Think about the stress involved in searching for a new house, putting in the best bid and then getting all the necessary inspections done before finally handing it over to the solicitors. Then there’s maintenance, a 20 year commitment via a mortgage and fear that your house will lose value.
Think about the stress involved in searching for a new house, putting in the best bid and then getting all the necessary inspections done before finally handing it over to the solicitors. Then there’s maintenance, a 20 year commitment via a mortgage and fear that your house will lose value. When you put it like that, renting sounds like the best thing since the internet and Starbucks – and many Germans think so too: 59% of the Germany population rents.
With over 70% of Brits owning property, what do the Germans know about renting versus buying that we don’t?
According to finance reporter Matt Phillips, a href="http://qz.com/167887/germany-has-one-of-the-worlds-lowest-homeownership-rates/" target="_blank">many German’s don’t buy their homes as a consequence of the war. Without going into the nitty-gritty details, after the war the German economy was in tatters and many people were left with inadequate housing. It was in dire need of a government-intervened boost and the banks were not in a position to start giving out mortgages. Germany’s first housing law served to effectively boost construction of housing that was suitable for the average German family.
On the other side of the sea, Britain was suffering a similar housing crisis and the government’s approach was similar, but they focused heavily on public-funded housing. Accordingly to Phillips, “Economists think German housing policy struck a much better balance between government involvement and private investment than in many other countries”, whereas Britain’s housing quality suffered and for a number of years, rentals became associated with the less affluent. However, this is changing in Britain as many youngsters struggle to get a foot onto the property ladder due to spiralling buying costs, and buy-to-let investments have improved the quality of rental properties.
Britain’s house prices see much better growth than those in Germany. According to Dr Jan Linsin, head of research at a German property services company, "…young Germans don't feel too frustrated if they cannot get on the property ladder, whereas the Brits do. The difference in attitude reflects the difference in the housing markets – over the past 10 years UK residential property prices have nearly doubled, while in Germany they have risen a mere 2%-3%”. (reported in the Guardian). This is another reason many Germans keep renting.
Policies by banks and the government are also more lenient towards renters in Germany than they are in Britain. For a start, mortgage regulations are very stringent in Germany, requiring as much as a 20% deposit, whereas rentals are more affordable in the large German cities than they are in London. Renting is also tightly regulated in Germany, meaning that rises in rents are capped which also keeps rents low. Tenants are also required to paint the apartment white again and vacate the home in a good state, ensuring that Germans have come to expect good quality rental properties. Lastly, Germany has not seen property bubbles like Britain has, which means buying is not considered an exceptionally good investment.
Perhaps the German government is enlightened by preventing property bubbles and so prevents people over-extending on their equity, or perhaps the British government has the right idea to encourage buying property but also keep a reign on mortgage lenders. The truth is that things are changing for youngsters in Germany and Britain, with more Germans keen to get a foot on the property ladder - no-one wants to rent when they’re retired - and more Brits struggling to do so and renting well into their 30s or getting parental help. We leave it for you to decide on whether you think renting is better than buying or vice versa. But just remember that the buying process can be made a lot smoother for you by having the support of an online estate agent like Tepilo do the leg work for you.