For Relocators
Understanding Relocation Costs: A Comprehensive Guide
November 28, 2024
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A warm welcome to the January issue of PerchPeek’s Germany Market Monthly update!
Here’s where you’ll find the hottest updates around employee relocation and international talent strategy, insights from our experts on housing and cost-of-living news affecting your staff, the latest trends in global mobility, and tips and tricks on ways to support your teams.
A fly-by summary
● Private health insurance threshold increase, home office allowance rise, and digital workplace incapacity certificates - three key 2023 workplace changes for People teams
● Temporary accommodation costs are soaring but are a must for relocating employees for their first 2-3 months in Germany - here’s how to support your teams
● Heating costs have doubled in the last two years, a quarter of German residents spend 10% of their net income on utilities, and other key stats to be aware of
● 60% of expats in Germany say life is difficult without German language skills - how to help your relocating employees learn German in 2023
● From renting furniture suites to haggling over pre-loved goods at flea markets, here’s how to help your relocating employees furnish their new home
As we’ve waved goodbye to 2022 and are getting into the swing of a new year, it’s time to shine a spotlight on three key changes for 2023 affecting workers and People teams in Germany:
● Above a certain salary, employees have the option to switch to private health insurance, rather than state health insurance, and for 2023 the threshold has risen to €66,000 per year. Employees should be made aware of this update and company health insurance policies should be updated accordingly.
● The ‘home office flat rate’ allowance introduced in 2020, letting employees deduct five euros on their tax return for every day they work from home, now carries a maximum limit of €1,000 per year, as opposed to last year’s €600 maximum. This will need to be made clear in internal policies.
● Workplace incapacity certificates are going digital! This means a process change will be needed for People teams, as employees will no longer need to provide you with a yellow slip; instead the certificates will be transferred electronically by their doctor.
To start the year on the right foot, make sure your team is aware of these changes and ensure that policies are updated in line with the latest rules and regulations.
If you’re supporting employees relocating to Germany, you’ll be aware of the competitive and fast-moving nature of the rental market. Home-hunters need to be in their new city to attend viewings and to complete local registration, meaning temporary accommodation is a must.
To offer your relocating staff the best support you can, it’s advisable to be on top of trends around short-term housing. Here are the latest insights from PerchPeek’s Germany experts:
● As supply of rental properties continues to outstrip demand, with prices having risen by over 10% in the last two years, it takes time to secure a long term rental. Movers should expect to stay in temporary accommodation for at least 2-3 months.
● Temporary accommodation costs have been soaring in response to demand lately, with 40m² short-term apartments (suitable for one person) being listed at €1,800 per month!
● Unlike other markets, we don’t recommend Airbnb or similar holiday rental sites in Germany. This is because movers need to obtain a local registration certificate (Anmeldung) in order to secure long term housing, and this isn’t possible in an Airbnb.
● Sites we recommend are Wunderflats, Housing Anywhere and Homelike.
In summary, it’s really important to manage employees’ expectations around temporary housing costs and timings, and to advise on recommended platforms. You should also review relocation packages regularly to ensure they allow for a stay of a few months at the current rates!
It’s been a tough winter for many in Germany - this year less due to chilly temperatures and more to do with soaring inflation and the rising cost of living.
As we see out the remaining winter months, we wanted to share some key insights around utility costs that impact your teams:
● As reported by Der Spiegel, utility costs have exploded in recent months. Heating costs have risen by 100% in the last two years, and the Deutscher Mieterbund (German Tenant Association) predicts that this will increase by another 60% in 2023.
● A quarter of those living in Germany have to pay over 10% of their net income on utilities - and up to 41% for lower-middle income households.
● It’s been an unseasonably mild winter in Europe, with many weather stations recording their highest January temperatures of all time. While this has its worrying implications around climate change, it will have eased consumer anxiety about soaring energy bills.
In order to support employees through these trying times, it’s important to stay on top of trends and make sure compensation packages are kept in line, where possible, with the cost of living.
It’s also worth providing staff with energy-saving tips, especially for newcomers to the country who may be unfamiliar with German heating and cooling systems!
While many residents of Germany’s largest cities speak perfect English, we always recommend that relocating employees learn German to help settle in well.
Learning the language is a key part of building a new life abroad and is sure to make relocating employees feel more integrated in their new city. It’ll also be a massive help when it comes to home-finding and other administrative tasks like local registration and opening a bank account!
Here’s why newcomers should learn German:
● A study shows that while 65% of all Germans consider themselves English speakers, 60% of expats in Germany say it’s difficult to live there unless you can speak German.
● In light of plans to shake up the German immigration system, there’s a caveat to the proposed fast-track citizenship option: applicants will be required to have C1-level German language skills.
● PerchPeek’s experts agree that non-German-speakers are at a disadvantage when searching for a flat, as many landlords have a preference for German speakers.
Here are PerchPeek’s top tips for helping relocating employees learn German:
● Offer Learning & Development allowance to cover premium subscriptions to popular language-learning apps such as Duolingo, Babbel and Rosetta Stone
● Share details of local language-learning classes and help staff buddy up!
● Offer support to employees with children on finding appropriate schools
If your relocating employees are moving into long-term rented accommodation (as opposed to a serviced, furnished apartment), they’ll find it super useful to know about furniture options! It’s a hot topic according to PerchPeek’s Germany experts - here’s our rundown of the key points:
Option 1: Rent furniture
● The most costly option - only recommended for short-term assignments (6-12 months)
● The easiest solution of the three, as delivery, assembly and collection are included
● Recommended providers in Germany are Cort Global and Lyght Living
● Large range of choices, from single items to furniture sets for entire rooms
Option 2: Buy second-hand furniture
● By far the most cost-effective option but requires the most time and effort
● Fabulous thrift shopping scene with various flea markets (Flohmärkte) in most cities
● Online marketplaces are very popular, such as eBay Kleinanzeigen (eBay Ads)
● Employees should be careful on online marketplaces and be vigilant against scams
Option 3: Buy new furniture
● Less expensive than renting but more expensive than buying second-hand
● IKEA is a very safe bet - and with 53 stores, Germany has the most IKEAs in the world!
● Other recommended stores include Möbel Höffner, Poco Domäne and Home24
● Furniture stores are usually closed on Sundays, meaning they’re packed on Saturdays!
● Flat-pack furniture assembly services are available via TaskRabbit, Zapft and Helpling
Furnishing one’s apartment isn’t just a necessity, it’ll also make a massive difference in helping relocating employees settle into their new city by putting a personal stamp on their place - it’s what turns it into a home! Our advice is to support relocating staff by presenting these options at the outset and helping them choose the best one to suit their budget and other requirements.
We hope you enjoyed this month’s update, and that your 2023 is off to a great start!
If you have any feedback, comments or questions about what's happening in your location, feel free to reach out via the form at the bottom of this page.
Thanks for reading, and see you next month!
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