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Housing Finance

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Thanks to low interest rates, almost everywhere in Germany it is cheaper to buy a home than to rent it. Despite this, the country remains a land of tenants. The explanation lies not only in a shortage of available properties to buy, but also in the high capital requirements and the cost of the purchase transaction itself.

The more expensive a property, the more capital buyers need: banks often expect a down-payment of at least 20 percent. In addition there are ancillary costs - for stamp duty, the estate agent’s commission and the notary’s fee - often amounting to more than 10 percent of the purchase price. With only a fifth of tenants having this sort of money at their disposal, the proportion of home-owners has stagnated at under 50 percent.

This situation could be remedied by restructuring stamp duty, a tax on land purchases, to make it payable in monthly instalments over a period of ten years. In addition, ways should be explored to assist low earners in financing a house purchase so that they need less capital for a deposit.

Michael Voigtländer

Prof. Dr. Michael Voigtländer

Head of the Research Unit Financial and Real Estate Markets

Tel+49 221 4981-741


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