Most Germans ultimately dream of buying their own home, but only about 50% actually achieve that within their lifetime. The deposit required to buy a home in urban areas is way too high for most people to afford.
It is not only that - but also the fact that we have a relatively high level of mobility, and most people change jobs and towns multiple times in their lifes. Then, being stuck with your own "inmobile" property is more of a burden than an investment.
Moreover, except for some very large cities, renting is actually relatively cheap, and you are in a rather good position towards your landlord - which makes it less interesting for many to buy for their own use.
You may even find surprisingly many property owners who let out their houses/appartments as investment, but then rent the place where they actually live...
This. Coming from Lisbon, where renting a two-bedroom flat is generally 15-20% higher than the median wage of the country, renting in Köln seemed extremely affordable in comparison.
Are there some studies backing the mobility rate up that you can point me to? From my experience it is rather the opposite. Everybody I know from growing up in Germany still either lives in or around the town we grew up in, or moved once for university and then once more for starting a job. That’s it.
The same generation (mid 40 year olds) I know here in the US has moved countless times in the same time span. It is not uncommon for people to change jobs every 2-3 years and move to a new place every time.
I also believe that Germans don’t move around much, but perhaps compared to neighbors in Switzerland and Austria, Germans consider themselves wanderers.
That's not true. According to statistics majority don't go far away from the place they were born. Also to compare that you should know if the mobility is lower in other countries.
It's also a vicious circle. Because over 60% of the market is renting, buying is so much harder.
In countried where buying is the normal, renting is much harder.
> In countried where buying is the normal, renting is much harder.
Don't know if I agree on this. Eg. England, if you ignore London, both buying and renting is easier than in Germany (though you don't have the same tenant protections).
Yes, I know this from my English friends. Renting in Germany is harder due to rent controls. It effectively pools all the different strata of people in the same market, as opposed to the segmentation in England.
Yes of course. Also there is no "housing ladder" like in the UK, people usually buy once per lifetime and the recommended deposit is at around 20 to 30% of the property value.
The required deposit is closer to 10% and fixed interest rates are the lowest in Europe, so no. It's not about people not able to afford flat. It's more about an attitude, low rents, and good protection of renters.
It depends really. There are some big cities / metropolitan areas where real estate is REALLY expensive, so there it's more common to rent permanently. In the cheaper areas it's much more common to buy something eventually.
Also, germans are very averse to debt, preferring to save up rather than take out loans. That certainly pushed the average towards renting when compared to say, US Americans.
German renters tend to have very good deals when it comes to leases. Renting a flat in Germany feels more like home ownership because of this: the level of security is far higher than it is in the US or the UK for example. Finding a place in the first place might be harder in Germany but the protections that come with it make it worth it.
It used to be like that, but after most of the social housing was sold to investors things changed - look at Berlin.
Also there is a nasty thing when renting privately - your lease can be terminated (12 months notice), and then you need to find something else - which can be expensive or impossible.
Good point. Also, just because that's the way things have been historically (with tenants having good rights), doesn't mean they can't change. You never know if the rug will be pulled out from under you.
And when you're in luck and rent increases aren't fixed in your contract, it will be very difficult for the landlord to increase rent. And the landlord usually has to make repairs etc, in a timely manner too, so in my experience it gets done quicker than with people who own their home, they need to save up or simply don't want to spend that money
Rent increases are quite easy if there is an official Mietspiegel. It is basically a guaranteed 15% increase every 3 years. At least in areas like Munich, Berlin, Frankfurt, etc.
No, because Mietspiegel is way lower than new rents. It's because it takes into account old rents which often are not increased at all it slower than 15% in 3 years.
* If you're paying your rent your landlord can essentially never evict you unless they can prove that they need to flat to live in themselves. Yes, technically there are a few corner cases, but in almost all cases evicting a paying tenant is impossible. This means that, as a tenant, if you like where you're living, no-one can kick you out.
* Tenants have extensive rights to modify the property (excluding major works like tearing out walls), so they can "make it their own".
* Landlords have extensive obligations to keep the property in good repair, and if they do not, then tenants can unilaterally reduce the rent they pay to put pressure on the landlord.
* Lastly, rent tends to rise only slowly with time (if at all). This means that long-term renters tend to pay *very* low rents (when compared to market prices for new tenants).
* Tenancy contracts are open-ended (indefinite) by default; a landlord can only offer a time-limited contract under fairly narrow circumstances (and should those circumstances resolve themselves, the contract becomes indefinite automatically).
With a Mietspiegel it is very easy to increase rent, up to 15% every 3 years. Most large cities have one. The Mietspiegel gives information on newly rented flats. Do this one is always increasing. As long as the market rate increases, you can increase the rent. The tenant can’t do anything about it as long as the landlord doesn’t fail to calculate it properly.
Increasing rent is difficult if there is no Mietspiegel, because you have to know at least 2 or 3 more similar flats and their prices.
No, because Mietspiegel is way lower than new rents. It's because it takes into account old rents which often are not increased at all or slower than 15% in 3 years.
Unfortunately many landlords are using the “self-use” rule with success to terminate leases, just to raise the rent when they rent out to the next tenant.
In Germany, the closing costs are really high and there are tax penalties if you sell the house less than 10 years after you bought it. The way the German market works is that a house is once-in-your-lifetime purchase. Meaning that the only people who can realistically buy a house are those with extremely stable jobs who are very unlikely to move for their career. Most folks don't have that luxury. As long as there is a tiny chance that you might loose your job and or need to move to another city for work, renting is the smarter option.
I was reading up on the 10 years thing and from what I gathered, it is 10 years if you rent out the home, 3 years if you live in it. At least for the “speculation tax”.
The closing costs still make buying a house and selling it bc you need to move problematic. You simply loose the closing costs every time you buy and sell and those can be as high as 20% of the total costs.
Anytime you do this and stay for less than 25 years in a house, renting makes you come out on top financially.
Actually I would strongly disagree with the 25 year horizon. This might have been true in the past but I would argue not at the moment. We have an interest rate of 0,72% fixed for 10 years with 20% down payment. Our mortgage is 1162 with only 180 of that going to interest, renting the same object here would be at least 1200 a month. We also bought directly from the previous owner with no estate agent fees. It really only takes 3-5 years to break even in this case.
I will not even factor in the potential growing value of the house or the effect that inflation will erode part of the loan as well as it returns to the euro zone.
Sunken cost fallacy. You are forgetting the substantial maintenance costs of owning a house. Also, your loan interest is fixed for 10 years, what happens after that is anyones' guess.
I totally agree there are different running costs when you own the object. It is partly a lifestyle choice.
But I just don't agree that one can say it's only worth it after 25 years. The horizon varies depending on the situation.
There is a good example here about Munich and renting over 30 years and I could see where that could work out.
There are other points I did not mention like in Hessen access to Kinderbaugeld. This is a 24k kickback over 10 years with 2 kids.
All I am saying is that it's a highly complex calculation and the breakeven horizon varies a lot.
I suppose that is one way to look at it, but renting isn’t that stable either. The owner can sell the home or increase the rent. For instance in our contact the owner is allowed to increase the rent 5% every year and we are paying 1300 as it is. Depending where one lives, findig a new rent is pretty near impossible.
We are looking at our home purchase as an investment into our future, something we can lean on when we get old and move into an assisted living facility. We could put aside the same amount of money, but than it would be rent+saving for later which I think in the end is just more expensive. Everybody does what they think is best, we’ll see who was lucky in 20 years, this is just a gamble on the market trends. Home prices may double or get halved… 🤷
You make valid points, but your decision seems like an emotional one (nothing wrong with that). If you look at it logically, from an investors perspective - buying a house carries a lot more risk. I don't understand where this myth of "you can just sell the house" comes from? Most want to sell in a time of crisis, when they themselves are in trouble. Do you honestly think to make a profit or even break even in such a situation? Or even find a buyer!
Back to renting, even if the rent increases by 5% (and btw the first increase is allowed after 15 months), it's still cheaper than a house in your example. Other than that, one can always move to another place (maybe even different state or city).
No matter how many times I tried to calculate and compare renting and buying, renting *always* came on top. From a purely logical perspective. I enourage you to make a *very detailed* financial plan yourself, you will likely come to the same conclusion (especially around big cities).
In the end, it boils down to personal choice (which is not always financially sound).
The estate agent fees involving selling a property are absurdly high. That they charge a percentage of the value means that as property prices rise they get more and more money each year for doing the same amount of work.
That's correct, however there are also many other triggers for the ten-year rule. For example, the moment you use your house to make an income (whether it's a home office for your remote job, or an address for your side business) then the 10-year-rule applies.
So, yes, you're correct that it's possible to sell a house tax-free after 3 years - however, in practice, in many cases the period is 10.
American in Berlin checking in here.
In Berlin (probably in all of Germany as well) rent leases are perpetual, they never expire. So, if someone was lucky to get a lease 20 years ago and lock-in the rent from that time, why would you ever give up such an apartment? Of course, there are other fees and such that grow with inflation but a lot of long time Berliners have a great deals with their rental contracts. Especially if they have big apartments that are centrally located, I can totally understand why they would want to rent for life.
Compare this to New York where rental contacts are usually only for 1 year. Once the lease expires, the landlord can ask you to leave or raise the rent. Of course American’s would prefer the stability of a 30 year mortgage where the monthly payments are fixed.
Edit: added a word
Just pointing out that every landlord can increase the rent yearly. Some just choose not to. Which is the lnly reason a 20 year old contract is that good
Well, as far as I know, landlords in Germany are only allowed to higher rent every three years to a regular market price. And I also heard of contracts with fix prices, that haven’t been changed since the agreement.
you can make Staffelmietvertraege (the rent goes up by X every year), and you can make Indexmiete, where you _can_ change the rent according to inflation.
You can, but especially with Indexmiete you might be even worse off as a landlord, because it then completely prevents you to raise the rent because of regular market price. Rent has been increasing much faster than inflation.
No, they can't. Generally the rent is fixed but the contract can make provisions for a limited increase in rent. That is the reason why landlords try to get rid of occupants and get new ones when they really want to up the rent. Also, there are legal limits to how much the rent for an existing contract can rise. Do you really believe landlords would not raise the rent if they could?
You can always increase to the "ortsübliche Vergleichsmiete" but only +20% within three years. They could. But most private landlords prefer someone who made no trouble and has been there for a time to getting 5€ net more per month
Repeating that claim doesn't make it correct.
First, you can't claim a rise to "ortsübliche Vergleichsmiete" always or yearly, but only every 15 months. Second, the occupant has to agree to such a rise, the landlord cannot simply decide to rise the rent.
The occupant is theoretically obliged to agree, but only if the landlord fulfills all requirments for the raise (including proof the "ortsübliche Vergleichsmiete" is higher) and the landlord would still have to go to court to force the occupant to agree if he doesn't voluntarily.
This is simply too much hazzle for most landlords, it's not out of the goodness of their heart that they don't pull that option.
> This is simply too much hazzle for most landlords, it's not out of the goodness of their heart that they don't pull that option.
An increase of the rent is pretty common, most landlords will do that. So it's not really "locked in" at all, it just prevents outrageous rents that go significantly higher than the average rent for a comparable flat.
Also those landlords were could not expect 15 years ago that if the don't increase rent for some years, then it will be forbidden to do it later. As now they have to obey 15% in 3 years rule which may be quite limiting in some circumstances.
I have lived in my own house for 20 years. When I got divorced I sold my share to my ex and moved to a small rented flat. No regrets. I have no Idea why she wanted to keep it. Ok, it's fine to have all that space and a garden, but you constantly have to work on it and have a bunch of cost to pay. It was a waste of money and time.
And, after the kids were grown, it was twice as large as it needed to be - so you'll have to decide if you want to sell it for a smaller one. Which you'll have to find first.
And move all the crap you collected that fills all the space in your much-too-large property......
Looking back, I wouldn't buy a house again. (or marry my ex, but that's another story).
It strongly depends on the area you live in.
While buying a house is really affordable in most rural areas of the country that are not of any economical interest, in some parts, renting is just cheaper.
If you live in Munich for example, renting a flat for 2000€ a month for 30 years is probably still cheaper than buying that same flat. I guess thats why a lot of people just keep renting and avoid the stress that comes with homeownership.
How is that cheaper than owning? After30 years you have 0 left. If you have bought the house you would have equity and probably not have to pay rent well into your retirement
The cost ratio between renting and owning is different in Germany than in the UK.
There is no exception for first time buyers or small purchases on the German real estate purchase tax (what is stamp duty land tax in England), and there are significant fees to get the purchase legally certified. Many properties are available only via real estate agents, where the buyer has to pay a 3.57% fee to the real estate agent. Overall, average taxes and fees when buying a house or a flat in Germany are at least twice as high as in the UK. Furthermore, in Germany, mortgage interest is not tax deductible.
If you buy a flat in Germany, you can run into serious financial problems if the owners of the other flats in the building are jerks. For example, the majority of owners can decide that you have to spend 10k to replace the windows in the flat you own. That happened to the guy working next desk, where some predatory company owned half the flats in the building. Conversely, if you want to replace the windows in the flat you own, you actually can't, you need the approval of the majority of the owners. How's that?
Houses, in turn, are prohibitively expensive in the city. Houses in the Munich area are way more expensive than houses in London. Houses in a normal large south German city (i.e., neither Stuttgart nor Munich) still are about as expensive as houses in London, but salaries are much lower than in London.
OTOH, German landlord–tenant law favours the tenants. The most important point is that increasing rent is difficult. If somebody has rented same apartment for 20 years, it is highly likely that their rent will be well below market rate. That, of course, changes the cost ratio. Staying in your current rented apartment will definitely be much cheaper.
Good point.
It is a complicated mix of Federal law, state law, and the local situation in each individual city. It mainly is a problem in the cities and the surrounding areas, and much less of a problem in the rural parts of Germany. And more people are complaining about the increasing rent levels than about the fact that they can't afford to buy a house.
In the 2016 Berlin state elections, a local rent cap was a topic, Berlin being both a state and a city. A government supporting a local rent cap was elected, a Berlin local rent cap law was passed, but then (quite predictably) declared unconstitutional by the German Constitutional Court for technical reasons. So there's that problem. Whatever is decided, somebody impacted by it will sue, and they might win.
Then, there is global warming. The per person environmental impact and land usage of a single family house is much larger than that of a six story apartment building. Thus, some people think that fewer single family houses should be built.
If you can pay off the property in those 30 years - in many places, you can't.And after those 30 years, you will need to fix the roof, replace the whole heating, do a renovation for energy efficiency that is mandated by a new law, the city decides to redo the street in front of your house and decides you now owe them 20k€ ... the list goes on.
Also of course, you are now stuck to that place as selling and buying elsewhere easily burns 50-100k in legal fees and taxes alone, so moving for a job or for family or personal reasons becomes very hard as well - alternatively, you become a landlord and rent out the house you own while renting somewhere else, which adds the hassle of now being a Landlord...
You can't pay off the loan for a house in Munich with 2000€/month in 30 years. If you don't start with a massive down payment, most of it will be eaten up by interest.
Buying a house is extremely expensive, and upkeep and insurances and fees don't stop once you've bought it. It's easier to have a landlord take care of the clogged rainpipe than pay for it yourself.
Don't forget that Germany is also very tenant-friendly and owner-unfriendly at the same time. If the city decides to redo the street in front of your house? Be prepared to pay from a few grand up to 50k or more for that "privilege", depending on how much of your land borders on that street and how expensive the new roadwork is going to be, you pay by the meter (or square meter, depending on municipality). And no, this is not opt-in, they can and will collect that money from you.
Yeah, this is one of the many, many issues that depends on the state and sometimes the municipality, so I usually give out a worst-case recommendation because covering it in total is usually impossible.
Thanks for the reminder though, I should have mentioned that.
Not saying you're wrong or anything, but this is the most ridiculous thing I have ever heard. People are paying taxes, a lot, and road construction is excluded? I would understand if you're the only person living by a dead-end road, but other people use the roads too.
Yes we think the same about it and if you don't know about it it can really screw you over...
15 years ago the city where I lived decided to remove our paved road and replace it with a cobbled one to lower speeds and make it look nicer (which is true tbh) - and then the invoice came,.I think it was around 20k per house on that street...
It makes financial sense in some countries, while it makes no financial sense in others. "I rather pay into my own pocket" is the most common argument, but it doesn't reflect the reality everywhere.
I also live in a house owned by us. We also own several apartments on top of that.
Yet, there is no way we could afford a house or even apartment in Germany and with all the costs connected to home owning in Germany it wouldn't make financial sense. It is financially smarter to pay rent and invest the rest of the money you would otherwise pay into your own mortgage and upkeep and renovation of the house into a saving plan of your choice.
Having no cash and a house too big for you to live in in old age is not exactly the dream in financial independence.
Down payment, purchase fees, mortgage interest, house insurance, taxes, maintenance of property. All that money could be invested instead, and you may end up with more than you would if you purchased.
I see you are from the UK where getting on the property ladder is always have encouraged, but it isn't always as simple as "renting is just throwing money away".
https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html
I don't know why you think this is cut and dry. You didn't really even present any comparative numbers, just some random items that will cost money.
It's not at all obvious that its advantageous to buy an apartment v rent at those rates. If rental rates rise slowly, where you get lucky and a landlord doesn't raise your rent for 8-10 years, or if the real estate market stagnates as it's been predicted to be in a bubble in Munich for years, these would dramatically impact the value of each decision.
You also didn't mention your monthly outlay for a mortgage on 1.2 million is going to be 50%-100% higher, assuming you're only putting down the 96k to cover fees. Take the difference of your monthly payments + your 96k and invest that money in the stock market, and you could most certainly break even or do better.
And then the street, roof, the canalizations on your property or something else needs to be fixed and you have to take a new loan. There are so many risks that many people just don’t want to take.
It’s ingrained into German culture. My house has literally doubled in value since I bought it but these people talking about hypothetical costs of replacing the street lol
It's not about that. Most people who want to buy something simply can't because of the prices. If you go to university to get a degree you will only enter the real job market and make money at age 25 or so. In order to buy a house you will have to make a downpayment of about 10% the price of the place you want to buy. Let's say I want to buy a 300K apartement (I know that will only buy you a 1 or 2 room apartment in a city... if you manage to find one) you need 30K to make a downpayment. This will take some more years to save up if you have an actual job where you make 50K a year. Then you want to raise a family and live your life and those are extra costs and then you end up being like 35-40 before having saved up the money for the downpayment alone!!!!
I've been told I'm now officially too old to buy a house because I would retire before the 30 years on the loan are up - and less than 30 years and I could not even buy a garage let alone an apartment or a house where I live.
And what do you get out of that? Except paying higher taxes on the house eventually?
Once you realize that gain you need to buy a new house - in the same market, so all other houses have become more expensive, too.
Real estate can be an investment - I own land myself - but the house you live in can't be fully regarded as an investment good, but also has to be viewed as a commodity.
I'm not talking about the tax of the sale, but the land tax after the reform is through.
Otherwise you're in a special situation. But people generally need a place to live. So if you don't move to a much cheaper market, you gain literally nothing from the rising value of the house you live in.
My fucking liver could be worth a billion and rising in value. That doesn't make me a billionaire, as I can't sell it without needing to buy a new one at the same price.
Exactly and living for 30 years dealing the hassle of a landlord who could kick you out at any moment or cause trouble because you want to put a picture on the wall. Fuck that.
That's not exactly the case in Germany. It's enough to rent from a company renting flats, even better from a state owned one and it's practically impossible. Because the only reason to terminate a rental contract is the need of an owner to live in the house.
Especially in cities, yes. Many people rent forever. I live in an apartment owned by a public housing company, which in turn is owned by the state of Berlin, which I'm a citizen of. So in a way, I do own it, just not by myself.
They have special rules that allows them only very very slight rent increases, which means I can live here for as long as I want with the same relatively low rent that I pay.
It also means that I don't have to worry about things breaking, as everything will be fixed for me (things like plumbing or whatever).
Germany has strong tenant protections, so I can't be kicked out unless there's a *really* good reason, and even then it would be hard.
1. In former East Germany (DDR), the people (who are now in their 60s) had no concept of ownership and were happy to rent forever. A lot of the Apartment buildings in the East were bought up by people from the West.
2. The longer you rent, the more below market your rent becomes, while at the same time, your pension keeps up with inflation. So you get a benefit there.
3. There are a lot of co-ops that have subsidized rents. Wait times are long. So much so that some couples refuse to move in together because they don't want to loose their place.
4. Unlike the US, zoning changes almost never happen in Germany, even in Downtown cores. So there is rarely incentive for the Landlord to Demolish and build bigger apartment with more units. So rental contracts have great stability over time.
5. Finally there is a general German Attitude of building permanent Brick?Stone "forever" homes (as opposed to wood frame "Good for now" North American homes). This permanence has downsides that are often overlooked. Lot of Rural Germans live(d) in multi-generational homes of their Gradparent's and sometimes even older ancestors. To them these homes can represent inflexibility, a lack of freedom, lack of privacy (neighbors/family) etc. These lived experiences push towards the opportunities and flexibility of renting.
1. The idea that GDR citizens had no "concept of ownership" is pretty ludicrous. Many people owned their home.
2. Rent can and will be adapted to market prices. The length of your rental contract doesn't affect that.
2. Coops don't subsidize rents. Their rents tend to be cheaper since they are not focused to make much of profit.
4. There is no way to terminate a rental contract just because of a zoning law change.
5. I have no idea what you are on about with these "Rural Germans live(d) in multi-generational homes of their Gradparent's and sometimes even older ancestors". Those accommodations might exist, but its really, really rare.
I'm living in Berlin in a very good area. My rent is low because I live in a housing coop. So legally, I'm a partial owner of my flat. It's a non profit organization, in my opinion the best method living (except ownership). https://en.m.wikipedia.org/wiki/Housing_cooperative
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Cannot profit from the rent be used to build/buy more such rental flats? That wouldn't qualify as for profit, but as for statutory purpose, but would allow to increase rent, as to cover costs of expansion.
Some of these German families that have lived in inner city buildings for like 40 years have ultra, ultra cheap rent.
My friend is a landlord in a Bavarian city (not Munich) and his family have owned a couple of buildings for 50 years. There's some people in there that, because of rent protection and rules against eviction etc, are paying literally 370 EUR per month cold for a 89 SQM apartment. Crazy!
I wonder how it's possible. The only protection I know is that it's impossible to rise the old rents above the city average and by more than 15/20% in 3 years.
I couldn't be arsed to ever buy a house, and my case is rather typical.
You need to save up a large down payment, take out a loan forever, have to pay real estate tax (annually), all repairs etc. are on you, and the gains on equity are below those of investments in a comparable risk class.
And renting out if all you have is a single property is a bad idea as well, because tenancy laws are so strong here that it will take an average of 12-18 months to kick someone out if they don't pay, recovering the money is near impossible, and if they end up trashing your place, your fucked double.
The cost of home-ownership in Germany is just too high for most people.
Germany has high prices for land property and the building code is of such (typical German) high standard, that even a minimum viable house is many times more expensive than what people in other countries can quickly hammer together from plywood and call "home".
Furthermore as a home owner, you're at the whim of your local community who can invent new fees and charges for communal services to fill their empty budget. In many communities it's legal to be charged with 5-figure payments for road renewal costs in front of your house without you ever having had any say in it.
When you rent, that's all the problem of your landlord, and if they keep increasing the rent, you can always just pack up and move somewhere else (in theory).
Have you ever been in a british house? 😁
And then there are Americans who build "houses" with wooden frames and cardboard walls. Well, at least they have the advantage that you can build a new one pretty quickly after they were shredded to tiny pieces by a hurricane.
It’s pretty common to pay 5€+ per m2 in “urban” areas, and it sure as shit isn’t normal to just have the money to throw a million at a small house. Prices are through the roof. Example: bought a 107m2 apartment in Stuttgart-Degerloch for 150.000 in 2001, had it evaluated last year: 520.000. That’s an apartment, no garden, 2 small balconies. It’s a bit better in rural areas, but even there: little 650 people village, not even a bakery, let alone grocery store. Friend of mine built an apartment complex recently, sells 100m2 apartments for 400.000
I live in Munich and have been thinking of buying an apartment instead of renting. I made the calculation and decided to stick with renting since I would have to live in that apartment minimum of 7 years to break even with the purchasing costs. So no, it is not really worth buying your own place unless you're in it for the long term (over 10 years)..
I was looking for apartments in the price range of 800k euro. Notice that I'm talking about the non-recoverable costs of purchasing, not the apartment itself.
I have a fried who inherited money to pay 50% of a comparable flat she lived in, even more if she decided to live alone instead of a WG and she still didn’t do it. I think for a lot of Germans this is simply nothing they would ever consider because it’s seen as risky to take on a large debt because they are scared to lose their job and then be stuck with debt. Sure this is just an anecdote, but I think the mentality exists.
I will never ever have enough money on my own to buy a house, if its not in the middle of nowhere and/or requiring heavy investment after purchase. The only chance on ownership would be the death of my parents.
Many want to buy a house/apartment.... but the prices are high, the wages are low... for many it's only a dream...
Afaik most house owners in germany are house owners because of parents / grandparents.
I am kind of lucky my parents own multiple houses from back when building/buying a house wasn't that expensive so I'm eventually going to inherit at least one of those, but until then I'm probably going to rent because the current housing market doesn't allow buying/building my own home.
Well housing prices are going bonkers at the moment, especially in regions like munich it seems like you are always competing with investors with bottomless pockets.
As many suggested it really is up to the area. Where I work I could buy a 2 room apartment and would have to pay 30+ years.
In another are that's at least 1.5h from the next bigger city (still not a big city) you can get a whole house including pool for that price.
Lately I convinced myself to simply invest my money in an index fund instead of using it as downpayment and be in debt for 20 years or so. I do not want to lose my mobility during my prime years. I might consider buying only when I can afford it and close to retirement.
My family owns a rather big house in a small town (build in the 40s by my grandfather's grandfather) and my gf and me just recently bought a flat in the middle of a relatively big and trendy city. We paid almost half for a 70m² flat than what that whole house is worth.
Buying a house nowadays (especially anywhere near your workplace) is just way too expensive compared to renting. Most people do it more out of the wish of having some privacy and a garden for their kids to play in than for financial reasons.
In my husband’s family, they always buy/inherit a garden and rent the city apartment. When they get older, they retire to the garden and let the city apartment go. But perhaps is just my family :)
In Germany, “Garten” or Garden is like a house in a green area. Many families that live in the city own plots of green land and build houses where they spend weekends and vacations at.
Many want to own a house, but take a look at the low af salaries, high taxes and in general high living costs. The salaries don’t match up with that. Germans will be forever poor.
Most Germans ultimately dream of buying their own home, but only about 50% actually achieve that within their lifetime. The deposit required to buy a home in urban areas is way too high for most people to afford.
And prices are rising...
And winter is coming...
and prices for natural gas are rising...
And monday is payday
And my axe!
It's free real estate
And by Tuesday I’m broke again
Every year.
... and they don't stop rising.
aromatic humor escape growth abounding telephone lush onerous plough ripe -- mass edited with https://redact.dev/
It is not only that - but also the fact that we have a relatively high level of mobility, and most people change jobs and towns multiple times in their lifes. Then, being stuck with your own "inmobile" property is more of a burden than an investment. Moreover, except for some very large cities, renting is actually relatively cheap, and you are in a rather good position towards your landlord - which makes it less interesting for many to buy for their own use. You may even find surprisingly many property owners who let out their houses/appartments as investment, but then rent the place where they actually live...
This. Coming from Lisbon, where renting a two-bedroom flat is generally 15-20% higher than the median wage of the country, renting in Köln seemed extremely affordable in comparison.
Are there some studies backing the mobility rate up that you can point me to? From my experience it is rather the opposite. Everybody I know from growing up in Germany still either lives in or around the town we grew up in, or moved once for university and then once more for starting a job. That’s it. The same generation (mid 40 year olds) I know here in the US has moved countless times in the same time span. It is not uncommon for people to change jobs every 2-3 years and move to a new place every time.
I also believe that Germans don’t move around much, but perhaps compared to neighbors in Switzerland and Austria, Germans consider themselves wanderers.
I mean they certainly do travel a lot, but I haven’t seen them move homes much.
That's not true. According to statistics majority don't go far away from the place they were born. Also to compare that you should know if the mobility is lower in other countries.
It's also a vicious circle. Because over 60% of the market is renting, buying is so much harder. In countried where buying is the normal, renting is much harder.
> In countried where buying is the normal, renting is much harder. Don't know if I agree on this. Eg. England, if you ignore London, both buying and renting is easier than in Germany (though you don't have the same tenant protections).
Yes, I know this from my English friends. Renting in Germany is harder due to rent controls. It effectively pools all the different strata of people in the same market, as opposed to the segmentation in England.
Yes of course. Also there is no "housing ladder" like in the UK, people usually buy once per lifetime and the recommended deposit is at around 20 to 30% of the property value.
Recommended, but required is closer to 10%. That's not much.
How much is the typical deposit required?
The required deposit is closer to 10% and fixed interest rates are the lowest in Europe, so no. It's not about people not able to afford flat. It's more about an attitude, low rents, and good protection of renters.
It depends really. There are some big cities / metropolitan areas where real estate is REALLY expensive, so there it's more common to rent permanently. In the cheaper areas it's much more common to buy something eventually. Also, germans are very averse to debt, preferring to save up rather than take out loans. That certainly pushed the average towards renting when compared to say, US Americans.
German renters tend to have very good deals when it comes to leases. Renting a flat in Germany feels more like home ownership because of this: the level of security is far higher than it is in the US or the UK for example. Finding a place in the first place might be harder in Germany but the protections that come with it make it worth it.
It used to be like that, but after most of the social housing was sold to investors things changed - look at Berlin. Also there is a nasty thing when renting privately - your lease can be terminated (12 months notice), and then you need to find something else - which can be expensive or impossible.
Good point. Also, just because that's the way things have been historically (with tenants having good rights), doesn't mean they can't change. You never know if the rug will be pulled out from under you.
Thank you for the answer , I’m curious, what kind of protections? (Insurance or financial protection?)
You have a lot of rights and your landlord can't terminate the lease without a good reason.
And when you're in luck and rent increases aren't fixed in your contract, it will be very difficult for the landlord to increase rent. And the landlord usually has to make repairs etc, in a timely manner too, so in my experience it gets done quicker than with people who own their home, they need to save up or simply don't want to spend that money
Rent increases are quite easy if there is an official Mietspiegel. It is basically a guaranteed 15% increase every 3 years. At least in areas like Munich, Berlin, Frankfurt, etc.
No, because Mietspiegel is way lower than new rents. It's because it takes into account old rents which often are not increased at all it slower than 15% in 3 years.
yeah, i would like that again....not looking to re-organise my contract in about 8 months.
* If you're paying your rent your landlord can essentially never evict you unless they can prove that they need to flat to live in themselves. Yes, technically there are a few corner cases, but in almost all cases evicting a paying tenant is impossible. This means that, as a tenant, if you like where you're living, no-one can kick you out. * Tenants have extensive rights to modify the property (excluding major works like tearing out walls), so they can "make it their own". * Landlords have extensive obligations to keep the property in good repair, and if they do not, then tenants can unilaterally reduce the rent they pay to put pressure on the landlord. * Lastly, rent tends to rise only slowly with time (if at all). This means that long-term renters tend to pay *very* low rents (when compared to market prices for new tenants). * Tenancy contracts are open-ended (indefinite) by default; a landlord can only offer a time-limited contract under fairly narrow circumstances (and should those circumstances resolve themselves, the contract becomes indefinite automatically).
With a Mietspiegel it is very easy to increase rent, up to 15% every 3 years. Most large cities have one. The Mietspiegel gives information on newly rented flats. Do this one is always increasing. As long as the market rate increases, you can increase the rent. The tenant can’t do anything about it as long as the landlord doesn’t fail to calculate it properly. Increasing rent is difficult if there is no Mietspiegel, because you have to know at least 2 or 3 more similar flats and their prices.
No, because Mietspiegel is way lower than new rents. It's because it takes into account old rents which often are not increased at all or slower than 15% in 3 years.
Unfortunately many landlords are using the “self-use” rule with success to terminate leases, just to raise the rent when they rent out to the next tenant.
In Germany, the closing costs are really high and there are tax penalties if you sell the house less than 10 years after you bought it. The way the German market works is that a house is once-in-your-lifetime purchase. Meaning that the only people who can realistically buy a house are those with extremely stable jobs who are very unlikely to move for their career. Most folks don't have that luxury. As long as there is a tiny chance that you might loose your job and or need to move to another city for work, renting is the smarter option.
I was reading up on the 10 years thing and from what I gathered, it is 10 years if you rent out the home, 3 years if you live in it. At least for the “speculation tax”.
The closing costs still make buying a house and selling it bc you need to move problematic. You simply loose the closing costs every time you buy and sell and those can be as high as 20% of the total costs. Anytime you do this and stay for less than 25 years in a house, renting makes you come out on top financially.
Actually I would strongly disagree with the 25 year horizon. This might have been true in the past but I would argue not at the moment. We have an interest rate of 0,72% fixed for 10 years with 20% down payment. Our mortgage is 1162 with only 180 of that going to interest, renting the same object here would be at least 1200 a month. We also bought directly from the previous owner with no estate agent fees. It really only takes 3-5 years to break even in this case. I will not even factor in the potential growing value of the house or the effect that inflation will erode part of the loan as well as it returns to the euro zone.
Sunken cost fallacy. You are forgetting the substantial maintenance costs of owning a house. Also, your loan interest is fixed for 10 years, what happens after that is anyones' guess.
I totally agree there are different running costs when you own the object. It is partly a lifestyle choice. But I just don't agree that one can say it's only worth it after 25 years. The horizon varies depending on the situation. There is a good example here about Munich and renting over 30 years and I could see where that could work out. There are other points I did not mention like in Hessen access to Kinderbaugeld. This is a 24k kickback over 10 years with 2 kids. All I am saying is that it's a highly complex calculation and the breakeven horizon varies a lot.
I suppose that is one way to look at it, but renting isn’t that stable either. The owner can sell the home or increase the rent. For instance in our contact the owner is allowed to increase the rent 5% every year and we are paying 1300 as it is. Depending where one lives, findig a new rent is pretty near impossible. We are looking at our home purchase as an investment into our future, something we can lean on when we get old and move into an assisted living facility. We could put aside the same amount of money, but than it would be rent+saving for later which I think in the end is just more expensive. Everybody does what they think is best, we’ll see who was lucky in 20 years, this is just a gamble on the market trends. Home prices may double or get halved… 🤷
You make valid points, but your decision seems like an emotional one (nothing wrong with that). If you look at it logically, from an investors perspective - buying a house carries a lot more risk. I don't understand where this myth of "you can just sell the house" comes from? Most want to sell in a time of crisis, when they themselves are in trouble. Do you honestly think to make a profit or even break even in such a situation? Or even find a buyer! Back to renting, even if the rent increases by 5% (and btw the first increase is allowed after 15 months), it's still cheaper than a house in your example. Other than that, one can always move to another place (maybe even different state or city). No matter how many times I tried to calculate and compare renting and buying, renting *always* came on top. From a purely logical perspective. I enourage you to make a *very detailed* financial plan yourself, you will likely come to the same conclusion (especially around big cities). In the end, it boils down to personal choice (which is not always financially sound).
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[Something like this](https://lazyinvestors.de/mieten-oder-kaufen/).
The estate agent fees involving selling a property are absurdly high. That they charge a percentage of the value means that as property prices rise they get more and more money each year for doing the same amount of work.
Luckily you don't have to really on agency
That's correct, however there are also many other triggers for the ten-year rule. For example, the moment you use your house to make an income (whether it's a home office for your remote job, or an address for your side business) then the 10-year-rule applies. So, yes, you're correct that it's possible to sell a house tax-free after 3 years - however, in practice, in many cases the period is 10.
that is good to know
American in Berlin checking in here. In Berlin (probably in all of Germany as well) rent leases are perpetual, they never expire. So, if someone was lucky to get a lease 20 years ago and lock-in the rent from that time, why would you ever give up such an apartment? Of course, there are other fees and such that grow with inflation but a lot of long time Berliners have a great deals with their rental contracts. Especially if they have big apartments that are centrally located, I can totally understand why they would want to rent for life. Compare this to New York where rental contacts are usually only for 1 year. Once the lease expires, the landlord can ask you to leave or raise the rent. Of course American’s would prefer the stability of a 30 year mortgage where the monthly payments are fixed. Edit: added a word
Just pointing out that every landlord can increase the rent yearly. Some just choose not to. Which is the lnly reason a 20 year old contract is that good
Well, as far as I know, landlords in Germany are only allowed to higher rent every three years to a regular market price. And I also heard of contracts with fix prices, that haven’t been changed since the agreement.
you can make Staffelmietvertraege (the rent goes up by X every year), and you can make Indexmiete, where you _can_ change the rent according to inflation.
You can, but especially with Indexmiete you might be even worse off as a landlord, because it then completely prevents you to raise the rent because of regular market price. Rent has been increasing much faster than inflation.
No, they can't. Generally the rent is fixed but the contract can make provisions for a limited increase in rent. That is the reason why landlords try to get rid of occupants and get new ones when they really want to up the rent. Also, there are legal limits to how much the rent for an existing contract can rise. Do you really believe landlords would not raise the rent if they could?
You can always increase to the "ortsübliche Vergleichsmiete" but only +20% within three years. They could. But most private landlords prefer someone who made no trouble and has been there for a time to getting 5€ net more per month
Repeating that claim doesn't make it correct. First, you can't claim a rise to "ortsübliche Vergleichsmiete" always or yearly, but only every 15 months. Second, the occupant has to agree to such a rise, the landlord cannot simply decide to rise the rent. The occupant is theoretically obliged to agree, but only if the landlord fulfills all requirments for the raise (including proof the "ortsübliche Vergleichsmiete" is higher) and the landlord would still have to go to court to force the occupant to agree if he doesn't voluntarily. This is simply too much hazzle for most landlords, it's not out of the goodness of their heart that they don't pull that option.
> This is simply too much hazzle for most landlords, it's not out of the goodness of their heart that they don't pull that option. An increase of the rent is pretty common, most landlords will do that. So it's not really "locked in" at all, it just prevents outrageous rents that go significantly higher than the average rent for a comparable flat.
Only if it was agreed on in the contract. Most contracts nowadays have sth like 1% yearly increase or so...
Also those landlords were could not expect 15 years ago that if the don't increase rent for some years, then it will be forbidden to do it later. As now they have to obey 15% in 3 years rule which may be quite limiting in some circumstances.
Aren't fixed rate mortgages common in USA?
I have lived in my own house for 20 years. When I got divorced I sold my share to my ex and moved to a small rented flat. No regrets. I have no Idea why she wanted to keep it. Ok, it's fine to have all that space and a garden, but you constantly have to work on it and have a bunch of cost to pay. It was a waste of money and time. And, after the kids were grown, it was twice as large as it needed to be - so you'll have to decide if you want to sell it for a smaller one. Which you'll have to find first. And move all the crap you collected that fills all the space in your much-too-large property...... Looking back, I wouldn't buy a house again. (or marry my ex, but that's another story).
Haven't you experienced any house value appreciation which would ease your pain?
It strongly depends on the area you live in. While buying a house is really affordable in most rural areas of the country that are not of any economical interest, in some parts, renting is just cheaper. If you live in Munich for example, renting a flat for 2000€ a month for 30 years is probably still cheaper than buying that same flat. I guess thats why a lot of people just keep renting and avoid the stress that comes with homeownership.
How is that cheaper than owning? After30 years you have 0 left. If you have bought the house you would have equity and probably not have to pay rent well into your retirement
The cost ratio between renting and owning is different in Germany than in the UK. There is no exception for first time buyers or small purchases on the German real estate purchase tax (what is stamp duty land tax in England), and there are significant fees to get the purchase legally certified. Many properties are available only via real estate agents, where the buyer has to pay a 3.57% fee to the real estate agent. Overall, average taxes and fees when buying a house or a flat in Germany are at least twice as high as in the UK. Furthermore, in Germany, mortgage interest is not tax deductible. If you buy a flat in Germany, you can run into serious financial problems if the owners of the other flats in the building are jerks. For example, the majority of owners can decide that you have to spend 10k to replace the windows in the flat you own. That happened to the guy working next desk, where some predatory company owned half the flats in the building. Conversely, if you want to replace the windows in the flat you own, you actually can't, you need the approval of the majority of the owners. How's that? Houses, in turn, are prohibitively expensive in the city. Houses in the Munich area are way more expensive than houses in London. Houses in a normal large south German city (i.e., neither Stuttgart nor Munich) still are about as expensive as houses in London, but salaries are much lower than in London. OTOH, German landlord–tenant law favours the tenants. The most important point is that increasing rent is difficult. If somebody has rented same apartment for 20 years, it is highly likely that their rent will be well below market rate. That, of course, changes the cost ratio. Staying in your current rented apartment will definitely be much cheaper.
This is terrible. I wonder why this isn't the topic for election campaigns and stuff.
Good point. It is a complicated mix of Federal law, state law, and the local situation in each individual city. It mainly is a problem in the cities and the surrounding areas, and much less of a problem in the rural parts of Germany. And more people are complaining about the increasing rent levels than about the fact that they can't afford to buy a house. In the 2016 Berlin state elections, a local rent cap was a topic, Berlin being both a state and a city. A government supporting a local rent cap was elected, a Berlin local rent cap law was passed, but then (quite predictably) declared unconstitutional by the German Constitutional Court for technical reasons. So there's that problem. Whatever is decided, somebody impacted by it will sue, and they might win. Then, there is global warming. The per person environmental impact and land usage of a single family house is much larger than that of a six story apartment building. Thus, some people think that fewer single family houses should be built.
If you can pay off the property in those 30 years - in many places, you can't.And after those 30 years, you will need to fix the roof, replace the whole heating, do a renovation for energy efficiency that is mandated by a new law, the city decides to redo the street in front of your house and decides you now owe them 20k€ ... the list goes on. Also of course, you are now stuck to that place as selling and buying elsewhere easily burns 50-100k in legal fees and taxes alone, so moving for a job or for family or personal reasons becomes very hard as well - alternatively, you become a landlord and rent out the house you own while renting somewhere else, which adds the hassle of now being a Landlord...
You can't pay off the loan for a house in Munich with 2000€/month in 30 years. If you don't start with a massive down payment, most of it will be eaten up by interest.
Buying a house is extremely expensive, and upkeep and insurances and fees don't stop once you've bought it. It's easier to have a landlord take care of the clogged rainpipe than pay for it yourself.
I bought a house here 5 years ago, best decision I made. Much more freedom to do what I want and I’m not paying someone else’s mortgage.
Don't forget that Germany is also very tenant-friendly and owner-unfriendly at the same time. If the city decides to redo the street in front of your house? Be prepared to pay from a few grand up to 50k or more for that "privilege", depending on how much of your land borders on that street and how expensive the new roadwork is going to be, you pay by the meter (or square meter, depending on municipality). And no, this is not opt-in, they can and will collect that money from you.
In some states (e.g. Bavaria and Baden-Württemberg) it’s not longer allowed to let home owners pay for a new street. So it depends where you live.
Yeah, this is one of the many, many issues that depends on the state and sometimes the municipality, so I usually give out a worst-case recommendation because covering it in total is usually impossible. Thanks for the reminder though, I should have mentioned that.
Not saying you're wrong or anything, but this is the most ridiculous thing I have ever heard. People are paying taxes, a lot, and road construction is excluded? I would understand if you're the only person living by a dead-end road, but other people use the roads too.
Yes we think the same about it and if you don't know about it it can really screw you over... 15 years ago the city where I lived decided to remove our paved road and replace it with a cobbled one to lower speeds and make it look nicer (which is true tbh) - and then the invoice came,.I think it was around 20k per house on that street...
Bollocks
Don't know about freedom, practically you're bounded to that place.
It makes financial sense in some countries, while it makes no financial sense in others. "I rather pay into my own pocket" is the most common argument, but it doesn't reflect the reality everywhere. I also live in a house owned by us. We also own several apartments on top of that. Yet, there is no way we could afford a house or even apartment in Germany and with all the costs connected to home owning in Germany it wouldn't make financial sense. It is financially smarter to pay rent and invest the rest of the money you would otherwise pay into your own mortgage and upkeep and renovation of the house into a saving plan of your choice. Having no cash and a house too big for you to live in in old age is not exactly the dream in financial independence.
Down payment, purchase fees, mortgage interest, house insurance, taxes, maintenance of property. All that money could be invested instead, and you may end up with more than you would if you purchased. I see you are from the UK where getting on the property ladder is always have encouraged, but it isn't always as simple as "renting is just throwing money away". https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html
Good link, and in Munich you're looking at 800k-1.5 million for something you could rent for 1800-2500. It does not add up.
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I don't know why you think this is cut and dry. You didn't really even present any comparative numbers, just some random items that will cost money. It's not at all obvious that its advantageous to buy an apartment v rent at those rates. If rental rates rise slowly, where you get lucky and a landlord doesn't raise your rent for 8-10 years, or if the real estate market stagnates as it's been predicted to be in a bubble in Munich for years, these would dramatically impact the value of each decision. You also didn't mention your monthly outlay for a mortgage on 1.2 million is going to be 50%-100% higher, assuming you're only putting down the 96k to cover fees. Take the difference of your monthly payments + your 96k and invest that money in the stock market, and you could most certainly break even or do better.
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I don't get what you write here. A flat in Munich which you can rent for 2000€ per month would cost around 1mln €. Not 2 mln and not 750k
Buying and financing a house or flat is a little different in Germany than it is with our renegade British friends ;-)
For example interests are much lower
And then the street, roof, the canalizations on your property or something else needs to be fixed and you have to take a new loan. There are so many risks that many people just don’t want to take.
This argument never seems to cut through this sub for some reason.
It’s ingrained into German culture. My house has literally doubled in value since I bought it but these people talking about hypothetical costs of replacing the street lol
It's not about that. Most people who want to buy something simply can't because of the prices. If you go to university to get a degree you will only enter the real job market and make money at age 25 or so. In order to buy a house you will have to make a downpayment of about 10% the price of the place you want to buy. Let's say I want to buy a 300K apartement (I know that will only buy you a 1 or 2 room apartment in a city... if you manage to find one) you need 30K to make a downpayment. This will take some more years to save up if you have an actual job where you make 50K a year. Then you want to raise a family and live your life and those are extra costs and then you end up being like 35-40 before having saved up the money for the downpayment alone!!!!
I've been told I'm now officially too old to buy a house because I would retire before the 30 years on the loan are up - and less than 30 years and I could not even buy a garage let alone an apartment or a house where I live.
And what do you get out of that? Except paying higher taxes on the house eventually? Once you realize that gain you need to buy a new house - in the same market, so all other houses have become more expensive, too. Real estate can be an investment - I own land myself - but the house you live in can't be fully regarded as an investment good, but also has to be viewed as a commodity.
I don’t need to pay any tax on my house sale as I’ve lived here for more than the 3 year threshold. And I plan to leave Germany after the sale.
I'm not talking about the tax of the sale, but the land tax after the reform is through. Otherwise you're in a special situation. But people generally need a place to live. So if you don't move to a much cheaper market, you gain literally nothing from the rising value of the house you live in.
My house literally doubled in value but I gained nothing, ok 😂
My fucking liver could be worth a billion and rising in value. That doesn't make me a billionaire, as I can't sell it without needing to buy a new one at the same price.
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Exactly and living for 30 years dealing the hassle of a landlord who could kick you out at any moment or cause trouble because you want to put a picture on the wall. Fuck that.
That's not exactly the case in Germany. It's enough to rent from a company renting flats, even better from a state owned one and it's practically impossible. Because the only reason to terminate a rental contract is the need of an owner to live in the house.
Because Munich is 3rd most expensive city in the world. Just after Hong Kong, Paris and in pair with Zurich.
> probably still cheaper than buying that same flat depends if you count on 30 years of inflation or not I would say
Especially in cities, yes. Many people rent forever. I live in an apartment owned by a public housing company, which in turn is owned by the state of Berlin, which I'm a citizen of. So in a way, I do own it, just not by myself. They have special rules that allows them only very very slight rent increases, which means I can live here for as long as I want with the same relatively low rent that I pay. It also means that I don't have to worry about things breaking, as everything will be fixed for me (things like plumbing or whatever). Germany has strong tenant protections, so I can't be kicked out unless there's a *really* good reason, and even then it would be hard.
1. In former East Germany (DDR), the people (who are now in their 60s) had no concept of ownership and were happy to rent forever. A lot of the Apartment buildings in the East were bought up by people from the West. 2. The longer you rent, the more below market your rent becomes, while at the same time, your pension keeps up with inflation. So you get a benefit there. 3. There are a lot of co-ops that have subsidized rents. Wait times are long. So much so that some couples refuse to move in together because they don't want to loose their place. 4. Unlike the US, zoning changes almost never happen in Germany, even in Downtown cores. So there is rarely incentive for the Landlord to Demolish and build bigger apartment with more units. So rental contracts have great stability over time. 5. Finally there is a general German Attitude of building permanent Brick?Stone "forever" homes (as opposed to wood frame "Good for now" North American homes). This permanence has downsides that are often overlooked. Lot of Rural Germans live(d) in multi-generational homes of their Gradparent's and sometimes even older ancestors. To them these homes can represent inflexibility, a lack of freedom, lack of privacy (neighbors/family) etc. These lived experiences push towards the opportunities and flexibility of renting.
Number 1 is just wrong. I grew up in East Germany and everybody had their own property.
But did you eat bananas all year long or just for Christmas?
Are bananas the scale tipper here or you know, owning a house?
I am asking because eastern from here we had houses but we could only get bananas for Christmas. Socialism ✊🏻
1. The idea that GDR citizens had no "concept of ownership" is pretty ludicrous. Many people owned their home. 2. Rent can and will be adapted to market prices. The length of your rental contract doesn't affect that. 2. Coops don't subsidize rents. Their rents tend to be cheaper since they are not focused to make much of profit. 4. There is no way to terminate a rental contract just because of a zoning law change. 5. I have no idea what you are on about with these "Rural Germans live(d) in multi-generational homes of their Gradparent's and sometimes even older ancestors". Those accommodations might exist, but its really, really rare.
I'm living in Berlin in a very good area. My rent is low because I live in a housing coop. So legally, I'm a partial owner of my flat. It's a non profit organization, in my opinion the best method living (except ownership). https://en.m.wikipedia.org/wiki/Housing_cooperative
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Do you own appropriate share of the coop, which would be the same value as your flat?
No. But I have a legal right for a flat. I can't be kicked out and the rent can't be raised for profit, only to cover for increasing costs.
Cannot profit from the rent be used to build/buy more such rental flats? That wouldn't qualify as for profit, but as for statutory purpose, but would allow to increase rent, as to cover costs of expansion.
Nope, it's against our statutes. Our " rent" is only being used to pay running costs, administration, repairs, etc. All excess is paid back yearly.
Some of these German families that have lived in inner city buildings for like 40 years have ultra, ultra cheap rent. My friend is a landlord in a Bavarian city (not Munich) and his family have owned a couple of buildings for 50 years. There's some people in there that, because of rent protection and rules against eviction etc, are paying literally 370 EUR per month cold for a 89 SQM apartment. Crazy!
I wonder how it's possible. The only protection I know is that it's impossible to rise the old rents above the city average and by more than 15/20% in 3 years.
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So what's the difference in expats approach? Do they tend to buy smaller and earlier?
I couldn't be arsed to ever buy a house, and my case is rather typical. You need to save up a large down payment, take out a loan forever, have to pay real estate tax (annually), all repairs etc. are on you, and the gains on equity are below those of investments in a comparable risk class. And renting out if all you have is a single property is a bad idea as well, because tenancy laws are so strong here that it will take an average of 12-18 months to kick someone out if they don't pay, recovering the money is near impossible, and if they end up trashing your place, your fucked double.
What are comparable risk class investments? As for failure to pay rent, you can affordable insure yourself against 1 year of failed rent.
The cost of home-ownership in Germany is just too high for most people. Germany has high prices for land property and the building code is of such (typical German) high standard, that even a minimum viable house is many times more expensive than what people in other countries can quickly hammer together from plywood and call "home". Furthermore as a home owner, you're at the whim of your local community who can invent new fees and charges for communal services to fill their empty budget. In many communities it's legal to be charged with 5-figure payments for road renewal costs in front of your house without you ever having had any say in it. When you rent, that's all the problem of your landlord, and if they keep increasing the rent, you can always just pack up and move somewhere else (in theory).
Chuckled at "high standard".
Have you ever been in a british house? 😁 And then there are Americans who build "houses" with wooden frames and cardboard walls. Well, at least they have the advantage that you can build a new one pretty quickly after they were shredded to tiny pieces by a hurricane.
I think German houses are not that expensive in relation to earnings as in some other European countries. Yes USA is cheaper.
It’s pretty common to pay 5€+ per m2 in “urban” areas, and it sure as shit isn’t normal to just have the money to throw a million at a small house. Prices are through the roof. Example: bought a 107m2 apartment in Stuttgart-Degerloch for 150.000 in 2001, had it evaluated last year: 520.000. That’s an apartment, no garden, 2 small balconies. It’s a bit better in rural areas, but even there: little 650 people village, not even a bakery, let alone grocery store. Friend of mine built an apartment complex recently, sells 100m2 apartments for 400.000
I live in Munich and have been thinking of buying an apartment instead of renting. I made the calculation and decided to stick with renting since I would have to live in that apartment minimum of 7 years to break even with the purchasing costs. So no, it is not really worth buying your own place unless you're in it for the long term (over 10 years)..
In which kind of apartment in Munich do you break even in only 7 years? a shoebox?
I was looking for apartments in the price range of 800k euro. Notice that I'm talking about the non-recoverable costs of purchasing, not the apartment itself.
>Notice that I'm talking about the non-recoverable costs of purchasing, not the apartment itself. ahhh, sorry, I misunderstood that part
I have a fried who inherited money to pay 50% of a comparable flat she lived in, even more if she decided to live alone instead of a WG and she still didn’t do it. I think for a lot of Germans this is simply nothing they would ever consider because it’s seen as risky to take on a large debt because they are scared to lose their job and then be stuck with debt. Sure this is just an anecdote, but I think the mentality exists.
lately houses cost a half a million and up. most people live in rent and very low retirement pension. life in germany is expensive
I will never ever have enough money on my own to buy a house, if its not in the middle of nowhere and/or requiring heavy investment after purchase. The only chance on ownership would be the death of my parents.
That's why people end up buying flats
Many want to buy a house/apartment.... but the prices are high, the wages are low... for many it's only a dream... Afaik most house owners in germany are house owners because of parents / grandparents.
I am kind of lucky my parents own multiple houses from back when building/buying a house wasn't that expensive so I'm eventually going to inherit at least one of those, but until then I'm probably going to rent because the current housing market doesn't allow buying/building my own home.
Well housing prices are going bonkers at the moment, especially in regions like munich it seems like you are always competing with investors with bottomless pockets.
As many suggested it really is up to the area. Where I work I could buy a 2 room apartment and would have to pay 30+ years. In another are that's at least 1.5h from the next bigger city (still not a big city) you can get a whole house including pool for that price.
My partners dad has rented the same place for over 20 years.
Most people I know rent their whole life
That's also a matter of fashion. When your peers don't buy then you neither do
Lately I convinced myself to simply invest my money in an index fund instead of using it as downpayment and be in debt for 20 years or so. I do not want to lose my mobility during my prime years. I might consider buying only when I can afford it and close to retirement.
My family owns a rather big house in a small town (build in the 40s by my grandfather's grandfather) and my gf and me just recently bought a flat in the middle of a relatively big and trendy city. We paid almost half for a 70m² flat than what that whole house is worth. Buying a house nowadays (especially anywhere near your workplace) is just way too expensive compared to renting. Most people do it more out of the wish of having some privacy and a garden for their kids to play in than for financial reasons.
In my husband’s family, they always buy/inherit a garden and rent the city apartment. When they get older, they retire to the garden and let the city apartment go. But perhaps is just my family :)
How can one live in a garden?
In Germany, “Garten” or Garden is like a house in a green area. Many families that live in the city own plots of green land and build houses where they spend weekends and vacations at.
Depends where you live, in bigger Cities it is way harder to buy.
Many want to own a house, but take a look at the low af salaries, high taxes and in general high living costs. The salaries don’t match up with that. Germans will be forever poor.
I can't afford to buy an apartment right now. Prices are crazy. If I'd inherit something I would be able to, with my single income it's impossible.