Most Germans don’t buy their homes, they rent • Hacker News Board

Re: Most Germans don’t buy their homes, they rent

#101

Post by maxsilver » Mon, Oct 24, 2016, 1:47 PM UTC

premium-concern wrote: post #6

buro9 wrote: post #3

Earlier quoted context omitted.

Yup. Germany has one of the lowest adoption rates of credit products such as the humble credit card out of nearly all Western nations. Debt is not liked. Edit: From the same site, the linked article at the bottom has the answer: http://qz.com/262595/why-germans-pay-cash-for-almost-everyth... A better link: http://www.businessinsider.com/you-have-to-understand-german...

Yep. "Don't buy things if you can't pay for then." sounds reasonable, but some other countries seem to disagree. Not surprised that those countries suffer from government shutdowns over how much the debt ceiling is raised.

Disagree might not be the right word, "force" is probably more accurate. In many countries, it would be effectively impossible for most regular people to get basic living needs (like housing and transportation) if they couldn't buy them using some amount of credit.

Obviously it shouldn't be this way, it should be possible to save and buy these things outright. But since it effectively isn't (for many people, in many places) I wouldn't fault people for taking on debt to do things like put a roof over their head or get to work on time reliably.

Re: Most Germans don’t buy their homes, they rent

#102

Post by fwn » Mon, Oct 24, 2016, 1:47 PM UTC

mrottenkolber wrote: post #56

Germany is a two-class society divided into landlords and renters. A landlord will usually not own only one but ~3-20 houses that total to ~15-100 flats. The landlords often are renters themselves. When compared with big housing companies, private landlords require bigger profit margins, leading to low quality maintenance of existing houses and ex-orbital rents. Especially in crowded cities, rent regulation is non ex…

Spending 70% of your income on rent is far from inevitable in Germany.

Re: Most Germans don’t buy their homes, they rent

#103

Post by kbart » Mon, Oct 24, 2016, 1:47 PM UTC

whack wrote: post #39

The Germans seem to be far ahead of the curve here. From a financial planning perspective, buying a home results in: 1) The vast majority of your assets becoming concentrated in a single plot of land, in a single neighborhood, in a single city 2) Your future mobility to pursue jobs in other cities, becoming significantly constrained If you want to invest your savings, then invest them in the stock/bond markets. If yo…

"2) Your future mobility to pursue jobs in other cities, becoming significantly constrained"

Not necessarily. I can always rent out my flat for about the same monthly fee I pay for mortgage and rent a flat myself in other city/country in case of a good job opportunity. Sure, being in a debt for few decades has many drawbacks, but restricted mobility is not one of them.

Re: Most Germans don’t buy their homes, they rent

#104

Post by bryanlarsen » Mon, Oct 24, 2016, 1:49 PM UTC

standel wrote: post #42

It's an interesting article. I'm from Belgium, one of the highest house owners countries. Even though it's true it's a life-long debt and it might be risky (in case of crisis), housing is still considered as a Long Term Investment so that you can pass that investment to your children (after heavy tax deduction :)). I find interesting the article does not mention who actually owns all these houses and who benefits in…

> renting has a guaranteed zero ROI

If rent < mortgage interest + other housing sunk costs and you invest the delta, renting can have a substantially higher ROI than buying.

Re: Most Germans don’t buy their homes, they rent

#105

Post by AdrianB1 » Mon, Oct 24, 2016, 1:49 PM UTC

Normal_gaussian wrote: post #50

AndrewDucker wrote: post #38

Earlier quoted context omitted.

German renters have a _lot_ more rights than UK ones do. http://www.telegraph.co.uk/expat/expatlife/11417359/Germany-...

Unfortunately they still don't approach those of an owner

That's called ownership: if it is yours, you should have right on it, is it?

Re: Most Germans don’t buy their homes, they rent

#106

Post by chank » Mon, Oct 24, 2016, 1:50 PM UTC

burkaman wrote: post #44

LeanderK wrote: post #29

I am a German CS-Student and currently renting in a shared flat with 4 other students. We call it WG (living-community) and its really popular not only with students, but i know a lot of young professionals and even middle aged ones that share an apartment (it gained popularity in the 60s, so i think its more of an culture thing that older do not share a flat). If you are in a partnership, you can move out and share…

This is pretty popular in the US. Most recent college graduates I know live in a shared house or apartment.

I'm sure a lot of that is out of need rather than desire to do so.

Re: Most Germans don’t buy their homes, they rent

#107

Post by kbart » Mon, Oct 24, 2016, 1:50 PM UTC

coldtea wrote: post #69

whack wrote: post #39

The Germans seem to be far ahead of the curve here. From a financial planning perspective, buying a home results in: 1) The vast majority of your assets becoming concentrated in a single plot of land, in a single neighborhood, in a single city 2) Your future mobility to pursue jobs in other cities, becoming significantly constrained If you want to invest your savings, then invest them in the stock/bond markets. If yo…

> Your future mobility to pursue jobs in other cities, becoming significantly constrained Perhaps the idea of people who haven't adopted this is that, unless they like doing so, humans should not have to live like nomads moving here and there to pursue this or that financial opportunity, but instead should be allowed to grow roots in some place, help shape it and improve it, connect with their neighbors, etc.

"humans should not have to live like nomads moving here and there to pursue this or that financial opportunity, but instead should be allowed to grow roots in some place"

Why? It's a choice best left to each person, telling somebody what they should do and how to live their lives is patronizing at least.

Re: Most Germans don’t buy their homes, they rent

#108

Post by thesimon » Mon, Oct 24, 2016, 1:50 PM UTC

Noseshine wrote: post #86

fwn wrote: post #59

Earlier quoted context omitted.

That's quite interesting. I rent cars quite frequently with the boring free VISA debit card from my normal checking account. I never knew that there are restrictions on which cards can be used for renting.

It's not so much a restriction, and it differs from company to company. For example, I rented twice this year - I don't own a car and usually use the train - and the first time they wanted my to enter the PIN for the credit card, which I didn't know. A big hassle, they took (real!) money off of my EC card (which I got back afterwards). The second time I didn't need a PIN (different car rental company), but they helpe…

>they took (real!) money off of my EC card

Technical limitation of the German debit card scheme, which doesn't support blocking amounts for security, but requires refunds...

Re: Most Germans don’t buy their homes, they rent

#109

Post by jamesdelaneyie » Mon, Oct 24, 2016, 1:51 PM UTC

rmc wrote: post #64

LeanderK wrote: post #29

I am a German CS-Student and currently renting in a shared flat with 4 other students. We call it WG (living-community) and its really popular not only with students, but i know a lot of young professionals and even middle aged ones that share an apartment (it gained popularity in the 60s, so i think its more of an culture thing that older do not share a flat). If you are in a partnership, you can move out and share…

> Serious question: Why is it not very popular in other countries? Because some countries have much, much worse tenants rights. I moved from Ireland to Germany and in Ireland: * There is basically no protection for rent increases, some people are being told their rent is increasing by 50% * Can't change your apartment. Not allowed to paint the walls, nearly all come with furniture, better make sure you don't damage a…

Rent increases can only be performed every two years in Ireland from Dec 2015. And you must have 90 days notice of a rent increase. More info on this link:

http://www.citizensinformation.ie/en/housing/renting_a_home/...

The landlord's relatives issue is however the easiest way to get someone out of a property and increase rent.

Re: Most Germans don’t buy their homes, they rent

#110

Post by Hermel » Mon, Oct 24, 2016, 1:51 PM UTC

cm2187 wrote: post #5

So in Germany, the interest on a mortgage is non tax deductible. The article doesn't mention it but I understand that property owners are also liable for capital gain tax if they hold the property less than 10 years. I think that makes sense. There is no reason to favor individuals investing into an unproductive investment (property) over productive investments (stocks and bonds, which enable companies to raise money…

In Switzerland, this is even more extreme and there are even fewer home-owners. The Swiss can deduct their mortgage payments from their income, but you are taxed the virtual income of renting your house to yourself. Furthermore, the capital gains tax on real estate is up to 40% on short-term transactions (less than two years) and there is no capital gains tax on stocks. Furthermore, there's a wealth tax disincentivizing you from holding low-return assets such as real estate. And returns on real estate are very low (like 3% or so), mostly because it is seen as a safe investment by pension funds. All these factors add up.