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Comment by mmarq | Hacker News Reader

> Most people in Germany can't afford to buy an apartment

Most people in Germany don’t buy the apartments they live in, because renting in Germany gives you more or less the same rights as owning a leasehold flat in the UK. If you really want to buy a flat, tax-wise it is more convenient to rent it out and rent another one to live in.

In many cities there are rent control mechanisms that make renting extremely cheaper than buying.

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Owning gives you the advantage of not flushing away a third of your income down the drain and instead owning something that's yours by the time you retire instead of paying your landlord's lease and then retiring in poverty as you won't be able to afford rent on your pension.

Have you seen new rent prices right now? It's definitely not "extremely cheap". It's only extremely cheap for those in grandfathered contracts.

A flat that cost 500-600K in Berlin would be rented out at 1000€ a month, that can’t increase more than the rent control allows. A mortgage would cost 3 times as much.

So you’d be better off renting and investing the deposit, the stamp duty, notary costs and the 2000€ you save each month in government bonds.

Are you sure about these numbers? As ROI doesn't make any sense to me in context of the new investments built solely for rent. How does it work?

Yes, check Numbeo for Berlin, Frankfurt, etc. Then look at the tier 1 and 2 cities in China.

https://www.numbeo.com/property-investment/rankings.jsp

The ROI absolutely does not make sense but it's real. A large portion of the world believe that the only two investment classes are real estate and government bonds.

average cost for an apartment in Berlin is apparently around 5.100/m2 and rent is around 11/m2, so back of the napkin math pretty much checks out

If landlords are forced to follow all regulations, the ROI on renting doesn’t work anywhere. In the UK it may still be profitable because you can evict tenants for the lulz, so they have to accept that properties are not maintained and that children may die of mould.

We would be all better off if people invested in the stock market instead of “investing” in properties (including landlords)

> If landlords are forced to follow all regulations, the ROI on renting doesn’t work anywhere.

Then, who builds the new apartments that people rent? If 50% of people in Germany rent and there is no ROI from building for rent, then who finances the new buildings??

I don’t know, maybe local authorities build them or probably new apartments are exempt from rent controls. But even in London, where my neighbour pays £3500K a month to rent a 65sqm flat, the landlord is earning much less than they would if they invested in the stock market. And they would be actually losing money if they carried out repairs, instead of having their tenant living like a rat.

If I owned a flat free and clear with a low rental yield as in many German cities (like 2-3%), I would sell the place to someone and then rent it from that person, then invest the proceeds into stocks.

People are overly obsessed with home ownership and being free and clear as soon as possible so they blindly repeat adages like "paying the landlord's rent" and "flushing your money away" without running the numbers.

Would you buy an apartment in Taipei, where a $1M apartment rents for $1k a month? I'd gladly pay my landlord's mortgage in that case.

It all depends on interest rates, rent to price ratio, and opportunity cost.

Anglo-Saxons are not obsessed with home ownership, they have to own their homes because renting in English speaking countries is hell. My neighbours change every other year, sometimes every 6 months, because the landlord increases their rent every year, evicts them when they ask for repairs (while expecting them to cook with a 10-15 year old oven that blows the power every time they set it to more than 180 degrees) and treats them like shit. I’m talking of people that pay in excess of 3K per month, normal people with normal salaries live like animals if they are renting.

Living in a flat while also owning it might have been a viable option in the past but that ship has sailed quite a while ago. In major cities - which is where the good joobs are - you're looking at down-payments of 200-300k to arrive at your current rent and even then you'd pay the mortgage for 30 years.

You can make 8-9K a year investing 200K in diversified basket of government bonds. It would pay almost the entirety of my brother’s rent.

It's super difficult to rent a flat in Western Germany. There are literally long queues for viewing a single flat in Berlin. It's slightly better in the rest of Germany, but still difficult.

It is extremely hard also in London, I know people that have been searching for months. Here tenants practically have no protections, it’s like renting on Airbnb, rents increase at random every year.

The rest of the country is a suburban wasteland

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