The short answer is that this was considered by the British to be the simplest and most economical way of disposing of the German U-boat fleet. The decision to sink the U-boats rather than salvage or divide them up among the ‘Big Three’ (the UK, the US, the Soviet Union) was part of the Potsdam Agreement (August 1945). It was agreed that the Royal Navy would be responsible for what became known as Operation Deadlight.
Lead-up to the surrender
A week before the German surrender on May 8th, 1945, the U-boat fleet numbered around 470 vessels, most of which were either training vessels or not combat-ready. This was the only substantial element of the German armed forces remaining. With virtually no support available from the surface fleet, and with ports rapidly being overrun by Allied forces, from May 1st U-boat captains began to scuttle their boats rather than surrender them. Thus, by the time of Germany’s formal surrender on May 8th, over 200 (estimates vary) had been scuttled by their commanders, mostly in or near the ports of northern Germany.
Most of the remaining U-boats surrendered and gathered at locations in Northern Ireland and Scotland. Some, though, could not be moved (too damaged or still under construction). Others were in the Pacific, of which six were taken over by the Japanese Navy. When the Japanese surrendered, these were all scuttled by the American, British and Dutch navies.
The decision to sink
Sinking was the final decision arrived at in Potsdam, but it appears that Stalin - initially at least - wanted the Soviet share of the German Navy to be kept afloat. Although the minutes taken by each of the Allies at the 1st meeting of the Potsdam conference are slightly different, the Soviets seemed intent on not sinking their share. On the fleet, the American minutes read:
"Stalin said, let’s divide it. If Mr Churchill wishes, he can sink his
Churchill, though, was insistent that surface ships and U-boats should be dealt with separately, and the Americans concurred. On July 18th, less than ten days before he lost the British General Election to Clement Attlee, Churchill met with Truman. His notes on that meeting state:
I made it clear that the case of the U-Boats must be considered
separately, as they were nasty things to have knocking about in large
numbers. He seemed to agree.
Churchill's concern relating to U-boats were long-standing and also extended to U-boat pens, as witnessed by this excerpt from a message he wrote to his chief military assistant, General Hastings Ismay, dated 23 June 44 (more than a year before Potsdam):
I am concerned to hear that the War Office have circulated a report
which raises doubt whether we shall be able to destroy the U-boat and
E-boat pens in occupied Europe before handing over the ports to the
Source: Winston Churchill, The Second World War, vol. 6
By the 3rd meeting at Potsdam, the Soviet position seemed to have shifted as they agreed to sinking "a large proportion" of the U-boats, but the number to be kept was in dispute; the Soviets wanted 30 for each of the 3 allied powers (total 90), the Americans and the British would only agree to 10 (total 30). Again, the Soviets gave way on this point (probably in exchange for concessions elsewhere) and agreed to the Anglo-American figure (by this time Churchill was out of power but Attlee pursued the same policy).
Despite the Anglo-American insistence on Stalin getting only 10 U-boats, the Soviets salvaged some from ports they overran. They also salvaged and repaired this U-9 series II-B which their air force had sunk in the Black Sea in August 1944. It proved unreliable and was scrapped in December 1946. Image source
The French navy was given six u-boats which were put into service despite being mostly obsolete diesel models. Other countries (including Norway, Sweden and, later, West Germany) salvaged some U-boats from ports. Two U-boats which had fled to Argentina were handed over to the US where they were scrapped, while one boat which had been interned was used by the Spanish navy until 1970. A detailed guide to the fate of U-boats can be found here.
U-873 (type IX-D2) pictured in Portsmouth Navy Yard, Maine. It surrendered to the US Navy at sea and was scrapped in 1948. Image source.
In Britain, it wasn't long before various 'interested' parties started raising questions as to the fate of the German fleet (which the Allies kept secret for fear that the Germans might scuttle their ships). According to The Fate of the U-Boats which Surrendered - Sink or Scrap? by Derek Waller,
Several Members of Parliament, including the MP for the Loch Ryan area
in south west Scotland, some businessmen and a number of individuals
raised questions, some of them directly with the First Lord of the
Admiralty, and some of them in Parliament itself. They were all
however met with the standard and bland Government response that: "the
arrangements for the use and disposal of the surrendered German fleet
had been agreed in principle at the Potsdam Conference, and a joint
statement by the three Governments setting out the details would be
issued in due course."
In effect, "The answer to the question of sinking versus scrapping was...never formally either debated or answered." but Waller goes on to quote an admiralty paper written on November 30th which was prepared "in anticipation that it [scrapping versus sinking] might become an issue which attracted the interest of the Press".
1."The reason why surplus German U-Boats are being sunk rather than scrapped is primarily because it was expressly agreed at Potsdam
between the three Governments that they should be sunk. It is not
possible to say what considerations influenced our Allies in making
this agreement because the decision was reached without discussion of
the merits of the two alternative courses of sinking or scrapping."
2."The reason which led the United Kingdom Government to join in this decision was that the sinking of surplus boats would plainly be
simplest and most convenient course. If the U-Boats were not to be
sunk, they would have to be divided equally between the three Powers
for scrapping. This would have involved complicated and expensive
operations for the removal of the U-Boats from the United Kingdom.
Moreover, it would have increased the manpower commitment for the
maintenance of the boats, a burden which would have fallen almost
entirely upon the United Kingdom."
3."Although U-Boats have some scrap value, this is extremely small compared with the large tonnage in United Kingdom ports already laid
up awaiting scrapping. At a rough estimate, there is upwards of a
million tons of British warships and auxiliary war vessels, including
27 submarines, available for scrapping, whereas the British third
share of surplus U-Boats would equal slightly less than 20,000 tons.
There is already several years of work for the ship-breakers."
4."Submarines contain a higher proportion of non-ferrous metals than surface vessels. The Admiralty is, however, advised that
scrap is not at present wanted so badly as other types, so that with
ship-breaking capacity at a premium, submarines would in this country
almost certainly have to take a second place in ship-breaking
5."Accordingly there can be little question that, taken by and large, the sinking of the German U-Boats is not only the simplest but
economical course for their disposal."
"A mass of surrendered German U-boats at their mooring at Lisahally, Northern Ireland. There are nine of the 21 class (1600 tons carrying 23 torpedoes), four of the 9 class (500 tons) and thirty nine of the 7 class (also 500 tons), a total of fifty two U-boats." Text and image source: Imperial War Museum
The sinking of the U-boats at a pre-determined location did not turn out to be as simple as perhaps the British had expected. Many were in bad shape and some sank before they arrived at the sinking location. The weather also made operations difficult. Of the U-boats sunk by the Royal Navy, 36 were used as aircraft targets.
Of the German surface fleet, little remained at the end of the war. In the last week,
Pocket battleship "LUTZOW" at Swinemunde and heavy cruiser "ADMIRAL
HIPPER" and light cruiser "EMDEN" at Kiel, all badly damaged in April
bombing raids, were scuttled in the first week of May. When Germany
surrendered, just three cruisers survived. "Prinz Eugen" was used in
A-bomb trials in the Pacific; "Leipzig" scuttled in the North Sea in
1946 loaded with poison gas munitions; and "Nurnberg" ceded to Russia.
A dozen or so big destroyers also remained afloat.
Other weaponry was mostly scrapped; equipment (including allied) was often sent to a “strip-out yard” where reusable parts might be extracted before the rest was either shipped on or sold for scrap.
"a primary assembly point in northwestern France in late 1944, with a variety of Allied and German vehicles awaiting transport to a “strip-out yard”." Image & text source
"This pile of vehicle carcasses at Vilvorde, Belgium was a common sight in the Low Countries and occupied Germany after WWII. In some cases, entire piles of unwanted war salvage was bought as one lot by a local speculator, who would hold it until scrap metal prices rose." Image & text source
Other equipment was simply abandoned, for example in the Libyan desert. Some German weaponry was used by Allied armies; France used the PzKpfw. V Panther until 1950 and had a Besnier squadron of Panzer IVs which were later sold to Syria and used in the 1967 Six-Day War, "last appearance by WWII German tanks on the world’s battlefields". German weaponry was also used in the Korean war.
Syrian army Panzer IV. Image source
Collectors, ready to cry? What happens to weapons after war….