In the UK for the last 60 years or so owning your own home was one of the major goals of most people, in Germany that’s not been the case, most prefer to rent, in Berlin across the capital around 88% on average rent rather than own, why is that and what makes owning the whole building they rent in such an attractive proposition.

In this article in ‘this week’ Richard Ehrman explores the changing face of mortgages and savings in the UK and Germany.

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Berlin’s reputation for cheap rent is persistent, but is that the whole truth? Prices are climbing all the time, and poor Berliners are being squeezed out of the real estate market. But maybe there are some alternatives.

(click picture or here to read full story from Deutsche Welle)

Berlin has apparently never been so popular. Tourists, especially young people, keep streaming into the city, excited by the avant garde reputation the city seems to radiate. And there is one big economic catalyst that greases the wheels of post-Wall Berlin: low-rent apartments.

The Berlin city council, or Senat, knows when it has a good selling point, and is quick to point out the benefits of the housing market to potential residents. Reiner Nagel, of the Senat’s urban development department, is confident the city can maintain its reputation for cheapness.

“Structurally it’s a good situation, because the housing market is relaxed,” he said. “You can get flats in all areas of the city, and the rent levels are relatively balanced. Compared to other German cities, where rents are two or three times as high.”

Certainly Berlin has a lot of catching up to do. Buying a nice apartment in the most popular area of Mitte will currently cost you between 1,600 euros and 3,500 euros ($2,100 – $4,600) per square meter. The most precious space in European capitals further west can easily cost four times as much.

All-important income/rent ratio

But there is of course more to it. Other factors need to be taken into account, according to Andreas Otto, housing policy spokesman for the opposition Green party.

“If I know how much people earn here, how big the incomes are, then it is put into proportion,” he said. “Some people in Berlin spend a third, or even 40 percent, of their take-home income on rent. That is really quite a lot.”

The city council quotes a statistic saying there are 100,000 uninhabited apartments in Berlin – equal to about 7 percent of the total number of units – a healthy figure for a strong property market. But this figure is open to some interpretation. It is based on data from energy supplier Vattenfall and is generated by counting the number of apartments that do not receive electricity for over six months. This method has been heavily criticized by the Berlin tenant’s association, which has said many of these flats are uninhabitable.

Michael LaFond, an urban project developer at his Institute for Creative Sustainability – which started life at the UFA Fabrik squat in Berlin – summed up the situation.

“The city’s been caught off guard, I would say,” says LaFond. “The establishment basically went to sleep a few years ago and stopped doing anything about housing. They worked in the wrong direction, privatizing public housing and forcing gentrification of the city, meaning encouraging increases in rent and increases in real estate value.”

The alternatives

So with the market a bit tighter than advertised, a lot of Berliners are turning to alternative, self-managed living projects as a way to beat the speculators. There are different models for these undertakings.

Some are rooted in Berlin’s politicized former squat scene, with locks taken off the doors and communal meetings, and others offer more conventional living arrangements. An effort to beat the inflation of the free market is what unites all of them. Julian Benz is an adviser with the Mietshaeuser Syndikat, an organization that provides assistance for groups hoping to manage their own living space.

“What I like about the Syndikat’s model is that the question of ownership is cancelled out,” Benz said. “The property is only ever at the disposal of those that live in it. That’s how it should be. It’s a small step in the direction of a right to living for everyone.”

Of course, not every model is this idealistic – sometimes a small group of people simply buy a piece of land, build a new building on it and live in it. According to LaFond, the German capital is in a unique position to take advantage of such ideas.

“Berlin is in a special situation, if you compare with other big cities around Europe,” he said. “There are an estimated 5,000 vacant lots in the city. Berlin has a unique opportunity to use this in a more progressive, social, creative way.”

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