A rental residence is a type of residence in Germany that is used more than a residence that has ownership status.
Homes in Germany are very expensive, with land and building costs averaging two to three times that of the United States. Coupled with a large down payment – between thirty to fifty percent – for the purchase of a house. But fortunately most Germans are not bothered by having to buy a house.
The level of home ownership in canninghill piers review is also among the lowest among other developed countries in the world, and right at the bottom position in Europe. Evidently, the desire to own a house is not the main driving factor for the economy in Germany. For comparison, 80% of people in Spain live in private residences, but the unemployment rate in Spain is almost 27%. While in Germany, it is known that the population who owns their own house/residence is 43%, but the unemployment rate is only 5.2%.
The very high purchase price of a house and the unfavorable tax regulations on property ownership in Germany are factors that cause most Germans to live in rental housing in the form of houses, apartments or condominiums.
Other factors that may help explain why Germans tend to choose to rent rather than own their own residence include the availability of good quality rental accommodation offerings, as well as the reason that the requirements for borrowing money for home purchases are very strict, ensuring that there is no oversupply of financing for payments. home mortgage. The lender, in this case primarily the bank, is highly risk averse and normally requires a 20% deposit or substantial collateral, as well as sufficient proof of sources of income over several years, which is highly unlikely for some buyers.
Depending on the region, the cost of renting a residence can vary from one-quarter to one-third of income per month. The city with the highest rental costs was Munich, followed by Frankfurt and Stuttgart. In developed cities with high rental costs, tenants can use up to half of their income to pay rent. Although living in rental housing is the norm in Germany – Europe’s most successful economy, the fact is that Germany had a dark history in the real-estate rental business in the late 1930s and 1940s.
Request for shelter after the war
When Germany surrendered unconditionally in May 1945, 20% of the housing stock was turned into ruins. 2.25 million houses were destroyed and another two million houses were damaged. A census in 1946 showed as many as 5.5 million housing units were needed in what is now West Germany. It’s not just the housing problem that has fallen into disrepair.
The German economy at that time was also paralyzed by zero income and a nearly worthless currency. Political tensions after the end of the war raised fears of a radical return to the masses, to fears of the return of fascism, or the threat of communism in the midst of high unemployment rates.
Eberhard Wildermuth, the first West German Minister of Housing who previously served in the German Armed Forces (Wehrmacht) in the 1921-1945 era, stated that the number of communist voters in European countries was inversely proportional to the availability of housing units per thousand population.
A housing program initiated by Germany’s housing minister could bring people back to work while reducing the housing shortage problem that is rife. Driven by the political situation at the time and also by the high demand for housing, West Germany designed a housing policy so as to provide the greatest benefit to the people as much as possible.
Increase in demand for housing: I
After West Germany was founded in 1949, the government put pressure on it through the first housing regulations. The regulation is aimed at increasing the construction of houses so that the size and rental costs can be appropriate and affordable for the general public.
This first housing policy yielded very satisfactory results. Thanks to a combination of direct subsidies and tax exemptions for all parties, be it the public sector, the non-profit sector, or the private sector, housing construction in Germany is happening everywhere.
In 1956 West Germany managed to reduce the number of housing shortages by fifty percent, and by 1962 the shortage had been reduced to 658,000 units. However, most of the new housing units had to be rented out due to low demand to buy. At that time German pawnshops were still very weak and the large down payment requirements required by banks to borrowers were the cause of the dearth of potential buyers.
Comparison with other countries
Germany was not the only country that experienced a housing crisis after World War II. The same thing was experienced by the UK which caused the British government to spend on a large scale to promote the housing program. However, the British do not remain in rental housing like the Germans. The level of home ownership in the UK is also much higher, with 66% of the UK population owning their own residence.
Germans stay in rental housing because Germans have a good perception of living in rental housing. Economists have argued that housing/residential policies in Germany strike a better balance between government involvement and the role of private investment, compared to housing/residential policies in other countries.
For example in the UK, the UK government only provides housing subsidies to the public sector, local governments, and not-for-profit developers to encourage housing construction after the war ended. This has caused the private sector to be knocked out of the housing market.
Housing policy in the UK also imposes heavy rent and construction costs on the public housing developers themselves. This inefficiency resulted in the quality of the houses being forced to become victims.
Over time, the difference between public housing construction and private housing construction has become more pronounced and has created a social stigma that rental housing that is heavily funded by the public sector is housing for the poor.
Based on the opinion of economist Michael Voightlnder who has extensively reviewed the housing market in Germany, the German government has also provided leeway in housing rental regulations. On the other hand, stringent regulations on renting houses lasted until the 1980s in England, which pressured rental home owners to cut maintenance costs, resulting in a drastic decline in the quality of the house/housing.
The high popularity of rental residences in Germany can simply be explained by the relatively lower rental costs, as well as regulations on tenant-friendly rental housing. Regulations in Germany allow state governments to increase rents by no more than 15% after a three-year period.
The German government also does not encourage German citizens to own their own homes. Unlike countries with high general home ownership/residence rates such as Spain, Ireland, and the United States, Germany does not allow homeowners to deduct mortgage interest payments from their taxes. Without this deduction, the advantages of owning and renting a residence are more balanced.
The regulation is a solid provision for the rental business in Germany, despite the fact that property prices in Germany are rising slowly, so rents are not rising as fast. One of the reasons people buy their own homes is to avoid rising rents. With the slow increase in rental costs in Germany, there is a tendency for people to rent, which in turn has an effect on the low number of home buyers and the low rate of home ownership in Germany.