Creating Appropriate Living Space and Affordable Rents

Objectives, Measures and Indicators

We make use of a variety of options to keep costs as low as possible for our tenants when providing new affordable homes that meet society’s needs. Alongside voluntary agreements and obligations, these include the exploitation of economies of scale, lowering construction costs by deploying serial construction methods and conversions in existing stock to meet needs.

Rent Cap Agreements

One of the first successful steps we have taken in restricting the burden on our tenants is the cap on allocable costs for modernization services. The intensity of the public debate surrounding rent increases as a result of modernization measures has shown the importance of this issue. Vonovia has thus pledged:

  • not to conduct modernization work in the future that would add more than two euros per month to the tenant’s basic rent per square meter,
  • to ensure that our customers can stay in their homes, and
  • to investigate hardship cases individually and actively look for solutions.

Including our tenants at an early stage is important in this regard. By doing this, we aim to ensure that measures that increase the value of our stock and environmentally friendly refurbishments are still carried out, i.e., that we can ensure that we meet our responsibilities for climate protection measures.

A second element is the demand for homes. An increasing number of our homes are losing their social housing status. Whereas back in 1990, there were still around three million apartments classified as social housing in Germany, this figure is set to have fallen to around one million by 2020. Around 10% of Vonovia’s homes are subject to social housing pricing restrictions. While there are now set rules in place for new constructions regarding rental price and occupancy-controlled homes – for instance, the Berlin model for cooperative building development sites, where 30% of the floor space must be occupancy controlled – there are usually no new regulations for existing properties. However, in many housing markets, Vonovia comes to voluntary agreements or finds individual solutions with cities and municipalities that also include new commitments for existing properties – and thus exceeds the statutory laws in many locations. We communicate with mayors, municipal authorities as well as tenants’ associations (see Open Dialogue With Society).

Achieving Economies of Scale

Vonovia primarily achieves economies of scale through standardized processes and the scale of the organization. This enables us to generate cost advantages in the management of the portfolio and the procurement of services, which we pass on to our tenants through lower ancillary expenses, for example. We also apply standardized processes when investing in existing properties and use the same materials wherever possible for maintenance and modernization measures. This allows us to buy in bulk, which means we receive the materials at special conditions, for instance, in the form of a lower purchase price or a better quality standard for the same price.

New Construction, and Serial Planning and Construction 102-15, 413-1

Vonovia wants to offer homes that are affordable to a broad section of the population. In order to ensure that we can, we must keep construction costs low. Serial planning and construction make this possible. In this context, we do not set up individual projects to plan construction activities, but rather use systematic, standardized serial processes and then divide the planned homes into individual modules. This enables to reduce the costs and construction times considerably while also guaranteeing uniform quality standards. The shorter construction periods also allow us to reduce the noise pollution and dirt that the residents are exposed to.

Modular approach for new construction work:

Modular approach for new construction work (graph)

The fact that Vonovia has a large amount of land and potential for vertical expansion, even in central locations, continues to have a positive impact as it means that there is no need to acquire expensive building plots.

The individual building regulations in different federal states mentioned above make the serial approach to construction, which we apply to reduce construction costs, more difficult. In order to meet the challenges that these circumstances pose, we work closely with politicians and municipalities as well as building authorities. We invest a lot of time in long-term and detailed planning.

The public debates in the reporting year have shown that including citizens in construction measures is becoming increasingly important if the measures are to be implemented successfully. Vonovia therefore takes the approach of including tenants and other stakeholders in the planning of new construction measures or vertical expansion and takes on board their ideas, views and suggestions. For example, we speak to local advisory boards and tenants’ associations early on and organize regular informational events. Where appropriate, we also bring in mediator support to deal with particularly complicated cases.

In 2018, we began and completed several serial construction projects in all our regions in Germany, such as two apartment buildings with steel modules in Wiesbaden and a new building using reinforced concrete modules in Dresden.

In 2018, the construction of more than 1,000 new apartments began, some of which have already been completed. We are maintaining the high level of our investment program and will once more invest approximately € 1.3 billion to € 1.6 billion, primarily in energy-efficiency modernization and new construction. We aim to expand the range of tasks completed by our technical service and to deploy technicians for interior work in coordination with partner companies.

Needs-based Conversions and Extensions 102-15, 413-1

The increasing changes in housing needs presents the housing industry with the task of adapting homes – even and particularly existing stock – to meet people’s needs. Alongside the fact that the German population is aging, there is additional demand from the rise in one and two-person households. This development is fueling the need for apartments to accommodate smaller households. Many of these apartments require fully accessible fittings and entry in order to enable elderly tenants to stay in their homes for as long as possible. Virtually no other aspect is as important to maintaining quality of living as remaining in your own home – even if care is needed.

To us, fully accessible means:

  • that apartments can ideally be accessed by elevator,
  • that thresholds and steps are leveled out and there are no floor level differences exceeding two centimeters, and
  • that wider entry and internal doors are fitted along with walk-in showers and accessible wash basins.

Our new constructions usually contain fully accessible features that exceed the statutory requirements, and during modernization measures we review the potential for improving accessibility. Our measures also include communal areas, where we widen entry doors or ensure there is separate space for storing walkers and other aids, for example.

We strive to meet changing needs, for instance, by conducting adequate senior-friendly conversions, establishing residential communities supervised by nursing assistants or offering elderly tenants support in their everyday lives.

We are testing models in Essen and Berlin, which we will roll out to other locations in future should they prove successful.

For our model project in Essen, we have established a supervised residential community for people suffering from dementia, where the people live together in one home and receive external care and support services. For this, four apartments, now inhabited by ten people with senile dementia who help each other in their daily routines, were joined together and made fully accessible. Responsible for this “Demenz-WG” (shared apartment for people with senile dementia) is the home care service provider Humanika. This manner of cohabitation offers elderly people and people with dementia the opportunity to live together and grow old on their own terms and to deal with their increasing need for care.

In the Reinickendorf district of Berlin, Vonovia is working on a neighborhood with a social project that focuses on the cohabitation of different generations. 145 senior-friendly and fully accessible one to two-room apartments will be created in two tower blocks – right in the heart of the neighborhood. In addition to precise floor plans, fittings such as automatic entry doors, larger bathrooms with non-slip flooring and handles, central power supply disconnection, special electricity sockets and built-in cupboards in the hall with room to store walkers are also included. We are also cooperating with the association “Johanniter Unfall-Hilfe,” with whom we have created a concept for neighborhood meetings. The aim is to enable people to live independently in their own homes in a supportive environment, even in old age. Various everyday support services, including a pharmacy and laundry service, home care services, on-call emergency doctors, a meal delivery service and group activities such as trips, cooking together and memory training, are all designed to foster participation and higher quality of living.