Property ownership: different countries, different customs

The German housing market has been a hot topic of discussion for several years now. People are frustrated by, and even outraged at, the high prices and rents. For policy-makers, housing has become the social issue of our time. How do other countries deal with this? Can Germany learn from its neighbours? The German Economic Institute in Cologne went in search of answers to this question. It examined the ways in which seven different European countries help their citizens onto the property ladder. Alongside attitudes to property ownership, the Institute also analysed how these countries deal with property transfer tax, how they handle the taxation of owner-occupied property and what kind of funding support is available.

In terms of property transfer tax, the examined countries take two different approaches. Especially the Scandinavian countries as well as Ireland and the Netherlands have particularly low rates of property transfer taxation. Although Great Britain, Belgium and France have somewhat higher rates, they take a sliding-scale approach, support first-time property buyers, offer tax allowances or use a progressive tariff. A tax allowance and progressive tariff on property transfer tax provides financial relief to householders buying small and low-cost homes.

In Germany, owner-occupied property is taxed in the same way as consumer goods, whereas rented property is treated as an investment asset. This puts many owner-occupied households at a disadvantage. In the Netherlands, Sweden and Denmark, owner-occupiers can claim tax relief on their interest charges. Germany should therefore redress the balance for owner-occupied households to prevent them being at a disadvantage compared to buy-to-let owners. The countries included in the analysis also offer low-interest-rate mortgages or loan-insurance policies to support households in funding their property purchases.

In neighbouring countries, home ownership is regarded as the epitome of social advancement. It plays an important role in personal wealth creation and helps prevent old-age poverty.

Legal note: This article does not constitute tax or legal advice in individual cases. Please have the facts of your specific individual case clarified by a lawyer and/or tax advisor.

Photo: © Michael van der Vegt, Pixabay

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