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Comment by ido | Hacker News Reader

In Berlin your rent will most surely be less than mortgage payment unless you take a very very long mortgage (like 50 years). Plus you need a down payment.

The reason it makes sense for landlords is that they have nothing else to do with the money if interest rate is zero or close to it - the alternative is slowly losing it (or higher risk stuff like stocks).

So they slowly build equity while not profiting every month, counting on prices continuing to rise for their long-term profit and if they run several properties you can get economies of scale going for managing them.

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On a month to month outgoing basis I can imagine you might be correct that renting works out cheaper in some cases.

However, it's missing something I think is important. In my case we have a £335k home at 1.6% interest which means every year we pay £5000 in interest, but we paying off around £15000 of the principal on the loan. After 10 years we could sell the house, spend the £150k+ (assuming the home value stays the same) we've paid off on a sailing boat and head off around the world or whatever takes our fancy.

If we'd have rented we might have been able to save maybe £200 a month in outgoings. Even invested in index funds it's unlikely to come close.

The situation in the UK is different than Germany - there are a lot less tenants protections & a lot less rent control (almost every renter in Germany is enjoying some sort of rent control - at the very least the landlords can't easily raise rent on an existing tenant and can't easily end the contract - which is by default unlimited in duration).

Rent is kept artificially low & safe in Germany via legislation, where as purchasing happens on the free market.

Also culturally Germans are very fiscally conservative and risk averse, it is not as common to take up debt (=mortgage) as in the UK or the US.

It doesn’t work like that.

You certainly paid a tax when you bought your home. I don’t know how it’s called or how much is it in your area, but you have to add that to the cost of what you bought, or deduce it from what you will sell (assuming the home value stays the same).

Then you also have to deduce all the real estate yearly taxes. And then all the costs associated with the real estate property itself (the ones you wouldn’t have to pay as a renter). Then you’ll have to deduce the real estate agency fees.

Then and only then you can start making some comparisons between buying and renting.

In the UK there is stamp duty which you pay when you buy a house. First time buyers though get a pretty good deal, nothing on up to £250k, I think we paid around £2000.

However, there aren't property taxes which you wouldn't need to pay as a renter. The closest thing to my knowledge is council tax but that is the same whether you buy or rent.

On the other hand, I've spent hundreds of pounds on rental contracts, referral fees, unfair deposit deductions etc.

All those things you mentioned in your last paragraph are illegal in Germany (or at least in Berlin). You just cant easily compare between countries like that - it can very well be that it "always" makes sense to buy in England because the rules ensure it while the opposite is true in another country.

The rental/real estate markets work differently in Austria and Germany and that's (partially) why home ownership patterns in those countries are so different to England's. Vienna and Berlin both have something close to 90% of the population renting rather than owning, and it's not because they are idiots.

There are massive incentives erected to keep renting tenant-friendly in a way that would never fly in a more capitalist country like the UK or the US.

I didn't suggest that buying always makes sense. I was only trying to point out that comparing month to month costs isn't a fair comparison, since a significant part of the money you put into a mortgage becomes available to you in the fullness of time. With rent, once you've paid it it's gone.

You're right, sorry I just wanted to reiterate as i often experienced that people in other countries don't understand how regulated the market is the German speaking countries.

E.g. many large american cities like chicago would have purchase prices similar to berlin but 2-3x the rental prices due to these regulations keeping Berliner rents artificially low.

Trying to actually check my vague memory: if numbeo[0] is anywhere near accurate (I anecdotally believe it's close enough to give you a good rough estimate) Berlin is both drastically more expensive to buy than Chicago (almost 50% more expensive) and drastically cheaper to rent (a bit over 40% cheaper).

Obviously this completely changes your buy vs rent calculous!

[0]https://www.numbeo.com/cost-of-living/compare_cities.jsp?cou...

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