So who then owns the property to rent out for most of the Germans?
Most Germans don’t buy their homes, they rent
291–300 of 413 posts
Re: Most Germans don’t buy their homes, they rent
#292Earlier quoted context omitted.
In Germany: - Rent increase limits - Larger changes need landlord's approval (changing walls and stuff). A lot of smaller stuff can be done on your own and doesn't require asking the landlords. (Many landlords are happy if you want to paint the walls etc., though.) - Only smaller apartments (often intended for students) come usually with furniture - The deposit has to be put on a special, locked bank account. The mon…
Actually IIRC the law was changed so tenants only have to make sure the walls have a neutral appearance (i.e. usually white woodchip wallpaper) when moving out, so they're pretty much free to decorate the place as they want as long as they don't outright demolish or damage the walls. There used to be a requirement for tenants to renovate the apartment (i.e. thorough cleaning, new wallpaper and white paint) before mov…
> However there are also co-operatives that invest your deposit and actually pass on the interest to you when you move out (these apartments are rare though).
This is not optional. It is required by law. Interest from deposits belong to the renter.
Re: Most Germans don’t buy their homes, they rent
#293Earlier quoted context omitted.
What about cars? Are Germans more likely to buy or lease a new car? Or do more people buy used cars with cash?
It's culturally frowned upon to buy expensive cars or other luxury goods on credit unless absolutely necessary. My grandmother taught it to me this way: credit is for necessities; for everything else you save. Also: low quality products are more expensive than high quality products in the long run (because you have to replace them more often). So as an example, if you're in a tight spot and an expensive household app…
I should request German citizenship :-)
Re: Most Germans don’t buy their homes, they rent
#294Earlier quoted context omitted.
You could have savings and investment you could use to cover a lower rent the rainy days. House prices are only high because everyone is over-bidding to buy them. And that's driving rents up. Now this is different to the question of whether you should individually follow the crowd in a country where everyone over-bids on property. If you don't, you still pay a high rent to repay the massive mortgage of the guy who bo…
Why is there room for rents to go up? Why aren't they in general already around the maximum the market will bear?
As a native of England and not an economics professor I feel here it's because it's the only alternative to buying (many can't buy) and there's still a juicy percentage of combined monthly wages /not/ spent on rent up for grabs. The market is bearing the increases by not saving, reducing food spend, etc.
Re: Most Germans don’t buy their homes, they rent
#295Earlier quoted context omitted.
You still need to rent something for you and your family. It's almost a fixed cost in your life. In any case, it's better to turn that fixed cost into an investment. It's hard to believe you'll ever get your equation right. Even more when you weight investment risks and actual average ROI over 25-30 years in stocks.
What about property taxes? I know people who have paid their house off in full and still pay 12-15 thousand in property taxes each year. Additionally, even if the house is paid off, you're still on the hook for all repairs, maintenance, etc. And if your neighborhood starts to go down the tubes, your house value can quickly decline as well.
What if Enron or Lehman Brothers utterly fail? What about taxes on stock gains?
I think property taxes in US already vary a lot from state to state. It certainly vary also from country to country. It's something you need to be aware to take a decision on whether it's a good investment or not.
Ultimately, all these costs are also embedded into renting price.
Re: Most Germans don’t buy their homes, they rent
#296Earlier quoted context omitted.
That's all well and good as long as you're a student, or partying your twenties away and as long as everybody in the house gets on .... I've done this, and while it is good fun in parts the downsides become downright tiring.
You don't have to party every weekend. Generally you choose to live with people who roughly share your lifestyle.
Indeed, that's why we rather partied every weekday.
Re: Most Germans don’t buy their homes, they rent
#297Earlier quoted context omitted.
Actually IIRC the law was changed so tenants only have to make sure the walls have a neutral appearance (i.e. usually white woodchip wallpaper) when moving out, so they're pretty much free to decorate the place as they want as long as they don't outright demolish or damage the walls. There used to be a requirement for tenants to renovate the apartment (i.e. thorough cleaning, new wallpaper and white paint) before mov…
> However there are also co-operatives that invest your deposit and actually pass on the interest to you when you move out (these apartments are rare though). This is not optional. It is required by law. Interest from deposits belong to the renter.
Sure, but the difference is that they actually invest it. Normally the money pretty much just sits there.
Re: Most Germans don’t buy their homes, they rent
#298So 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…
>So in Germany, the interest on a mortgage is non tax deductible Wrong reasoning. It's tax deductable in Switzerland and they rent even way more than the germans
But then you are also taxed on the imputed rent for the property, i.e. you have to pay taxes as if you are renting the property from yourself and the rent that you are paying yourself is taxable income. That greatly outweighs the effect of the mortgage tax deduction.
Re: Most Germans don’t buy their homes, they rent
#299Earlier quoted context omitted.
so as a society, it would be better to have a handful of house owners collecting the rent of everyone else? Is that a good allocation to you?
Yes. Owning your own home is like cooking your own food. It might be cheaper but only if you don't value your own time or have anything better to do. There's a reason why even rich, successful businesses rent office space instead of buying. They just can't manage a property as efficiently as the companies that focus on that.
Businesses often sell their real estate on leaseback terms because it allows them to book one-time profits that boost the executive's bonuses or as a way generate cash that private equity firms can easily extract. They don't typically sell to third-party investors, but often finance the debt of the newly created property owner.
For many businesses it absolutely makes sense to own your own property. For example, if mid-way through a 20 year lease on a building the economy goes bust, do you really want to be paying the same rent that was negotiated during boom times? It could destroy you.
There's textbook theory, and then there's reality. The real world is an incredibly complex system with innumerable variables, and can't be reduced to simple concepts like "specialization". It all depends on context. Obviously for most companies it doesn't make sense to own their property. There's no disputing that, and your point stands. But for rich companies, it often actually makes a lot of sense, notwithstanding insiders trying to extract value for their personal benefit.
Re: Most Germans don’t buy their homes, they rent
#300Earlier quoted context omitted.
so as a society, it would be better to have a handful of house owners collecting the rent of everyone else? Is that a good allocation to you?
Yes. Owning your own home is like cooking your own food. It might be cheaper but only if you don't value your own time or have anything better to do. There's a reason why even rich, successful businesses rent office space instead of buying. They just can't manage a property as efficiently as the companies that focus on that.
IMHO it's crazy to think of every minute as either earned money or spent money. Second, very few people can arbitrarily trade any amount of time\effort for any amount of money. That's not how the market works. So how exactly would I go make $30 instead of cooking dinner for 30 minutes each evening? I assure you that whatever answer you have doesn't scale for my free time, or to everyone in the economy.