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  Euro on Sunday Opinion: How Politics Prevents Property | Message | Bit Updates
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Euro on Sunday Opinion: How Politics Prevents Property | Message

Saturday, March 10th, 2018 | bitcoin updates

by Kai Wolfram, guest author of Euro am Sonntag
Who would have thought that? According to a Forsa survey from the summer of 2016, a good 75 percent of residents in the German tenant capital Berlin want to live in their own four walls. 72 percent want a state property transfer. That is: the housing policy in Germany's largest city goes by the wishes of two thirds of the population.
And even in Germany, the transfer of property plays at most a symbolic role. Because of the CDU enforced Baukindergeld adds up with three children after ten years to 36,000 euros. This may be attractive as state support for the construction of a home in rural areas. When buying a Fnfzimmerwohnung in a reasonably prosperous city cover 36,000 euros at most the additional costs, of which then go 15,000 euros as land transfer tax to the country.
In general, the activities of the federal government, federal states and municipalities create new burdens in housing construction rather than promoting ownership. Increased building regulations, successive increases in the land transfer tax and the low designation of building land are fueling the financial benefits of the historically low interest rates. For example, more stringent regulatory requirements with regard to energy efficiency, accessibility, stability as well as fire and sound insulation have increased the construction costs of multi-family homes since the turn of the millennium by about a quarter.
High land transfer tax
makes housing more expensive
At the same time, some federal states, including Berlin, North Rhine-Westphalia and Schleswig-Holstein, have vigorously pushed up the land transfer tax – from 3.5 to 6.0 percent and 6.5 percent respectively – to curb real estate speculation. And finally, many cities and towns are fueling the land market by making little use of land for housing.
Not infrequently, the interests of the residents and old owners are asked about the needs of the home seekers, also because the inmates make the majority of the voters. Accordingly, there is a generous Landstcksvergabe and Zuzugsprmien often only where the population declines sustainable and the existing population must fear the loss of infrastructure services. That may make sense in view of the fate of one or the other community. Economically, this type of housing subsidy is more than questionable.
Because urbanization seems inevitable, and rising real estate values ​​are most likely to be found in the big cities. At the moment, however, as well as the trend towards temporary employment and the low wage increases of recent years, it is especially the case that younger people make the formation of home ownership more difficult and the most important pillar of wealth creation and private pension provision tends to be weaker.
The social impact of any declining property ratios is hardly to be overestimated. This is evident, for example, in the distribution of assets. Median assets are already significantly higher in most European countries than in economically prosperous Germany. With an average wealth of 195,000 euros and a home ownership rate of 44 percent, Germany only has a median assets of 51,000 euros in the ECB comparison, while for example Cyprus (267,000 euros), Malta (216,000 euros), Spain (183,000 euros) and Italy (174,000 euros ) achieve higher median assets in the case of home ownership rates between 69 and 83 percent.
The situation is similar with the inheritances. According to a study by the German Institute for Old-Age Pensions, every fourth testator without real estate does not inherit any financial assets. In the case of the testators with low real estate possession (up to 250,000 euro) it is only every ninth. The mass of non-resident deceased also inherited only a total assets of a maximum of 25,000 euros (45 percent). In the case of testators with low real estate assets (up to 250,000 euros), the mass inherits 100,000 to 250,000 euros (55 percent). The low genetic makeup of tenants shows the great importance of freedom of rental in old age. Those who do not live in their own four walls, in later years of life of his savings and can thus pass on less to future generations, which in turn increases the inequality between inheriting property markers and non-inheriting tenant children.
Conversely, the decision to buy a home, especially for middle-income and low-income people, always implies a renunciation of consumer spending in favor of longer-term investment. The willingness to pay a higher annuity compared to the rent is also an indication of a greater sense of responsibility of owners towards other people and communities.

Strong differences between West and East in the province
This is particularly visible in structurally weak regions. Although the Sauerland and the Berlin-distant regions of Brandenburg are characterized by a similarly weak economic performance, one will have to look for a comparatively long time in the Sauerland for a verdited pay or drawn from emigration community.
Because in the West German province has been invested continuously in homes and businesses and in the club life of the villages in recent decades. In Brandenburg, on the other hand, the connection between property and its management was cut by the collectivization of agriculture. Modern farms both for the cultivation of the fields and for animal production originated in the years of the GDR exclusively on the edges of the villages. The servants were maintained and incinerated for residential and personal use only, as the large enterprises released labor after reunification and many left the villages without property and income.
The example shows that if politicians want to prevent the social slippage of large sections of the population in the metropolises, they are well advised not only to hand out alms to families. It must promote bragging and, consequently, home ownership with united forces, so that people in the cities feel more at home than they do today. A redesign of the land transfer tax, for example, with exemptions from private first-time buyers, would be the right and redundant step.

short CV
Kai Wolfram,
Managing partner
Engel and Vlkers Investment Consulting
The graduate banking economist has experience in the areas of corporate banking, risk management and real estate financing. Since 2014, he has been managing director of E & V Investment Consulting, transaction consulting, portfolio structuring
and transaction management including sales asset management.

_____________________________Images: iStock, Engel and Vlkers Investment Consulting, zagan / Shutterstock.com


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