Social Issues

Within the context of the statutory requirements in the Non-financial Group Declaration, social issues include the following material topics: “Neighborhood development and contribution to infrastructure,” “Fairly priced housing,” “Homes that meet people’s needs and demographic change” and “Customer satisfaction and service quality” (see Materiality Matrix).

Neighborhood Development and Contribution to Infrastructure

The social megatrends of climate change, urbanization and demographic change continue to determine the framework conditions under which housing providers must develop their services and solutions. Whether it is climate-neutral housing stock (see Environmental Issues), the provision of sufficient affordable housing in large metropolitan areas (see below Fairly Priced Housing) or services for an aging society (see below Homes that Meet People’s Needs and Demographic Change) – the requirements are wide-ranging and call for integrated solutions.

Therefore, the neighborhood, people’s direct residential environment, is becoming an increasingly prominent area of focus for the housing industry. Quality of living is being associated more closely with the neighborhood level. People want to feel at home in their environment and identify with their place of residence. The neighborhood level is also the starting point for networked environmental and social measures.

Thinking and acting in terms of neighborhoods is our answer to these crucial megatrends – it is also the approach we adopt to find solutions for the economic, environmental and social (new) development of our urban housing portfolios, which are largely located in urban quarters. We understand a neighborhood– as per the definition of the Association of German Housing and Real Estate Companies (GdW) – as a visually coherent urban development structure that is seen by its residents as a distinct area and that represents an area for action in which the residential real estate company can make a difference and see positive effects. It comprises at least 150 apartments (see Portfolio Structure).

This neighborhood-based, holistic view of the portfolio expands our spectrum of measures for designing our portfolio using networked approaches and new technical capabilities, thereby helping us to develop places of shared living with a socially and environmentally viable future. The potential of the neighborhood approach can be seen particularly in the synergistic effects that can be achieved through its application. Our neighborhood developments are designed to comply with clear climate protection requirements. They use innovative concepts to offer a strong platform to counter the challenges associated with climate change and reduce CO₂ emissions. We design our residential environments and green spaces to strengthen participation and urban community life and to be sustainable and resilient from an ecological perspective.

Environmental and social aspects go hand in hand within our neighborhood approach. Vonovia is equally committed to both aspects and to promoting social interaction in the local community. Measures to strengthen shared living only become manageable and effective through the neighborhood approach. This is a process involving city and municipal authorities, local stakeholders and our tenants in order to jointly develop solutions for the neighborhood. It uses various participatory processes, instruments and cooperation initiatives to achieve this, e.g., by making premises available, establishing services, neighborhood meet-ups and day care centers hand in hand with cooperation partners that focus on the greater good.

The investment program for neighborhood developments is where Vonovia’s neighborhood approach is implemented at an operational level. In 2022, 18 neighborhood developments across Germany, accounting for around 9,600 residential units, were involved in this program, which is set to run for a period of several years. This approach will also be extended to Deutsche Wohnen’s portfolios and developed further as part of the integration process.

However, due to the deterioration in the investment climate during the reporting year, we were forced to push back the start date for new neighborhood developments to reflect general economic conditions. The frequent changes to subsidy eligibility conditions by public authorities during the reporting year – e.g., for new-build energy standard requirements and the sudden discontinuation of certain types of support – make neighborhood development planning, which is long-term and complex by its very nature, immensely difficult. In this area, in particular, we are dependent on reliable support schemes. Nevertheless, we are trying to forge ahead with our plans for further multi-year neighborhood developments and are unwavering in our commitment to our long-term goal of optimizing all urban quarters in the portfolio in the course of neighborhood developments moving forward.

We were therefore unable to use the €117.8 million that had been earmarked for investment in neighborhood developments in Germany for the 2022 fiscal year in full. We also expect a reduced investment volume for 2023. Nevertheless, we are ensuring that our plans for further neighborhoods are at a stage where we will be able to implement them as soon as the investment environment allows. We hope to use the associated transition phase to improve internal structures and processes – with respect to standardization, innovations, learning and networking – and to emerge from the crisis stronger than ever.

Neighborhood development calls for complex teamwork and extensive, forward-looking skills from all employees to ensure successful on-site implementation. Here, Vonovia follows the approach of providing central support services for local decision-makers and actors and ensuring the transfer of best practice. Thanks to the Neighborhood Academy, an internal training and networking format, Vonovia employees are trained as neighborhood development experts. The Neighborhood Academy not only teaches innovative concepts and basic knowledge of how the neighborhoods of tomorrow are developed and managed, but also focuses on the training of specific skills. At the same time, it enables the systematic sharing of experiences of neighborhood-related topics among participants. This is supported by a Web-assisted knowledge management system, the Vonovia Guide, which can be used throughout the Group.

In order to further spearhead research in the field of neighborhood development and living, Vonovia sponsors a foundation professorship – held by Prof. Dr. Jan Üblacker – at the EBZ Business School in Bochum.

Neighborhood development is planned and managed on a decentralized basis via the regions. The Chief Rental Officer (CRO) is the Management Board member responsible for the property management business as well as for customer service and portfolio management. We are increasingly using our own neighborhood developers for on-site implementation. This allows us to address any specific issues as and when they arise.

The investment and participation formats are also the responsibility of, and are managed by, the regions, just like Vonovia’s social commitment. This approach is supplemented, also from a quality assurance perspective, by centrally managed supporting measures via corporate communications.

Fairly Priced Housing

As a responsible company, we are committed to providing affordable housing that meets people’s needs. As such, we meet the basic human need for housing. In this context, the needs and life circumstances of our customers – as a reflection of society – differ in all kinds of ways. There are also differences in the situation on individual housing markets. In metropolitan areas, in particular, shortages of available housing often go hand in hand with strong demand.

This already high demand is exacerbated further by the influx of refugees due to Russia’s war of aggression on Ukraine. The marked increase in demand coincides with an increasingly unfavorable investment environment resulting from rising construction and land costs, fewer subsidies, a lack of skilled labor and disproportionately higher interest rates.

These developments continue to unfold against the background of high climate protection requirements, the fulfillment of which is particularly cost-intensive in the buildings sector. Particularly with regard to modernization, it is therefore important to balance the economic and ecological perspectives without losing sight of what our tenants and those searching for an apartment can actually afford. The significantly higher energy costs associated with the war are putting further pressure on housing costs for many people.

For us, it is of fundamental importance to be able to offer long-term housing prospects to as many people as possible. The fundamental challenge involves being able to provide a broad supply of housing at fair and transparent prices, while at the same time achieving a virtually climate-neutral housing stock, even in a more challenging environment.

By further expanding our core business through letting and development, we make a substantial contribution to easing the current situation on housing markets. Our rental prices are based on the usual local rents and – if available – on qualified rent indices. We are in favor of regulatory intervention in the housing markets, as we believe that it helps to ensure social balance and creates a stable business environment as a result. When letting, we always observe the applicable country-specific legislation.

When passing on modernization costs, we are always mindful to ensure that the burden placed on our tenants is socially just and offer individual solutions as part of our social management system. That said, reasonable compromises must be made in favor of additional climate change mitigation measures. In the 2022 reporting year, an average of €1.20/sqm in modernization costs was passed on.

Vonovia’s Group-wide portfolio has grown considerably as a result of the merger with Deutsche Wohnen, especially in Berlin. At the same time, the housing situation there is extremely challenging. As responsible partners, Vonovia and Deutsche Wohnen together sent several signals already in 2021 that we wish to change the situation in Berlin through cooperation between politicians, society and housing companies.

As part of the “Future and Social Housing Pact” agreed with the Senate of Berlin in 2021, we have made three voluntary commitments: to strengthen the municipal housing portfolio, build more new homes and limit rises in rents for existing properties. In June 2022, Vonovia – one of only two private residential real estate companies to do so – signed the “Alliance for New Housing Construction and Affordable Housing in Berlin,” which replaces the previous agreement and will remain in effect until at least 2027. The Alliance now provides a new basis for commitments to Berlin’s tenants that far surpass the scope of the old agreement.

Deutsche Wohnen also has its own regulation, the “Tenants’ Promise,” which will apply to its portfolio until mid-2024 and continue to exist in parallel with the Berlin Alliance. However, the agreement that is more favorable for our tenants shall always apply.

In other cities and municipalities, too, we also offer subsidized – in Germany around 41,000 of our homes are currently price-controlled – and independently financed homes for people on low incomes and are responding to location-specific challenges with services tailored to needs. The focus of such services can vary: In Frankfurt am Main, we are addressing the issue of homelessness, for instance, while in Cologne we are focusing our efforts on a new construction offensive, and in Dresden our aim is to strengthen the municipal housing association as well as to work together to develop neighborhoods and ensure a coordinated climate strategy.

The fundamental concept on which all agreements are based is Vonovia’s desire to work in partnership with politicians and society to tackle municipal challenges and that the company takes specific societal and social challenges present within cities into account within its planning.

Individual support programs constitute a further supplementary component of our work to enable fairly priced housing. The aim is to ensure that people can stay in their homes for a long time and that housing remains affordable for them. We support them in this matter and offer personalized assistance to all tenants who are actively working with us to find a solution. These forms of assistance range from deferring rent and allowing payment to be made in installments, to offering help with housing allowance applications and other dealings with the authorities, relocation assistance and other practical forms of help.

As part of our established social management system, we apply uniform standards to hardship cases in the event of modernization work and follow guidelines based on those of welfare associations. These standards and guidelines were agreed with the Tenants’ Association and other residential real estate companies in 2021. As such, we are contributing to greater reliability and transparency in cases of hardship.

Also still in place are our special vested rights for people aged over 70, which have also – as of January 2023 – been extended to Deutsche Wohnen’s portfolio, and our active support for people who have fallen into payment difficulties as a result of the coronavirus pandemic.

Due to the sharp rise in energy costs, many tenants are worried about high additional heating costs and ancillary expenses. Just like during the coronavirus pandemic, our promise, which is that no one who is taking active steps to find a solution will have to move out of their home due to unaffordable energy costs, still stands. With this in mind, we have developed a comprehensive package of measures to counteract the increase in costs caused by the energy crisis and inflation. These include reducing the heating temperature in our properties to save energy, energy-saving tips, help with claiming government benefits and individual solutions when tenants find themselves unable to cover energy costs. 

2022 was primarily dominated by the suffering in Ukraine. Just like during the refugee crisis in 2015, which resulted in a comparable situation, rapid and pragmatic help was needed here. Particularly in the large metropolitan areas of Berlin and Dresden, employees of the company provided support at a number of different levels – whether that be through the provision of housing, furniture donations, volunteer work or donations to charities. Deutsche Wohnen – which focused on Berlin – has run numerous campaigns of this kind, and others, under the hashtag #Wirhelfen (“We are helping”).

The very vulnerable groups include, in particular, people who are homeless or at risk of becoming homeless. Vonovia therefore makes this target group a key focus of its social commitment efforts. As such, we continued to engage in a number of projects and measures in this area in the reporting year. In doing so, we pursue the “housing first” approach, which envisages providing homeless people 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 for this purpose as part of numerous cooperative initiatives.

Rent structures and agreements with municipalities are managed in a decentralized manner via the regions. The individual measures are planned and coordinated in the Portfolio Management department.

Homes That Meet People’s Needs and Demographic Change

Our aging society, a result of demographic change, means that our customers’ needs are changing, too. This poses new challenges for the real estate market. In Germany, the demand for senior-friendly housing will outstrip supply by around two million by 2035.

We are adapting our offering in response to these changing housing needs. Our aim is to ensure that our tenants can stay safe, healthy and independent in their homes over the long term. In the event that architectural conditions no longer support independent living, it is important that the barrier to accessing further care services is low.

We are already planning to make a large share of our newly built apartments accessible and/or wheelchair-friendly. More important, however, is the low barrier for equipping and refurbishing apartments for people with impaired mobility. Homes that are completely barrier-free, according to German industry standard DIN 18040-2, are only necessary in very rare cases. Rather, a small number of measures, such as the fitting of non-slip flooring or flush-to-floor showers, are often sufficient to significantly increase the level of living comfort in old age.

We therefore aim to modernize around 30 percent of newly rented apartments every year so that they meet the demands of an aging society. To this end, we are reviewing existing buildings to determine their potential for accessibility. In 2022, around 10,100 apartments were (partially) modernized to make them accessible. Due to the limited investment opportunities, we expect the share of accessible, (partially) modernized apartments to account for only around ten percent of new rentals in 2023. However, we are planning to have this share back at its historical level as soon as possible. As of 2023, Deutsche Wohnen has joined the program of (partial) modernization measures to make its portfolio properties fully accessible.

The Care segment, which is new for Vonovia and for which reporting is carried out separately, comprises Deutsche Wohnen’s nursing care and nursing care properties business segments. As of December 31, 2022, we employed a total of 3,798 people in care service or care home management within this segment. Care business operations are based on an independent system and process landscape. 39 retirement and care homes are operated under the brands KATHARINENHOF and PFLEGEN & WOHNEN HAMBURG, 38 of which are owned by Deutsche Wohnen. There are also an additional 33 nursing care properties run by other agencies.

These facilities provide full residential care, the aim being to maintain an active lifestyle and residents’ independence to the greatest possible extent. Demand remained at a consistently high level in the reporting year. Senior citizen-friendly services are also provided within the context of assisted living. With its Care segment, Deutsche Wohnen makes a substantial contribution in the area of demographic change.

In addition to structural measures, the social infrastructure in the neighborhood also plays a key role. Alongside special forms of housing, such as senior-friendly apartments, Vonovia also works with cooperation partners that focus on the greater good to offer services and neighborhood meet-ups, for example.

Responsibility for the senior-friendly housing programs lies with the Management Board (CRO). The structure of the renovation program is managed centrally and is implemented via the regions.

Customer Satisfaction and Service Quality

Customer satisfaction is instrumental in the success of a company. For us, this is mainly associated with the question of whether our tenants feel at home in their apartments and neighborhoods and whether they feel that they are treated fairly by us as their landlord. Here, the quality of customer care and services plays a central role. Our experience shows that accessibility, speed and transparency in service are decisive factors for achieving customer satisfaction.

Our central, multilingual customer service department acts as the first port of call, whereas our caretakers and craftsmen look after the needs of tenants on location. This allows us to ensure fast and reliable service. We run our own customer service centers in Essen and Dresden, and since January 2023 also in Berlin. This takes the merger with Deutsche Wohnen – and the increase in customers that came with this – into account. The aim is to be able to guarantee the same level of quality for the entire portfolio in Germany.

In order to further boost flexibility and speed, we are pressing ahead with the digitalization of our service functions. The key channel in this regard is the tenant app, which has already been downloaded more than half a million times and is used actively by some 145,000 users. The new features introduced to the app in 2021, the digital lease agreement and apartment search, were well received. In 2022, the feature for providing consumption data that can be read remotely was added. As a result, we can show the entire customer journey in the app: from searching for an apartment and scheduling viewing appointments through to digital contract drafting, ancillary expense bills and all other topics for existing customers. The customer app has thus replaced the customer portal, which was previously run in parallel to the app. The portal was closed down at the beginning of the fourth quarter of 2022.

Customer satisfaction is measured using a quarterly customer survey and is reflected in the Customer Satisfaction Index (CSI). It is incorporated into the Management Board’s remuneration as a direct non-financial indicator and component. Year-on-year, we once again succeeded in achieving an all-time high for Vonovia in the CSI, surpassing the previous year’s result, which at that time had been our best yet. The aim is to cement this positive trend on a permanent basis. BUWOG in Austria and Victoriahem in Sweden also carry out regular customer satisfaction surveys.

Looking forward, we aim to introduce a harmonized CSI in Germany, Sweden and Austria in order to be able to compare the results of the individual surveys.

Deutsche Wohnen continued to conduct its established annual tenant survey in the 2022 fiscal year. This is comprised of various parameters and investigates how satisfied Deutsche Wohnen’s customers are with their housing situation as well as how satisfied they are with Deutsche Wohnen as a landlord. It is not comparable with the Vonovia CSI. Year-on-year, satisfaction with Deutsche Wohnen as a company increased by almost three percentage points (2021: 80.7% to 2022: 83.4%). The score for satisfaction with housing remained at a consistently high level, increasing slightly to reach 87.2% (2021: 86.6%). The first ever consolidated survey on the CSI is scheduled for 2023.

At Vonovia, responsibility for the central customer service center lies with the CRO. While customer satisfaction is assigned to the central customer service center in strategic terms, it affects all customer-facing operating departments and is ensured by each and every Vonovia employee. The design and management of the tenant app are also the responsibility of the central customer service center.