Lower Saxony: Property tax reform brings significant cost increases!

What's going on in Lower Saxony? The property tax reform has caused some waves. A current evaluation by the Lower Saxony Taxpayers' Association shows that almost every third municipality will record higher income from property taxes in 2025. The reform process, which came into force in January 2025, has prompted many municipalities to increase their assessment rates. Around 32% of a total of 936 cities and municipalities are increasing their assessment rates, which overall leads to more money for the coffers. These increases are not revenue neutral, meaning many municipalities are taking in more than ever before. Only 19 of them report lower income and this has a direct impact on housing costs.

In Prinzhöfte, a small town in the Oldenburg district, the deviation is enormous: more than twice as much property tax is collected here, which corresponds to an increase of 127%. For tenants, this means that the increased costs can soon be passed on to them via the operating cost bill. Tenants with low incomes in particular have to be careful now, because the Lower Saxony Social Association warns that they are particularly at risk due to the increased housing costs. The Association of the Housing and Real Estate Industry Lower Saxony Bremen sharply criticizes the municipalities' approach and calls for a review of the property tax regulations.

Responsibility and reactions

The responsibility for the assessment rates lies with the municipalities, emphasizes the state of Lower Saxony and is prepared to offer relief for hardship cases. The Lower Saxony Association of Towns and Municipalities defends the increases as a necessary measure to stabilize the budget. “There’s something going on!” That's how you could describe the general mood. Meanwhile, the Association of Taxpayers Germany e. V., as a party-politically neutral interest group, is involved in critically monitoring tax and budget policy.

Another aspect of the reform: The revaluation of the properties in Lower Saxony was well advanced on January 1, 2022. Around 98% of the properties were valued by September 30, 2024. Property owners have already received assessment notices from the tax office and can now prepare for the new property tax notices that will be sent out by the responsible municipalities. The tax administration asks for patience and understanding, as we have received an increasing number of questions and objections from property owners.

Impact on tenants and owners

The innovations also have an impact on tenants. While some could benefit from the reform, others, like the Binninger family in Stuttgart, have to fear massive increases: instead of 445 euros in property tax, they now have to pay 2,695 euros annually. These are dramatic increases that some tenants could perceive as a risk of termination, as additional costs are often affected. Property tax is usually paid by the owners, but can be passed on to tenants through additional costs. Many will not be informed about the possible additional payments until 2026, which could lead to a real shock.

That's why it's important to stay active as a tenant. It is advisable to examine the area for which property tax is charged. A good example shows that the property tax could be reduced from 3,500 euros to 43 euros through an appraisal. It is never too late to take a look at your rental documents and, if anything is unclear, to speak to the owner.

The property tax reform, which became necessary after the Federal Constitutional Court declared the old model unconstitutional in 2018, continues to cause a great stir and leaves many questions unanswered. It remains to be seen whether the planned measures will be sufficient to do justice to all those affected.