Why the Germans and French prefer to rent

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Englishmen may see themselves as king of their own castles, but the fact that Europe largely did away with its monarchies many years ago does not necessarily explain why those on the Continent are happier to rent, even if the situation is starting to change.

Property ownership in Europe: click here to download graphic (130k)

Germany has the greatest proportion of home-renters in Europe, and Germans still prefer to rent accommodation rather than own it. Only 39 per cent of the population own the homes that they live in compared with about 60 per cent in Britain. But that pattern is changing. Berlin is experiencing a boom in property buying: hundreds of recently renovated, turn-of-the-last-century apartments are being snapped up by wealthy Germans.

But as home ownership gradually increases, renting is still seen as a perfectly acceptable alternative, and is much more part of the fabric of German society. Rents controlled by local government and the reluctance of banks or housing associations to provide would-be home-owners with mortgages are among the main reasons for the Germans' preference for renting.

Unlike in Britain, Germany's more cautious banking system requires would-be home-owners to provide substantial guarantees of their ability to finance a loan before granting a mortgage. For many on low incomes or with little capital, owning a home has simply never been an option.

And even when the Germans buy, they often buy a plot of land and have a new home built from scratch rather than buying an old house. This is in part owing to lack of housing stock. Even in Britain, attitudes are changing, with more people buying up older housing and renovating it.

France likes to think of itself as a nation of owner-occupiers. But it is not. Only just over 50 per cent of French people live in their own properties. In Paris, the figure is less than one in three.

President Nicolas Sarkozy declared, Thatcher-like, four years ago that he intended to turn France into a nation of home-owners. He has failed. The proportion of owner-occupiers in France fell in the 1990s and crept up in the Noughties but has been pushed back by a boom in property prices in the past two years.

Even relatively well-off young couples now find it impossible to afford to buy a flat in Paris. The average asking price has just broken the €8,000-a-square-metre barrier for the first time. Unless you have a large lump sum of cash, you could never find a mortgage on a similar flat at a similar weekly price. Rents are also high – maybe €600 a week for 100 square metres in a reasonably good area – but annual increases have been held back by a change in the law since 2008.

As a result, renting a flat or house in France is still relatively respectable, even a normal state of affairs, especially in the big cities. There is no social disgrace to being a tenant in Paris or Lyon.