8 ms·

Over 50% of the population of Germany does not own their home

41 points by kleiba 3y ago

stcroixx 3y ago
A good time to leave Germany for better prospects was about 1750. It was already full then and they haven't succeeded at any new territory.
- hef19898 3y ago
  Germany didn't even exist in 1750. We did try to add territory so twice, didn't get us anywhere. I either blame the airforce or submarines, since those exist Germany failed to win a single war.
megamix 3y ago
It's all rent. Either from the bank or the landlord lol. Or can we see a break down of how many have 0 mortgage?
- pc86 3y ago
  Not sure how it is in Germany but in the US even if you buy your house in cash you don't own it. Go a few years without paying property taxes and you won't be in your house anymore.
  - bryanlarsen 3y ago
    You can extend that argument to say that you own nothing. No matter what you own, I'm sure you can find a law restricting what you can do with it. For example, it's illegal to burn many things. Ownership isn't and never is absolute possession.
    - crazygringo 3y ago
      Not really -- real estate is pretty unique in that regard. Property taxes aren't a restriction on use, as you present it -- they're a requirement for continued ownership. I'm not going to go as far as the parent commenter to say it means you don't own it, but I can't think of any other possession where the government takes it away if you don't keep paying. Not books or washing machines or food or anything. Even with vehicles, you need to pay to keep them registered but if you don't you just can't drive them on public roads. They're not taken away from you. So real estate really is in a kind of special "you mostly own it but kinda not entirely".
      - hef19898 3y ago
        In Germany, cars. We pay taxes in car ownership. Thing is so, tax debt or default doesn't lead to the state taking you property away (ultimately yes, but then you are at default for a vwry long time and probably bankcrupt anyway). It just means you have to repay you debt, tax authorities might seize e.g. bank accounts. And even banks prefer refinancing over foreclosures, selling real estate is a risk and work German banks like to avoid.
        crazygringo 3y ago
        From what I can find online, you don't have to pay that tax if you de-register the car, i.e. no longer use it on public roads. So it's not really any different from vehicle registration in the US. It's not a tax on vehicle ownership, but rather on annual usage of public roads per vehicle.
        hef19898 3y ago
        True! The vast majority of people so are not collecting cars, hence generaly people tax for the cars they own. You are absolutely right so, as long as you don't use your car on public roads, you don't pay taxes, don't need insurance or TÜV.
      - bryanlarsen 3y ago
        Still disagree. There are lots of things you need to actively spend effort and/or money on that the government will take away if you don't. Pets are one big category of stuff. Dangerous items are another.
        crazygringo 3y ago
        You're undoing your own point. Your exact words were: > Ownership isn't and never is absolute possession. Actually, it usually mostly is. There are exceptions, but generally speaking it is absolute possession. It's not conditional. It's called property rights for a reason. The fact that you're bringing up exceptions just proves the existence of the rule in the just place. That doesn't mean you can use your property to do harm to others, or that you can bring it anywhere you want, or that it can't be seized if you refuse to pay debts. But most things you actually do simply own, flat-out, unlike real estate with its property tax requirement.
  - skywhopper 3y ago
    Given that your property is defined by, supported by, and protected by the government, it makes sense that someone who is stealing from their neighbors by avoiding taxes should probably lose that property.
    - pc86 3y ago
      I'm not saying it's right or wrong, simply pointing out the fact. But I'd be remiss if I didn't point out that your example is someone with the means just choosing not to pay taxes, which are usually pretty small compared to the mortgage payment, especially if it was just recently paid off. But the much, much more common scenario is an older individual, maybe single-income but certainly fixed-income, being priced out by property tax increases.
- hef19898 3y ago
  Yeah, people still think that having a mortgage means the real estate is owned by the bank. Well that is just not the case. Repaying your mortgage is a combination of interest payments and repaying the debt. It goes to zero eventually. A rent is a permanent payment into the account of the person renting you something they own.
- HumblyTossed 3y ago
  As you pay off your mortgage, you build up equity in the house. So, you are in fact an owner.
  - megamix 3y ago
    If the mortgage was possible to be paid off to 0 sure during your lifetime. The disposable income doesn't unfortunately. The error to believe the house price will always continue to rise is a risky belief. People always need somewhere to live, but where and when you enter/exit the market matters. If mortgage interest rates were not set to keep the banks happy, then it would possibly be a realistic scenario to believe the housing market works for the benefit of the population.
    - hef19898 3y ago
      Germans are a lot less likely to move aroubd than Americans so. Once you bought a house, chances are you still living there when you retire. So market value is a lot less important than the amount you pay every month for said housing once you retired. This whole speculating on real estate value is more of an US thing than it is European. Outside of real estate investors, but those are the landlorda Germans, and others, rent from.
    - bluGill 3y ago
      38% of US houses have no mortgage as all. And one assumes that enough people who have a mortgage are on track to pay it off eventually. Many people do cash-out-refinances which ensures you never pay the house off, but if you just treat like the mortgage like rent and do nothing else (though if you can get a better interest rate refinancing for what you owe is often a good idea) you will pay it off. If you can afford the initial payment, your effective payment typically goes down over time as inflation brings the rest of your income up. Once you have the house half paid for odds are your payment is so low compared the income that you will have no problem paying the rest off. The early years are tough though before inflation works for you. Of course if you do the cash-out refinance your payment raises more or less with inflation (just like rent) plus you get a nice chuck on cash to do whatever with. If you invest that cash wisely it might even be abetter investment than paying off the house (I don't think anyone has ever done this, but it is an option)
- dukeyukey 3y ago
  Having a mortgage just means you own and asset (the house) and a liability (the mortgage). It doesn't mean the bank owns the house, no matter how doomer you want to be.
coldcode 3y ago
But they do own their own kitchen. I thought of moving to Berlin (from US) at one time, but the idea of an apartment not having a built-in kitchen is insane. Apparently, it is very common for the apartment to have an empty kitchen with nothing but hookups, and when you leave, you either take the kitchen you put in with you or sell it to the next renter.
- drakenot 3y ago
  Like the cabinets and whatnot? Wouldn't they be fitted to the space available or are the kitchen spaces standardized?
  - joezydeco 3y ago
    Yes the cabinets and no, nothing ever fits perfectly.
  - lifestyleguru 3y ago
    Explain this to Germans.
  - timeon 3y ago
    I'm not sure how it is in Germany but usually kitchen modules are 60x60cm and 60x45cm. Post-war kitchens are designed to this modules.
    - lifestyleguru 3y ago
      Except kitchen walls and ceilings are rarely equally straight, vertical, or horizontal. Then the kitchen worktops... a topic for a separate novel.
    - Yizahi 3y ago
      Cabinets are standard usually, but the panels they conform to, decor, even the wall space available are not. Like I can dismantle the kitchen from my parent's apartment and it will break in some separate sections, but not all will break, for example horizontal panels won't. And If I will try to put it together in the rental apartment, most likely it won't fit on one side, and likely leave empty space on the other side etc. The sink part in built in the corner, if rental apartment doesn't have water pipes in the corner, then it won't fit. Same with dishwasher module, oven module etc. I guess only if the kitchen is designed from the start in the cheapest possible way, with everything separate and squarish, with zero protruding or nonsquare shapes, then maybe it can be rearranged to the next apartment. Honestly, this idea is mind blowing every time I read about it.
j7ake 3y ago
Germany also has reasonable tenant laws so that landlords cannot raise rent arbitrarily, making being a tenant more pleasant than in the USA. As a tenant in Germany, it is just as secure or more compared with owning. You have tenant laws and you know you can call someone to get things fixed any time.
- msoad 3y ago
  Yes it's nice for current tenants. Some times their rent is so low that they rather leave the apartment empty for a whole year and go vacation instead of giving up the contract. However, it's not so nice if you don't have an apartment to rent. Almost nobody wants to move out of their sweet deal. People (at least in Berlin) will stay in the contract even if they have bought a new home. They just sublease it to a friend at that lower rate plus some profit even. I'm not free market absolutist but living in Berlin has shown me too much tenant protection can end up hurting actual home seekers.
  - FirmwareBurner 3y ago
    >I'm not free market absolutist but living in Berlin has shown me too much tenant protection can end up hurting actual home seekers. Pretty much. It limits mobility a lot while creating a neo-feudal gentry who lucked out on market timing/conditions and get to exploit it for their benefits and the expense of others.
    - caditinpiscinam 3y ago
      > neo-feudal gentry who lucked out on market timing/conditions and get to exploit it for their benefits and the expense of others You're saying this about the tenants? Not the landlords?
  - sumuyuda 3y ago
    It’s not the tenant protections that cause the problems, but rent price inequality(old contracts vs new contracts) due to the landlord increasing the price when the previous tenant leaves. Especially in Berlin many landlords charge illegally high rents. If this equality didn’t exist, people wouldn’t hold on to flats like they do.
johngladtj 3y ago
It makes very little sense to buy a home in major German cities. Say you put away 1% of the value in depreciation + 3% as cost of capital + 1% in running costs a year. That's around 5% of the homes value in costs that you're having every year, so you need a return on that just to break even. If you're looking to live somewhere, and you can choose to buy or rent the exact same house, it's simple to do the math. If your yearly rent is 12k, then just divide that by the 5% required return and you get the value of that house. So 12k/0.05 = 240K If that house costs more than 240K to buy, you're better off just renting it and saving the difference. For me the difference in the apartment I'm renting and the price is ridiculous. The landlord is taking about 1.5% of the house value from me yearly, and using that to pay all those costs, so they are losing about 3.5% per year by renting it to me. Thank you Mr. Landlord
- onlyrealcuzzo 3y ago
  Your landlord is getting ~0% interest and leveraged 4:1. The leveraged appreciation is definitely not -1%. Over the last ~15 years, it's closer to +10%.
  - johngladtj 3y ago
    Close, their cost of debt was 2% a couple of years ago. The waac last I checked was around 3 or 4 %. Whatever the case once you account for costs they are not making money
- FirmwareBurner 3y ago
  >you're better off just renting it and saving the difference Saving significant amounts of money while renting it's a luxury many people don't have. Owning your own property is also an insurance against old age poverty. You can pay current market rent with your salary, but you won't be able to with a state pension. If you pay off your property by the time you retire, it's basically free rent after that. Meanwhile you're paying your landlord's mortgage and owning no asset at the end. Your math works if you "win the lottery" and get some rent controlled apartment way below market rates, then it makes sense to keep renting and investing the difference somewhere else instead of owning.
KingOfCoders 3y ago
Houses and flats are very expensive. Flats for one person are around EUR 100k, flats for two people and two children start at 300k in a small city. Houses start at 500k. There are many reasons for this, one reason is houses are build in expensive ways, usually concrete basements, concrete floors and concrete inner walls, bricks for the outer walls. Also the ground is usually very expensive in cities and the ground where you are allowed to build outside is scarce.
pimterry 3y ago
There are some key differences in rental legislation that drive how different cultures view home ownership. From my experience in the UK, homeownership has a lot of cultural weight, because it's really the only way to guarantee stability in housing. While renting, you typically have to renew every year, which results in unexpected price changes and the constant risk you might have to move unexpectedly (often with just 1 month notice periods). In many European countries though, including Germany, this isn't such a thing. Leases are often indefinite, landlords will really struggle to evict you against your will as long as you are paying your rent and not destroying the place (the only notable exception being if they evict you to personally live in the flat as their main residence) and there are tight limits to the rent increases allowed (https://conny.de/en/rent/rent-increase/information https://conny.de/en/rent/rent-increase/information). When you can get ~similar housing stability without ownership, it becomes more a question of flexibility vs financial investment, rather than a strict goal that always makes sense. There's also lots of subsidies in Germany that actively support the rental market (rather than houseownership, unlike elsewhere): https://www.brookings.edu/articles/Germany-rental-housing-markets/ https://www.brookings.edu/articles/Germany-rental-housing-ma...
- dukeyukey 3y ago
  > often with just 1 month notice periods This is mostly not the case - a 2-month notice period is way more common. It might not even be legal with a typical shorthold tenancy.
- FirmwareBurner 3y ago
  >Leases are often indefinite How common is that today? In Austria most landlords stopped offering indefinite leases a long time ago, and are instead renewed every 3 years or so when they can increase your rent or kick you out. Or if you have an indefinite lease it's automatically indexed by inflation which screws you big time if your wages aren't keeping up. The only indefinite lease currently in existence without inflation indexing are very old contracts who got grandfathered in but no landlord is crazy to offer that today anymore.
  - whstl 3y ago
thiago_fm 3y ago
So what? Only 40% of Americans have paid off their mortgages and own a property. I live in Germany and once I found how the illusion of owning a property isn't a necessity, I started to be more chill about life in general. Tenant laws are good here, you can live with dignity. Of course, you will never "live big" as Americans do, but you can take vacations, visit the world, live an everyday life, etc. At the moment, I'm paying a mortgage, but I don't have this illusion of "owning" it; I know I don't. And even if I finish paying it, I know it doesn't mean very much, as this means I could have invested the money somewhere else or just spend it all on experiences, things that actually matter in life. Modern humanity has tied too much of who they are, even their self-confidence and self-worth, to what they are able to own. It's sad.
- vidarh 3y ago
  The main benefit of buying is the relative freedom to make changes. In places with poor protections for tenants, it then has the added benefit of removing you from that (I'm in the UK; that is a consideration), but the freedom to make changes to my house and garden matters to me. It doesn't matter enough that I wouldn't consider renting if I moved somewhere else, though - it really depends on the situation.
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flohofwoe 3y ago
Is this news-worthy though? From what I understand this isn't a new development, or has been changing much in the last 100 years. I guess West Germany had a a bit of a boom of building your own home during the 60s and 70s through the so called "Bausparvertrag", and similar in East Germany after the reunification, but renting is a lot more convenient, and more importantly you don't need to go into debt until you're in your 50s. Of course there's still the clichee of a young family building their own home, but then a few years later the young family falls apart, the house goes back to the bank, and both live their separate lives long and happily everafter as renters ;)
- hef19898 3y ago
  Germans always rented to larger degrees than others, which explains the difference in certain wealth statistics. As a German, I have no idea why that is, that we tend to rent. That being said, until your 50s, either you are debt, debt offset by property with a certain value, or you pay rent. Either way, you do not live for free. Difference is, once you retire in your 60s, with owned property your living costs actually go down a lot, while rent only keeps coming. Of course, one can do all kind of corporate accounting tricks to explain that even after your mortgae is repaid, you don't live for almost nothing in your house, but that wouod only show a serious lack of financial understanding.
  - flohofwoe 3y ago
    Living alone as an old person in the house you built for a whole family when you were young isn't cheap either though, especially now when it's time to upgrade the heating away from gas, isolate the walls and maybe it's also about time to finally fix the roof, it's much easier to complain about all this to your landlord ;)
    - hef19898 3y ago
      All of those costs are factored into your rent so. In fact, those rennovation works are a reason for a landlord to increase rent on existing leases. So you pay for those, always. What you don't pay so, ia rent for property you own. And ince the mortgage is repaid, ideally begore you retire, your monthly costs are the same as if you rented without the rent.
secretsatan 3y ago
Switzerland still has the lowest rate of home ownership. I'm looking to buy a home there soon, it was a struggle to build sufficient down payment, especially after losing my first attempt to the loss of a job. But renting in Switzerland is a far better experience than what I had in the UK, which was awful. Unexpected and outrageous rent hikes, told to get out of several flats with little notice, or just quit after refusing to pay the hikes. I moved 4 times in six years. In Switzerland, I feel much better protected, landlords can't just raise rents on a whim, there's renters associations to back you up, the standards are higher, and for me initially, rents were lower. One annoyance, you can use some of your pension as downpayment without taxt penalties here. Unfortunately, that means it is exceedingly hard to transfer my pension from the UK, as UK gov won't allow tax free transfers abroad to pension schemes that offer such a service.
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poisonborz 3y ago
It doesn't make much sense to own a home in Germany, or in most of EU for that matter. In the countryside, 20 years of rent is maybe one third of the buying price, not counting in taxes and maintenance. Plus you lose flexibility, both in terms of moving and in investment. What makes sense is what a lot of people do there: when reaching retirement/kids are out, buy property in east europe and live off your pension there.
- ctrlp 3y ago
  How does it make sense to have to leave your own country and move to a foreign land for the last decades of your life? Sounds like a bad deal.
miga89 3y ago
When doing these rent vs buy comparisons people often neglect the opportunity cost of investing the down payment and any difference between rent and mortgage (if it exists) Rule of thumb according to [0] is that, assuming historical returns, if your yearly rent is less than 5% (1% maintenance + 1% property tax + 3% capital cost vs investing) of the property value it's better* to rent. [0] https://youtu.be/Uwl3-jBNEd4?si=FDRG-6U_T4nsGtJa https://youtu.be/Uwl3-jBNEd4?si=FDRG-6U_T4nsGtJa *local tax treatment might play a role **paying a mortgage requires less discipline than consistently investing during volatile markets ***Purely from a financial, non-emotional standpoint ****you might not be able to rent the house you want to buy

41 points by kleiba 3y ago

A good time to leave Germany for better prospects was about 1750. It was already full then and they haven't succeeded at any new territory.

hef19898 3y ago
Germany didn't even exist in 1750. We did try to add territory so twice, didn't get us anywhere. I either blame the airforce or submarines, since those exist Germany failed to win a single war.

megamix 3y ago

It's all rent. Either from the bank or the landlord lol. Or can we see a break down of how many have 0 mortgage?

pc86 3y ago
Not sure how it is in Germany but in the US even if you buy your house in cash you don't own it. Go a few years without paying property taxes and you won't be in your house anymore.
- bryanlarsen 3y ago
  You can extend that argument to say that you own nothing. No matter what you own, I'm sure you can find a law restricting what you can do with it. For example, it's illegal to burn many things. Ownership isn't and never is absolute possession.
  - crazygringo 3y ago
    Not really -- real estate is pretty unique in that regard. Property taxes aren't a restriction on use, as you present it -- they're a requirement for continued ownership. I'm not going to go as far as the parent commenter to say it means you don't own it, but I can't think of any other possession where the government takes it away if you don't keep paying. Not books or washing machines or food or anything. Even with vehicles, you need to pay to keep them registered but if you don't you just can't drive them on public roads. They're not taken away from you. So real estate really is in a kind of special "you mostly own it but kinda not entirely".
    - hef19898 3y ago
      In Germany, cars. We pay taxes in car ownership. Thing is so, tax debt or default doesn't lead to the state taking you property away (ultimately yes, but then you are at default for a vwry long time and probably bankcrupt anyway). It just means you have to repay you debt, tax authorities might seize e.g. bank accounts. And even banks prefer refinancing over foreclosures, selling real estate is a risk and work German banks like to avoid.
      - crazygringo 3y ago
        From what I can find online, you don't have to pay that tax if you de-register the car, i.e. no longer use it on public roads. So it's not really any different from vehicle registration in the US. It's not a tax on vehicle ownership, but rather on annual usage of public roads per vehicle.
        hef19898 3y ago
        True! The vast majority of people so are not collecting cars, hence generaly people tax for the cars they own. You are absolutely right so, as long as you don't use your car on public roads, you don't pay taxes, don't need insurance or TÜV.
    - bryanlarsen 3y ago
      Still disagree. There are lots of things you need to actively spend effort and/or money on that the government will take away if you don't. Pets are one big category of stuff. Dangerous items are another.
      - crazygringo 3y ago
        You're undoing your own point. Your exact words were: > Ownership isn't and never is absolute possession. Actually, it usually mostly is. There are exceptions, but generally speaking it is absolute possession. It's not conditional. It's called property rights for a reason. The fact that you're bringing up exceptions just proves the existence of the rule in the just place. That doesn't mean you can use your property to do harm to others, or that you can bring it anywhere you want, or that it can't be seized if you refuse to pay debts. But most things you actually do simply own, flat-out, unlike real estate with its property tax requirement.
- skywhopper 3y ago
  Given that your property is defined by, supported by, and protected by the government, it makes sense that someone who is stealing from their neighbors by avoiding taxes should probably lose that property.
  - pc86 3y ago
    I'm not saying it's right or wrong, simply pointing out the fact. But I'd be remiss if I didn't point out that your example is someone with the means just choosing not to pay taxes, which are usually pretty small compared to the mortgage payment, especially if it was just recently paid off. But the much, much more common scenario is an older individual, maybe single-income but certainly fixed-income, being priced out by property tax increases.
hef19898 3y ago
Yeah, people still think that having a mortgage means the real estate is owned by the bank. Well that is just not the case. Repaying your mortgage is a combination of interest payments and repaying the debt. It goes to zero eventually. A rent is a permanent payment into the account of the person renting you something they own.
HumblyTossed 3y ago
As you pay off your mortgage, you build up equity in the house. So, you are in fact an owner.
- megamix 3y ago
  If the mortgage was possible to be paid off to 0 sure during your lifetime. The disposable income doesn't unfortunately. The error to believe the house price will always continue to rise is a risky belief. People always need somewhere to live, but where and when you enter/exit the market matters. If mortgage interest rates were not set to keep the banks happy, then it would possibly be a realistic scenario to believe the housing market works for the benefit of the population.
  - hef19898 3y ago
    Germans are a lot less likely to move aroubd than Americans so. Once you bought a house, chances are you still living there when you retire. So market value is a lot less important than the amount you pay every month for said housing once you retired. This whole speculating on real estate value is more of an US thing than it is European. Outside of real estate investors, but those are the landlorda Germans, and others, rent from.
  - bluGill 3y ago
    38% of US houses have no mortgage as all. And one assumes that enough people who have a mortgage are on track to pay it off eventually. Many people do cash-out-refinances which ensures you never pay the house off, but if you just treat like the mortgage like rent and do nothing else (though if you can get a better interest rate refinancing for what you owe is often a good idea) you will pay it off. If you can afford the initial payment, your effective payment typically goes down over time as inflation brings the rest of your income up. Once you have the house half paid for odds are your payment is so low compared the income that you will have no problem paying the rest off. The early years are tough though before inflation works for you. Of course if you do the cash-out refinance your payment raises more or less with inflation (just like rent) plus you get a nice chuck on cash to do whatever with. If you invest that cash wisely it might even be abetter investment than paying off the house (I don't think anyone has ever done this, but it is an option)
dukeyukey 3y ago
Having a mortgage just means you own and asset (the house) and a liability (the mortgage). It doesn't mean the bank owns the house, no matter how doomer you want to be.

coldcode 3y ago

But they do own their own kitchen. I thought of moving to Berlin (from US) at one time, but the idea of an apartment not having a built-in kitchen is insane. Apparently, it is very common for the apartment to have an empty kitchen with nothing but hookups, and when you leave, you either take the kitchen you put in with you or sell it to the next renter.

drakenot 3y ago
Like the cabinets and whatnot? Wouldn't they be fitted to the space available or are the kitchen spaces standardized?
- joezydeco 3y ago
  Yes the cabinets and no, nothing ever fits perfectly.
- lifestyleguru 3y ago
  Explain this to Germans.
- timeon 3y ago
  I'm not sure how it is in Germany but usually kitchen modules are 60x60cm and 60x45cm. Post-war kitchens are designed to this modules.
  - lifestyleguru 3y ago
    Except kitchen walls and ceilings are rarely equally straight, vertical, or horizontal. Then the kitchen worktops... a topic for a separate novel.
  - Yizahi 3y ago
    Cabinets are standard usually, but the panels they conform to, decor, even the wall space available are not. Like I can dismantle the kitchen from my parent's apartment and it will break in some separate sections, but not all will break, for example horizontal panels won't. And If I will try to put it together in the rental apartment, most likely it won't fit on one side, and likely leave empty space on the other side etc. The sink part in built in the corner, if rental apartment doesn't have water pipes in the corner, then it won't fit. Same with dishwasher module, oven module etc. I guess only if the kitchen is designed from the start in the cheapest possible way, with everything separate and squarish, with zero protruding or nonsquare shapes, then maybe it can be rearranged to the next apartment. Honestly, this idea is mind blowing every time I read about it.

j7ake 3y ago

Germany also has reasonable tenant laws so that landlords cannot raise rent arbitrarily, making being a tenant more pleasant than in the USA. As a tenant in Germany, it is just as secure or more compared with owning. You have tenant laws and you know you can call someone to get things fixed any time.

msoad 3y ago
Yes it's nice for current tenants. Some times their rent is so low that they rather leave the apartment empty for a whole year and go vacation instead of giving up the contract. However, it's not so nice if you don't have an apartment to rent. Almost nobody wants to move out of their sweet deal. People (at least in Berlin) will stay in the contract even if they have bought a new home. They just sublease it to a friend at that lower rate plus some profit even. I'm not free market absolutist but living in Berlin has shown me too much tenant protection can end up hurting actual home seekers.
- FirmwareBurner 3y ago
  >I'm not free market absolutist but living in Berlin has shown me too much tenant protection can end up hurting actual home seekers. Pretty much. It limits mobility a lot while creating a neo-feudal gentry who lucked out on market timing/conditions and get to exploit it for their benefits and the expense of others.
  - caditinpiscinam 3y ago
    > neo-feudal gentry who lucked out on market timing/conditions and get to exploit it for their benefits and the expense of others You're saying this about the tenants? Not the landlords?
- sumuyuda 3y ago
  It’s not the tenant protections that cause the problems, but rent price inequality(old contracts vs new contracts) due to the landlord increasing the price when the previous tenant leaves. Especially in Berlin many landlords charge illegally high rents. If this equality didn’t exist, people wouldn’t hold on to flats like they do.

johngladtj 3y ago

It makes very little sense to buy a home in major German cities. Say you put away 1% of the value in depreciation + 3% as cost of capital + 1% in running costs a year. That's around 5% of the homes value in costs that you're having every year, so you need a return on that just to break even. If you're looking to live somewhere, and you can choose to buy or rent the exact same house, it's simple to do the math. If your yearly rent is 12k, then just divide that by the 5% required return and you get the value of that house. So 12k/0.05 = 240K If that house costs more than 240K to buy, you're better off just renting it and saving the difference. For me the difference in the apartment I'm renting and the price is ridiculous. The landlord is taking about 1.5% of the house value from me yearly, and using that to pay all those costs, so they are losing about 3.5% per year by renting it to me. Thank you Mr. Landlord

onlyrealcuzzo 3y ago
Your landlord is getting ~0% interest and leveraged 4:1. The leveraged appreciation is definitely not -1%. Over the last ~15 years, it's closer to +10%.
- johngladtj 3y ago
  Close, their cost of debt was 2% a couple of years ago. The waac last I checked was around 3 or 4 %. Whatever the case once you account for costs they are not making money
FirmwareBurner 3y ago
>you're better off just renting it and saving the difference Saving significant amounts of money while renting it's a luxury many people don't have. Owning your own property is also an insurance against old age poverty. You can pay current market rent with your salary, but you won't be able to with a state pension. If you pay off your property by the time you retire, it's basically free rent after that. Meanwhile you're paying your landlord's mortgage and owning no asset at the end. Your math works if you "win the lottery" and get some rent controlled apartment way below market rates, then it makes sense to keep renting and investing the difference somewhere else instead of owning.

KingOfCoders 3y ago

Houses and flats are very expensive. Flats for one person are around EUR 100k, flats for two people and two children start at 300k in a small city. Houses start at 500k. There are many reasons for this, one reason is houses are build in expensive ways, usually concrete basements, concrete floors and concrete inner walls, bricks for the outer walls. Also the ground is usually very expensive in cities and the ground where you are allowed to build outside is scarce.

pimterry 3y ago

There are some key differences in rental legislation that drive how different cultures view home ownership. From my experience in the UK, homeownership has a lot of cultural weight, because it's really the only way to guarantee stability in housing. While renting, you typically have to renew every year, which results in unexpected price changes and the constant risk you might have to move unexpectedly (often with just 1 month notice periods). In many European countries though, including Germany, this isn't such a thing. Leases are often indefinite, landlords will really struggle to evict you against your will as long as you are paying your rent and not destroying the place (the only notable exception being if they evict you to personally live in the flat as their main residence) and there are tight limits to the rent increases allowed (https://conny.de/en/rent/rent-increase/information https://conny.de/en/rent/rent-increase/information). When you can get ~similar housing stability without ownership, it becomes more a question of flexibility vs financial investment, rather than a strict goal that always makes sense. There's also lots of subsidies in Germany that actively support the rental market (rather than houseownership, unlike elsewhere): https://www.brookings.edu/articles/Germany-rental-housing-markets/ https://www.brookings.edu/articles/Germany-rental-housing-ma...

dukeyukey 3y ago
> often with just 1 month notice periods This is mostly not the case - a 2-month notice period is way more common. It might not even be legal with a typical shorthold tenancy.
FirmwareBurner 3y ago
>Leases are often indefinite How common is that today? In Austria most landlords stopped offering indefinite leases a long time ago, and are instead renewed every 3 years or so when they can increase your rent or kick you out. Or if you have an indefinite lease it's automatically indexed by inflation which screws you big time if your wages aren't keeping up. The only indefinite lease currently in existence without inflation indexing are very old contracts who got grandfathered in but no landlord is crazy to offer that today anymore.
- whstl 3y ago

thiago_fm 3y ago

So what? Only 40% of Americans have paid off their mortgages and own a property. I live in Germany and once I found how the illusion of owning a property isn't a necessity, I started to be more chill about life in general. Tenant laws are good here, you can live with dignity. Of course, you will never "live big" as Americans do, but you can take vacations, visit the world, live an everyday life, etc. At the moment, I'm paying a mortgage, but I don't have this illusion of "owning" it; I know I don't. And even if I finish paying it, I know it doesn't mean very much, as this means I could have invested the money somewhere else or just spend it all on experiences, things that actually matter in life. Modern humanity has tied too much of who they are, even their self-confidence and self-worth, to what they are able to own. It's sad.

vidarh 3y ago
The main benefit of buying is the relative freedom to make changes. In places with poor protections for tenants, it then has the added benefit of removing you from that (I'm in the UK; that is a consideration), but the freedom to make changes to my house and garden matters to me. It doesn't matter enough that I wouldn't consider renting if I moved somewhere else, though - it really depends on the situation.

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flohofwoe 3y ago

Is this news-worthy though? From what I understand this isn't a new development, or has been changing much in the last 100 years. I guess West Germany had a a bit of a boom of building your own home during the 60s and 70s through the so called "Bausparvertrag", and similar in East Germany after the reunification, but renting is a lot more convenient, and more importantly you don't need to go into debt until you're in your 50s. Of course there's still the clichee of a young family building their own home, but then a few years later the young family falls apart, the house goes back to the bank, and both live their separate lives long and happily everafter as renters ;)

hef19898 3y ago
Germans always rented to larger degrees than others, which explains the difference in certain wealth statistics. As a German, I have no idea why that is, that we tend to rent. That being said, until your 50s, either you are debt, debt offset by property with a certain value, or you pay rent. Either way, you do not live for free. Difference is, once you retire in your 60s, with owned property your living costs actually go down a lot, while rent only keeps coming. Of course, one can do all kind of corporate accounting tricks to explain that even after your mortgae is repaid, you don't live for almost nothing in your house, but that wouod only show a serious lack of financial understanding.
- flohofwoe 3y ago
  Living alone as an old person in the house you built for a whole family when you were young isn't cheap either though, especially now when it's time to upgrade the heating away from gas, isolate the walls and maybe it's also about time to finally fix the roof, it's much easier to complain about all this to your landlord ;)
  - hef19898 3y ago
    All of those costs are factored into your rent so. In fact, those rennovation works are a reason for a landlord to increase rent on existing leases. So you pay for those, always. What you don't pay so, ia rent for property you own. And ince the mortgage is repaid, ideally begore you retire, your monthly costs are the same as if you rented without the rent.

secretsatan 3y ago

Switzerland still has the lowest rate of home ownership. I'm looking to buy a home there soon, it was a struggle to build sufficient down payment, especially after losing my first attempt to the loss of a job. But renting in Switzerland is a far better experience than what I had in the UK, which was awful. Unexpected and outrageous rent hikes, told to get out of several flats with little notice, or just quit after refusing to pay the hikes. I moved 4 times in six years. In Switzerland, I feel much better protected, landlords can't just raise rents on a whim, there's renters associations to back you up, the standards are higher, and for me initially, rents were lower. One annoyance, you can use some of your pension as downpayment without taxt penalties here. Unfortunately, that means it is exceedingly hard to transfer my pension from the UK, as UK gov won't allow tax free transfers abroad to pension schemes that offer such a service.

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poisonborz 3y ago

It doesn't make much sense to own a home in Germany, or in most of EU for that matter. In the countryside, 20 years of rent is maybe one third of the buying price, not counting in taxes and maintenance. Plus you lose flexibility, both in terms of moving and in investment. What makes sense is what a lot of people do there: when reaching retirement/kids are out, buy property in east europe and live off your pension there.

ctrlp 3y ago
How does it make sense to have to leave your own country and move to a foreign land for the last decades of your life? Sounds like a bad deal.

miga89 3y ago

When doing these rent vs buy comparisons people often neglect the opportunity cost of investing the down payment and any difference between rent and mortgage (if it exists) Rule of thumb according to [0] is that, assuming historical returns, if your yearly rent is less than 5% (1% maintenance + 1% property tax + 3% capital cost vs investing) of the property value it's better* to rent. [0] https://youtu.be/Uwl3-jBNEd4?si=FDRG-6U_T4nsGtJa https://youtu.be/Uwl3-jBNEd4?si=FDRG-6U_T4nsGtJa *local tax treatment might play a role **paying a mortgage requires less discipline than consistently investing during volatile markets ***Purely from a financial, non-emotional standpoint ****you might not be able to rent the house you want to buy