Fairly Priced Housing
Vonovia’s core business is the provision of housing that meets everyone’s needs. The fundamental challenge for us involves being able to provide a supply of housing at fair and transparent prices while at the same time achieving a climate-neutral housing stock. We believe that social responsibility and the transparency of our rents are two of our most important levers in this context. By further expanding our core business through letting and new construction, we make a substantial contribution to easing the current situation on housing markets. Our rental prices are based on local rent prices, and, if available, on certified rent indices. In our view, regulatory interventions in housing markets are necessary and conducive to the achievement of our objectives.
We also partner with cities and municipalities to offer subsidized and independently financed homes for people on low incomes and are responding to location-specific challenges with services tailored to needs (see project box “Frankfurt and Vonovia Working Together for Climate-Friendly Housing at Fair Prices“). In Germany, around 10% of our housing is currently price-linked. In order to protect low-income tenants, we enter into individual agreements for rent-controlled homes. This secures our existing rents and plays into wider-reaching social agreements. We are concluding more and more wide-ranging agreements with cities and municipal authorities in Frankfurt, Berlin, Cologne, Munich and elsewhere. The use of public subsidies – now and in the future – also helps us to make existing and new housing affordable for our tenants and at the same time to implement climate protection measures. In this way, we can contribute to a balanced tenant structure and social heterogeneity in our neighborhoods.
We will retain our voluntary commitment in Germany to cap the modernization costs passed on to tenants at € 2/m2. In the event that a disproportionately large amount of CO₂ – and therefore further heating costs for tenants – can be saved, it is possible to balance the objectives in favor of the climate-protection measures on a project-by-project basis. We remain committed to providing special protection for people over 70 years of age who are affected by regular rent increases. We do not want our older tenants to worry about their financial security or losing their home due to their rent going up.
In Sweden, Victoriahem works with tenant associations to reach agreements on issues such as changes in rent charges. Issues like these are discussed and agreed on in negotiations. Rent increases occur annually, between 1–2%, or after modernization to a higher standard.
We also provide tailored assistance through our hardship management program to ensure that our customers have access to affordable housing over the long term. All tenants have the opportunity to claim hardship due to exceptional circumstances in the case of energy modernizations. The team – which comprises five hardship managers working at the headquarters and 25 neighborhood managers working on site – looks at each individual case and works with the tenant to find an individual solution. Our goal is always to ensure that people can stay in their homes and that their homes remain affordable.
We also offer solutions for particularly vulnerable people such as refugees and the homeless. We do this, for example, within the framework of special agreements with state governments, cities and municipalities as well as other residential real estate companies. We do this because we are convinced that social cohesion only comes about through successful integration and inclusion. And this begins at home.
Rent structures and agreements with municipalities are managed in a decentralized manner via the regions. The Chief Rental Officer (CRO) is the Management Board member responsible for the property management business in the North, East, South and West business areas, as well as for customer service and portfolio management. The individual measures are planned and coordinated in the Portfolio Management department. Hardship management is the responsibility of Portfolio Management. Since 2019, it has been supported by community developers in the individual regions in order to provide even better support for the tenants concerned.
Objectives & Measures
In times where housing is increasingly hard to come by, one of the ways in which we live up to our responsibility to society is by providing homes at transparent and fair prices to suit different budgets. The results of our new customer survey show that we provide suitable homes for a wide variety of people. We have customers from over 150 nations, and 35,322 new tenancy agreements were signed in 2021 in Germany. Around half of these customers are single, while the average household size is 1.8 people. Students and trainees accounted for 9% of all new tenancy agreements in 2021. Notably, 47% of new tenants are between 18 and 30 years old. The top three locations for new tenants in 2021 were Dresden, Berlin and Dortmund.
We have sent a number of signals that we want to be involved in changing the situation in Berlin, our second most popular location for new rentals, by bringing politicians, society and residential real estate companies together. In a first step, we waived potential claims for rental back payments arising from the ruling of the German Federal Constitutional Court on the Berlin rent freeze. In concert with Deutsche Wohnen, we have also gone a step further with our “Future and Social Pact for Housing” by selling 14,750 apartments to public housing companies, voluntarily limiting our rental increases for the next five years in Berlin and committing to build 13,000 new apartments. We are playing an active role in solving the housing shortage in Berlin.
In 2020, we entered into a framework agreement with the city of Munich to ensure that affordable apartments are rented long-term. The partnership will make affordable housing available in two different ways: firstly by renting homes to people who are eligible for subsidized housing, and secondly by providing suitable housing for employees of the city on a lower income. These and other partnerships with municipalities and cities – including the establishment of an independent mediation body in Dresden – demonstrate that Vonovia strives to work in partnership with politicians and society to tackle municipal challenges and that the company is taking specific societal and social challenges into account within its planning.
Our rents saw a moderate and socially responsible increase, underlining our commitment to providing homes for all. The average rent in the reporting year was € 7.38/m² (in Germany € 7.19/m²) throughout the Group. We respect all regulatory provisions such as rent ceilings and rent indices. The average modernization cost allocation in the reporting year was € 1.24/m² – identical to the previous year. This shows that we still had quite a bit of room to maneuver in 2021, in light of our commitment to limit the modernization cost allocation to € 2/m2.
Nevertheless, there will always be people who are unable to handle rent increases caused by modernization costs, for a number of different reasons. Our well-established hardship management team works with tenants to find individual solutions for their financial and personal difficulties. This can include deferring or reducing rent increases. In the case of personal hardship, this may also mean that we help tenants to move house, rearrange their furniture or find alternative accommodation. The hardship team can be reached directly via a dedicated telephone number. This ensures that our customers have fixed contact persons. When they receive notification of a case of hardship, the hardship managers perform an initial preliminary review before handing the case over to the community managers for further processing, who then personally contact the tenants concerned. During the reporting year, 874 customers submitted hardship cases to Vonovia, of which 654 were approved – a rate of 75%.
In 2021, we also cooperated with the German Tenants’ Association and other housing companies to agree on consistent standards for dealing with hardship cases in the event of modernization work, applying a common guidance framework. As such, we are contributing to greater reliability and transparency in cases of hardship.
We continued our over-70s scheme to protect older tenants. Since 2019, the scheme has provided individual help for over 500 people off the back of just under 1,000 inquiries. 161 of the 316 inquiries submitted in the reporting year were approved.
The coronavirus pandemic has made it even clearer what a difference our approach to hardship can make for our tenants. Customers need to feel safe within their own four walls, now more than ever. Vonovia has issued a guarantee that nobody will lose their apartment, if they encounter difficulties paying their rent due to the coronavirus pandemic. This guarantee remained in effect in 2021, even though we have seen a slight downturn in outstanding rent.
People who are homeless or at risk of becoming homeless are a particularly vulnerable group in society. That is why we continued to engage in a number of projects and measures in this area in the reporting year. Our “Housing First” approach ensures that homeless people are provided with a standard tenancy agreement with all of the normal rights and obligations, regardless of any mental or physical health conditions that they might have. It is only after this that they are offered help in order to get some stability into their lives. Vonovia provides homes as part of a wide range of partnerships. We have an agreement with the Sozialdiensten katholischer Frauen und Männer and Cologne Drogenhilfe. The latter provide assisted living for addicts and run events that provide information about addiction prevention. A joint case management team was set up in order to provide tenants with information about addictive behavior and other conflicts, in addition to being a port of call for additional help. In Bonn, we work with the Verein Frauen to help women as part of the “A Home at Last” initiative in North Rhine-Westphalia. We entered into a similar partnership with the city of Leipzig at the beginning of 2022. This followed on from our efforts to provide housing for a homeless project, which began in November 2021.
We provided new facilities in a building bought by BUWOG to “Haus Strohhalm”, a homeless facility in Berlin Treptow-Köpenick, after their old location – which was owned by the SPI association had to close. We made sure that the SPI association was closely involved in the planning process for the building, which has space for over 44 people. The construction project took their requirements into account.
We support other groups in need of protection. In Berlin, we work in partnership with the Hestia e.V association. We will make 15 homes available to this association over the next four years for women and children fleeing from violent situations.
We continue to provide homes for refugees. Currently, in 2022, we are providing housing for people who have been displaced from Ukraine due to the ongoing war, and are trying to do this as quickly and unbureaucratically as possible. To do this, we are using a tool that proved its worth during the 2015/2016 refugee crisis. We established the house map platform that local authorities could use to access housing from a variety of residential real estate companies. We will also be using this extremely successful format in 2022. We are also giving our craftsmen the opportunity and the materials to set up homes for refugees, even if these homes are not in our portfolio.