Retirees Don't Need Larger Apartments: Apartment Swaps in a German City as a Solution to the Housing Crisis

In Mainz, the capital of the state of Rhineland-Palatinate, one rule applies: anyone who has a roof over their head tries to keep it—even if the apartment no longer meets their needs. As a result, fewer people are moving within the city of just over 220,000 inhabitants.

The municipal housing company Wohnbau Mainz manages around 11,000 apartments. "Currently, only between 45 and 55 apartments become vacant each month", says managing director Roman Becker. The tenant turnover rate has fallen below six percent, indicating that the rental market has nearly come to a standstill, according to Deutsche Welle.

At the same time, too little new housing is being built in Mainz, making it increasingly difficult for people to find an apartment.

New Apartment, Same Rent

Wohnbau Mainz has launched a new program called "Future at Home 55+." The initiative encourages older residents who no longer need as much living space after their children have moved out to exchange their larger apartments for smaller ones, freeing up family-sized housing for younger households.

The key incentive is financial. "We are one of the few housing companies in Germany that guarantees tenants they can keep their previous cold rent (Kaltmiete) when moving to a smaller apartment. In addition, we provide a relocation bonus of €1,500", Becker explains.

For example, a tenant paying €850 per month for an 85-square-meter, four-room apartment can move to a 65-square-meter, two-and-a-half-room apartment while keeping the same rental conditions. This can result in annual savings of up to €2,400 compared with current market rents.

In addition, a smaller apartment generally means lower heating, electricity, and maintenance costs.

Downsizing Should Pay Off

The housing company developed this concept after an earlier apartment-exchange program for seniors achieved only limited success over five years.

The main problem was that, although tenants moved to smaller apartments, the rent per square meter was often significantly higher than in their long-term apartments. Allowing tenants to retain their previous rent level can therefore save them several thousand euros per year.

The new apartments are also renovated and designed with few or no accessibility barriers. Tenants are not required to pay double rent during the move, and the usual notice period does not apply.

Pilot Project Underway

It is estimated that around 2,700 elderly tenants could potentially move to smaller apartments, while approximately 1,000 families are currently searching unsuccessfully for four-room apartments. The company has begun contacting potential participants.

The pilot project is scheduled to run for 24 months and involves around 100 apartments.

Wohnbau Mainz does not expect to profit financially from the initiative. "We are doing this because, as a public housing company, we also have a social responsibility", Becker says.

Who Else Is Occupying Housing Space?

Rainer Braun, chairman of the board of the private research institute Empirica in Berlin, has closely examined the Mainz model. Empirica conducts studies for clients, including banks, insurance companies, ministries, and construction-sector associations.

"The problem in all attractive large cities is that existing rents, due to rent regulations, are often far below actual market levels", Braun says.

According to him, seniors are not the only people remaining in apartments they no longer fully use. "People who temporarily move elsewhere for work often keep their apartments because they may return after a trial period in another city and would be unable to find affordable housing again."

"Existing rental contracts have become a form of security whose value is almost certain to increase", Braun argues.

He identifies another group contributing to the housing shortage: "People over 40, often divorced and typically urban professionals, who are in relationships but continue living separately."

Such households can afford two apartments not only because of their income but also because they benefit from low rents under older contracts. They are aware that, in the event of a breakup, finding a comparable apartment again would be extremely difficult.

Politics Shares Responsibility

Braun does not view the Mainz model as a long-term solution. "For those participating in the exchange, it is certainly beneficial. But the model addresses the symptoms rather than the root causes of the problem."

On the contrary, he argues that if such an approach were implemented on a large scale, it could reduce the capital available for new construction and renovation projects.

"High rents in new leases have two causes: high costs and housing shortages," Braun says. "The state and municipalities share responsibility for both because they establish building regulations and continue to tighten them."