Thursday 14 March 2019

Are Germany’s tenants better off than the UK’s?

Germany’s housing market, and more specifically their rental market, is often pinned up as “how renting should be”, with indefinite tenancies and rent controls. As 54% of Germans rent their home (in the UK it’s just 20%) many argue we should adopt their model - but would that really be for the best?

The Labour party have made it clear they would like to bring in rent controls similar to the continent. In Germany there are indeed rent controls….in most areas you can’t increase the rent by more than 15-20% in three years! Rents across the UK have increased an average of just 4.5% in the past three years, which is lower than both inflation (+6%) and wages (+7.5%) over the same period.

As for the indefinite tenancies German renters benefit from, well that is true. But then again, the landlord has no responsibility to maintain, repair or improve anything inside the property - all of this resides with the tenant. In fact, the landlord merely provides an empty shell; forget white goods, German tenants have to supply their own kitchen and bathroom/s or pay extra for the privilege! The property does have to be watertight, so at least they get doors and windows, which are actually optional in Romania (where only 2% of the country rent)!.

In the UK there’s been 30 years of increased and improved legislation to ensure properties are kept up to standard for tenants. In some cases these haven’t gone far enough, as is shown regularly in the media, although I believe a lot of this is down to a lack of enforcement of the existing legislation. So, whilst UK landlords don’t have rent controls to abide by and can offer shorter tenancies, in return for this property standards have been, and continue to be, massively cracked down upon.

In Germany, sure there’s greater security of tenancies alongside rent controls (in the loosest possible terms) but all repairs, maintenance and improvements are down to the tenant (much like many commercial tenancies here in the UK). 


So, what do we want? It’s not fair or realistic to cherry pick the best parts of both systems. Should we make landlords spend more on improving standards and increased legislation? Or should we lower their cost base and responsibilities, pass these savings to tenants by limiting rent increases and put the onus on the tenants to create a home for themselves, whereby they’ll only be asked to leave if they stop paying the rent or breach their agreement? 

It might be worth bearing in mind that home ownership in Germany is stifled by banks requiring 20% deposits, estate agents charging fees to buyers of (typically) 7%, as well as stamp duty of up to 6.5%. And yet Germany hasn’t been immune from exploding house prices and rents getting pushed to the limits of the so called ‘rent controls’, which has recently led to social disgruntlement and protests in the street.

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