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 tenant needs and action in response to demographic change” and “Customer satisfaction and service quality” (see materiality matrix). The Group guidelines of Vonovia are definitive in terms of describing the concepts and their implementation. As part of the pending integration of the company Deutsche Wohnen acquired by us, we are reviewing the agreements, standards and processes in place at this company with respect to the material topics listed under social issues. Where necessary, we will implement our internal company-wide guidelines. Unless stated otherwise, the concepts presented for the reporting year apply to the Vonovia Group excluding Deutsche Wohnen.

Neighborhood Development and Contribution to Infrastructure

The social megatrends of climate change, urbanization and demographic change set out the scope for change within which the housing industry needs to find services and solutions. Whether climate-neutral building stocks (see Environmental Issues), increasing conglomeration in urban spaces and cities under individually evolving conditions (see Fairly Priced Housing) or an aging society (see Homes that Meet Tenant Needs and Action in Response to Demographic Change), the requirements are becoming increasingly complex and interconnected. Therefore, people’s direct residential environment, the neighborhood, is becoming an increasingly prominent area of focus for the housing industry, a trend that is amplified by the impacts of the coronavirus pandemic. 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. What’s more, the neighborhood level is also suitable for networked environmental measures.

Thinking and acting in terms of neighborhoods is Vonovia’s answer to these crucial megatrends – and our solution approach for the economic, environmental and social (new) development of our urban housing portfolios. With this in mind, Vonovia takes a holistic perspective on neighborhoods and develops infrastructure that is tailored to suit the individual challenges of each neighborhood, that is geared toward the needs of the tenants and that combines structural design, climate protection and services to meet social needs.

Almost 70% of Vonovia’s portfolio is located in neighborhood settings; this equates to 586 urban quarters (excluding Deutsche Wohnen). In this context, we understand a quarter – as per the definition of the 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. In addition to the urban quarters, there are unique strategic properties (urban clusters) to which the options for action of the strategy and business model are adaptively applied (see The Company).

This neighborhood-based view of the portfolio expands our spectrum of measures for designing our portfolio using networked approaches and new technical capabilities, thereby helping us to create places of shared living with a socially and environmentally viable future. Synergy effects release their potential within the neighborhood approach. As part of the further development of our investment strategy, some 20 neighborhoods in 2022 will be analyzed in terms of their environmental performance and social megatrends before being extensively prepared.

Vonovia’s neighborhoods are designed to comply with clear climate protection requirements. They use innovative concepts to offer a good platform to counter the challenges associated with climate change and reduce CO₂ emissions. Vonovia designs its residential environments and green spaces to strengthen participation and urban community life and to be sustainable 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 as well as our tenants in order to jointly develop solutions for the neighborhood. It uses various 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.

In 2021, there were 15 neighborhood development projects in the operational implementation stage across Germany comprising approx. 8,600 residential units as part of the neighborhood development investment program. These include various key components, such as energy-efficiency refurbishments, the construction of new homes and measures to design an appealing residential environment – supported by additional social services, urban development aspects and necessary infrastructure measures. These projects generally run for a period spanning several years. Due to lead times and adjustments to internal program logic, the aforementioned new neighborhood approach within the investment strategy cannot yet be presented in reported investment volumes. This relates to expenses connected with the measures in the neighborhood development program in the fiscal year.

Neighborhood development is also a material topic at Deutsche Wohnen. Here, the program and governance logic differs from the approach taken by Vonovia. The processes and governance logics, from the investment program through to implementation of the neighborhood development components, will be merged as part of the integration.

Neighborhood development calls for complex teamwork and extensive innovative knowledge of all employees to ensure successful implementation on location. From an organizational standpoint, the challenge of the neighborhood approach lies in reflecting networked thought and action within the organizational structure, facilitating knowledge transfer and establishing the processes necessary for this to happen.

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, employees can be qualified as neighborhood development experts. The Neighborhood Academy not only teaches innovative knowledge, but also focuses on the training of specific skills. At the same time, it enables the systematic sharing of experiences among participants. This is supported by Group-wide, web-assisted knowledge management in the form of the Vonovia Guide.

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 University of Applied Sciences in Bochum, thereby firmly embedding the neighborhood perspective in the education of EBZ students.

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 in the North, East, South and West business areas, as well as for customer service and portfolio and tenant 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

Vonovia’s core business is the provision of 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. Among other things, these developments unfold against the background of high climate protection requirements, which are particularly cost-intensive in the buildings sector. This is why, particularly with modernization projects, it is key to bear in mind what individual tenants can actually afford in order not to end up losing customers. After all, one aspect that is of fundamental importance to us is being able to offer our tenants the prospect of being able to stay in their homes in the long term. The fundamental challenge 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.

First and foremost, we achieve this through fair and transparent prices of our housing that are affordable for the various sections of society. 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 the usual local rents and – if available – on qualified rent indices. In our view, regulatory interventions in housing markets are necessary and conducive to the achievement of our objectives. When letting, we always observe the applicable country-specific legislation. We will retain our voluntary commitment in Germany to cap the modernization costs passed on to tenants at € 2 per 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.

The housing situation in Berlin is particularly fraught: the Act on Rent Controls in the Housing Sector in Berlin (“the Berlin rent freeze”), introduced by the Berlin State Government in 2020, was declared unconstitutional by the German Federal Constitutional Court in the fiscal year under review. As a consequence, a majority of voters in Berlin instructed the Berlin State Government by means of a referendum in fall 2021 to examine demands for socialization of the portfolios of major housing companies in Berlin. This illustrates the urgent need for sufficient and affordable housing in Berlin.

Here at Vonovia, we have therefore sent several signals that we wish to change the situation in Berlin through cooperation between politicians, society and housing companies. 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 by committing to build 13,000 new apartments in order to send a clear signal in the effort to combat the housing shortage.

Both in Berlin and in other cities and municipalities, we also offer subsidized and independently financed homes for people on low incomes and are responding to location-specific challenges with services tailored to needs. In Frankfurt am Main, we have agreed with the city on regulations for climate-friendly housing at fair prices. These regulations limit the average increases in existing rents to the level of inflation and – similar to the agreement in Berlin – to one percent for three years. Of new builds, 30% are in the subsidized segment – and Vonovia provides accompanying support to people affected by or threatened with homelessness. For the city of Frankfurt, this is the first agreement of its kind concluded with a private enterprise.

These two agreements, along with 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 takes specific societal and social challenges into account within its planning.

Individual support programs constitute a further supplementary component of our work to enable fairly priced housing. We have, for instance, firmly established our hardship management program. When we receive hardship case pleas, we work with the tenant concerned to find a suitable solution in each case. In the fiscal year under review, we cooperated with the German Tenants’ Association and other housing companies to agree on consistent standards – based on the guidelines of charitable organizations – 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. Also still in place are our special vested rights for people aged over 70 and our active support for people who have fallen into payment difficulties as a result of the coronavirus pandemic. The aim of these measures is always to ensure that people can stay in their homes and that housing remains affordable.

Rent structures and agreements with municipalities are manged 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 and tenant management. The individual measures are planned and coordinated in the Portfolio Management department.

Homes that Meet Tenant Needs and Action in Response to Demographic Change

Demographic trends and the associated aging of the population are changing the needs of our customers and the related challenges on real estate markets. We adapt our offering in response to these changing and varying housing needs. Our aim is to ensure that our tenants can stay safe and healthy 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.

In Germany, the demand for senior-friendly housing will outstrip supply by around two million by 2035. In an aging society, it is crucial to enable a large number of people to live independently in their own homes for as long as possible. We therefore already design a large share of our newly built apartments to be 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 pursue the target of modernizing 30% of newly rented apartments every year so that they meet the demands of an aging society. To this end, we review existing buildings to determine their potential for accessibility. In 2021, 10,000 apartments were (partially) modernized to make them more accessible.

As of December 31, 2021, we employed a total of 3,783 people in care service or care home management in the area of Care at Deutsche Wohnen. Retirement and care homes are operated under the brands KATHARINENHOF and PFLEGEN & WOHNEN HAMBURG. These facilities provide full residential care, the aim being to maintain an active lifestyle and residents’ independence to the greatest possible extent. Senior citizen-friendly services are also provided within the context of assisted living. With its Care and Assisted Living business 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. In addition to 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 refurbishment 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 residential environments and whether they feel that they are treated fairly by us as their landlord. Here, the quality of customer care and services plays a major role. Our experience tells us that availability, speed and transparency in customer service are pivotal when it comes to living up to expectations.

Our central, multilingual customer service department acts as the first port of call, whereas our caretakers and in-house craftsmen look after the needs of tenants on location. This allows us to ensure fast and reliable service. In 2021, we considerably increased the telephone availability of our customer services team, thereby significantly reducing waiting times.

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 250,000 times and is used actively by some 68,000 users. In 2021, we added two new features to the app – the digital lease agreement and the apartment search. As a result, the entire customer journey can now be shown 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. In the future, the app will be expanded to include additional features such as consumption data that can be read remotely. The systematic implementation of digital solutions also helps the environment and has already enabled us to save more than a million sheets of paper.

Customer satisfaction is measured using a quarterly customer survey and is reflected in the Customer Satisfaction Index (CSI), which is an element used in determining Management Board remuneration as a direct, non-financial control parameter and SPI component. In 2021, Vonovia reached an all-time high in the CSI. This success is further reflected in an award given by analysis institute AktivBo, which Vonovia received in the fiscal year under review as the company with the largest improvement in the service index. 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 also conducts an annual tenant survey to measure its customers’ satisfaction with their living situation and their satisfaction with Deutsche Wohnen as a landlord, with this survey comprising multiple items. It is, however, not comparable with the Vonovia CSI. Satisfaction with Deutsche Wohnen as a company remained more or less stable between 2020 (82%) and 2021 (81%). The level of satisfaction with tenants’ residential units stands at 86% (2020: 88%).

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 and the customer portal are also the responsibility of the central customer service center.