German Property - Renting V Buying

Discussion in 'Finance, Property, Law' started by Black_Belt_Bertha, Feb 14, 2007.

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  1. One for all the financial Gurus out there and those that have eaten the pie and are now wearing the T-shirt !!

    Been looking closely at the housing market in Germany prior to leaving and after convincing myself to buy property (UK Physche) I have since had second thoughts - Prices do not rise in Germany as much as most other European countries and this is borne out by the population who are mostly renters. My current logic is to rent first to get a feel for the area and also to take more time choosing a good property. What are the pros and cons of buying as opposed to renting ?.

    I appreciate everyone one is different but what are your experiences/advice ?

    Thanks in advance

  2. I'm looking at buying in Germany in the next year or so. Prices have stalled a lot due to the recession. As you mention, they are not as bad as the UK price rises due to more people renting. After watching a programme on TV recently, Germany is tipped as a place to buy soon as prices are set to soar.

    There are some good websites to look for houses in Germany. Have a look and you can easily find 4-5 bedroom houses for around the £100,000 mark. This in comparison to the UK is nothing. A normal 3 bed semi can easily be bought for £50,000, which your 22 year money can easily break the back of.

    To that end, I would say it’s better to buy and get a cheap mortgage and live life to the full. When it’s paid off, you can relax with no worries. If you rent, you’ll only be doing it for the rest of your life. Buy now while you’re young(ish).

  3. Start here and do some searches, lot of property advertised in banks and they could help you further. I am looking at buying land first in 2008 and then building an energy efficient house in 2009. been advised off buying apartments as always problems when it comes to costs of renovation for common bits, gardens etc. Also I just want a base, not interested in buying to invest.
  4. Heard those energy efficient houses are the way ahead

    Checked the site out and have to say the Makler fees are ridiculous eg they get 16000 euros from buyer/seller for a 300000 euro house - These guys ought to be locked up - all they do is produce a portfolio, advertise it on the net and show you around for an hour. Easy money.

    Although renting will give me a bit more breathing space it does have its advantages too - ie the capital I was going to use on the house will now be used elsewhere in an investement - Ive also even been toying with buy to rent market in UK whilst renting in Germany the advantage being that it gets me on the property ladder in a healthy housing market.
  5. Came across this calculator on the net - keeping in mind the property inflation rate in Germany is 0.5% to 1% then it works out cheaper over a 10 year period to rent rather than buy. The Uk market property rate is higher ie 6-8% annually so in UK it would be better to buy. Put in your own figures to find out what suits you. Link below
  6. Bertha - the logic is to buy so as not to lose your money to someone who will gain from your rent. At least when you buy you are esentially keeping the money via the purchase!
  7. I understand your logic but for Germany the house prices do not rise like UK therefore the capital you would have used to purchase the property in the first place can be used elsewhere in a higher interest investment which over a 10 year period can actually make you better off finacially. I know it sounds illogical but try putting the figures in yourself at a low house inflation rate as Germany has. In UK the story is different because the value of your property is increasing every year at a much higher rate.
  8. Well, in that case place your money in a high interst account, wait 30 years, take it out and buy property. But during all those years, you will also be paying rent to someone else who made the commitment at some stage. Also, you will not be able to save the same ammount you would be paying off your Darlehen (mortgage) as you would have 2 instead of 1 bill (1 = buying a house as opposed to 2= saving for a house and also rent).

    I lived there for 7 years until re-enlisting and worked on the net. It can be a struggle as rent does go up every 2nd year!!!
  9. Dear B3,

    If I were you, I'd clue myself up on all the different aspects of renting and buying property in Germany. It's unlike anything you'll find in the UK, and while there are pitfalls, it's infinitely more secure for a prospective buyer/renter than the chaotic scene in the UK. Example: A letting agent (Makler) can charge a fee of up to three months' "Kaltmiete" (the basic rent, shorn of all ancillary costs), however, some of them try it on and calculate their fee on the basis of the "Warmmiete" (which includes the heating and water costs usually paid by the landlord and subsequently billed to the tenant). Be careful of this, since it can make a difference of several hundred euro.

    These people can give you advice:

    If you need anything else, gizza shout.

  10. Everyone on this thread has ignored the costs of the transaction(s) and the maintenance of the property.

    In the UK, there is the hefty Stamp Duty to consider and then annual maintenance. If you rent, neither is an issue. I accept that the UK property market has been a one-way bet in the last few years, but there are signs that it is creaking.

    If I was to buy property now, I would buy in Germany. You would have proper title which is not necessarily true in Spain, Bulgaria, Turkey). They are working their way out of recession, albeit slowly, and German property appears cheap to my UK-biased eyes. And the property is usually well-built, unlike the crap that you find in the UK. However, I know nothing of transaction costs! However, I note that the headline UK mortgages are usually at a lower rate than those in Germany; the market there is not quite as liberalised as in the UK. One could argue that could make the German market a one way bet, as happened in the UK, and I would agree.

    Bayern, Ich Komme!

  11. Having just bought a house in Germany, thought you might find this useful.

    We HAD to get out of army accomodation cause it sucked!
    We couldnt find a suitable property to rent in our area, our only stipulations were garden for the kids and 3 bedrooms (a spare for guests would be a bonus) but everything was flats

    We have bought a zweifamilliehaus which in German terms is big enough for two families (not that you couldnt guess that) but we are living in it all cause we are greedy and it means we can have loads of family and friends over!
    Mortgage-€750pcm for 18 years (deposit paid)
    Costs of buying a house here are pretty high-budget 11-12% of the purchase price for notaires, taxes, agents etc
    Running costs are based on the sq metreage of the inside of the property and set by the Stadt, you only get a recalculation at the end of each year.
    Extras per year (paid quarterly or monthly)-ground tax, bin tax, insurance for house building and contents, personal liabilty insurance, german life insurance (your UK policy is not acceptable), utilities obviously

    Yes, we could rent cheaper (if we could find something) but it wouldnt be this big, it wouldnt be ours and we would have nothing to show for it at the end. We do not plan on settling indefinately in Germany. We are living happy for the time we are here and will rent it when we leave. We will cover our mortagage, maintenance and running costs but probably not make money month to month. Thing is, we will have loved the time we lived here and our mortagage will then be paid for the majority of it's life by someone else.

    Look closely at your running costs if you are considering buying, they can mount up if you are not careful but if you chose a big bank like the Sparky or the Volksbank they can give you really good estimates for these.

    Good Luck
  12. We bought some land and built a house in Bayern last year. There is a trick here. When you buy in Germany you pay Grunderwerbssteuer, which is like stamp duty, but if you buy the land first you only pay this tax on that sum. If you buy a house which is already standing then you pay tax on the lot.

    When you calculate your costs you need to add 8.5% for associated costs such as the notar, (solicitor to do the conveyancing), grundbuch fees, (like the land registry), a commision of 3.57% to any agents involved and a couple of other fees like surveys etc.

    Banks will normally offer the best interest rates which are the lower rate 4.85% on up to 40% of the value and 5.5% on the rest. We were lucky and managed to get 3.92% fixed for 10 years. But at the moment you can get a mortgage at 3.5% from a swiss bank, which is at the mercy of the Franc/Euro exchange rate.

    Renting is iffy, as at the end you own nothing and you were not able to save the money you spent or pay off any capital of your own.

    Could go on forever but PM me if you are interested in more info.

    Incidentally I have good inside info on two or 3 good builders.