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 within 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 Fairly Priced Housing) or services for an aging society (see Homes that Meet Tenant Needs and Demographic Change) – the requirements are wide-ranging and call for integrated solutions.

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 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. This is particularly evident in the further development of heat supply, where we are moving away from looking only at individual buildings (wherever possible) and generating synergies via integrated heating networks in order to find the most ecologically and economically viable solution. This process sees us work with stakeholders on location to develop the right concepts. Our neighborhood developments are designed to comply with clear climate protection requirements (see Environmental Issues).

Environmental and social aspects go hand in hand as part of the 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. We use a range of 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.  With our “freiRaum” concept, we also offer free, low-threshold locations for local initiatives and groups to allow people to get involved in social events in our neighborhoods. These flexible neighborhood space concepts are already in place in Dresden, Bremen and Hamburg and are designed to serve as a blueprint for the establishment of more central meeting spaces in various Vonovia neighborhoods.

The investment program for neighborhood development defines the scope for operational implementation of Vonovia’s neighborhood approach. In 2023, 17 neighborhood developments across Germany, accounting for around 9,500 residential units, were involved in this program, which is set to run for a period of several years. In response to the gloomy investment climate, we are currently taking a more differentiated approach to our neighborhood development measures, and dividing packages of measures into smaller chunks. For example, we are adapting modernization measures to take account of the limited investment opportunities and reflect demand, without losing sight of the neighborhood as a management level. Our urban quarters are also reaping increasing benefits from further measures from other Vonovia programs (modernization/heating replacement/photovoltaics).

Nevertheless, we are trying to forge ahead with our plans for further multi-year neighborhood developments and are sticking to our commitment to our long-term goal of using modernization measures to optimize all urban quarters in the portfolio in line with our binding climate pathway.

Due to the deterioration in the investment climate and resulting adjustments to this specific investment program, we were only able to use part of the € 62.8 million that had been earmarked for investment in neighborhood developments in Germany for the 2023 fiscal year in full. Depending on how interest rates developed, we also expect a reduced investment volume for this part of the program in 2024 as well.

For us, neighborhood development also means being an active driver of the infrastructure transition. By way of example, we are taking targeted measures to upgrade our neighborhoods by establishing key local amenities, building playgrounds and designing green spaces and communal areas. We are also supporting the expansion of the fiber optic network in order to boost digital networking.

One key component is promoting state-of-the-art mobility concepts. Our measures support the mobility transition towards lower-emission and less car-heavy mobility in our neighborhoods. When designing new construction projects, we pay attention to good public transport connections, focus increasingly on bicycle parking spaces and consider providing charging facilities for electric mobility from the planning stages.

While the options available to us are more limited in our existing buildings, we want to make an important contribution to greener mobility here, too – e.g., by installing charging infrastructure for electric vehicles. With this aim in mind, we are planning to install 100 neighborhood charging stations in our existing neighborhood in 2024. Car and bike sharing services (including for electric vehicles) round off our offering. We are also working on ideas for similar concepts in Sweden.

In order to do an even better job of integrating affordable and sustainable mobility into our neighborhoods, we are placing particular emphasis on strengthening cycling-related services. We are aiming to gradually connect our neighborhoods to municipal cycle path networks and are seeing increasing demand among our customers for bicycle-related mobility solutions. With the establishment of the Group’s own start-up NEARBYK (https://nearbyk.de) in 2023, we are offering e-bikes for purchase or hire as well as service points for bike repairs and maintenance. We will be testing this new service for a period of around 16 months, initially at three locations in Essen, Dresden and Bremen. Freely accessible repair stations and the rental of cargo bikes round off our range of services in selected other neighborhoods.

Thanks to the Neighborhood Academy, an internal training and networking format, Vonovia employees are trained as neighborhood development experts, promoting the skills required for a holistic neighborhood approach among our own workforce.

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.

Living at Fair Prices

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 situations 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 resulting from the megatrend of urbanization is exacerbated further by the ongoing influx of refugees due to Russia’s war of aggression on Ukraine. This is corroborated by an investment environment that remains unfavorable due to increased construction and land costs, a volatile subsidy landscape, a lack of skilled labor and rapidly rising interest rates – meaning that the construction of new apartments for more affordable segments is not commercially viable at present.

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 energy crisis 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.

As development activities throughout Germany are currently not at a level that is able to alleviate the pressure on demand due to the unfavorable investment environment, our core business – providing homes – is extremely important from a social perspective. Our rental prices are based on the usual local rents and – if available – on qualified rent indices. Rents are only adjusted in line with the statutory parameters. Nevertheless, the average rent including ancillary expenses in our portfolio remains below 30% of the average disposable household income in Germany. 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.

In Sweden, rents are generally set as part of a binding, consensual process involving negotiations between tenants’ associations and landlords. This means that prices are fixed. Increases tend to occur annually and after modernization to a higher standard. All of our apartments in Sweden are price-controlled.

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 2023 reporting year, an average of € 1.32 per sqm in modernization costs was passed on.

In numerous cities and municipalities, we also offer subsidized – in Germany around 38,000 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 people’s needs. The supplementary voluntary agreements that we conclude with municipal authorities include, for example, provisions governing fair rental conditions, the construction of new apartments or the strengthening of municipal housing construction companies and joint neighborhood development. 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 the people living in our homes have a safety net so that they can stay in their homes for a long time and 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 charitable 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 and our active support for people who have fallen into payment difficulties as a result of the coronavirus pandemic.

Energy costs, and heating costs in particular, have shown very dynamic development over the past two years. The heating index published for 2022 estimates that the annual year-on-year increase in costs for consumers in Germany came to 81%. Households with gas-fired heating systems were particularly hard hit. This means that many tenants are worried about high additional heating costs and ancillary expenses. Even though we are generally not the energy supplier ourselves, but rather only pass on the costs charged by the energy providers concerned, we consider it our responsibility to support our tenants. 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 to the extent that we have the power to do so. These include reducing the nighttime temperature in our properties by one degree Celsius to save energy. Energy-saving tips help with claiming government benefits and individual solutions when tenants find themselves unable to cover energy costs. We provide our tenants with information in various languages, also on our website, about ways of saving energy (see https://www.vonovia.de/en/mein-zuhause/saving-energy).

Energy prices have also risen dramatically in Sweden since the start of Russia’s war of aggression against Ukraine. Due to the Swedish model of rents that already include ancillary costs, however, tenants only have to bear the price effect associated with electricity themselves, while landlords’ ancillary costs are on the rise due to the higher heat supply costs. This also, however, provides incentives for energy-efficient building refurbishment at the same time. We did not identify any critical changes affecting rental or for tenants due to energy prices in the reporting year.

People who are homeless or at risk of becoming homeless are a particularly vulnerable group in society when it comes to housing. 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. We pursue the “Housing First” approach that 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 for this purpose across Germany 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. The demand for senior-friendly housing is expected to outstrip supply in Germany 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. We want to keep existing customer groups in our properties for as long as possible and attract new ones.

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.  New leases in particular offer us a good window of opportunity to carry out appropriate renovation measures without inconveniencing tenants with construction work.

We therefore aim to modernize around 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. Due to the limited investment opportunities available, we were only able to (partially) modernize around 6,550 apartments (or 17.5% of newly let apartments) in 2023 to make them fully accessible. We have, however, clearly outstripped our original 2022 forecast of around ten percent for 2023. As far as 2024 is concerned, we expect to be able to return to the original level of around 30%.

The modernization program relates to the German portfolio – there are no equivalent programs in Austria or Sweden, although making homes more accessible is also a consideration there under the relevant building regulations.

The Care segment comprises Deutsche Wohnen’s nursing care and nursing care properties business segments. As of December 31, 2023, we employed a total of 3,825 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. The nursing care activities are currently being subjected to a strategic review and market tests by the Management Board of Deutsche Wohnen (see Care and Assisted Living).

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 to addressing demographic change.

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

The challenge facing Vonovia lies in achieving high levels of customer satisfaction and service quality against the backdrop of a large residential portfolio, low vacancy rates – and, as a result, strong demand for homes – and a wide variety of customers with a whole range of different concerns. This requires a good deal of availability and speed, as well as employees who have been trained accordingly. This is both an opportunity and a risk, as 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, Dresden, and Berlin. Our employees undergo continuing professional development thanks to a centralized knowledge and training management program. Regular dialogue formats ensure performance and quality. The aim is to be able to guarantee the same level of quality for the entire portfolio in Germany. Our customers can reach our staff of more than 1,100 employees through a variety of channels.

In addition to personal contact, the digitalization of our services that address customer concerns is an important field for us in order to make accessibility even faster, more convenient, and flexible. This is why we are continuing to expand self-service functions such as our “My Vonovia” and “DeuWo Digital” tenant apps. Together, the two apps have already been downloaded more than 745,000 times and are actively used by around 215,000 users. We can use the apps to map the full customer journey: from the apartment search process, including arranging viewing appointments, to the digital conclusion of contracts and all other issues affecting existing customers, such as ancillary expense bills, through to the concerns of customers moving out of our properties and former customers. In Austria, the BUWOG customer app was added to the app landscape in 2023.

All of our tenants also have access to our whistleblower and complaints channels (see Combating Corruption and Bribery).

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. In the 2023 fiscal year, the customer survey was extended to the Deutsche Wohnen portfolio (excluding the Care segment). The aim is to consolidate the high level achieved in recent years in the long run within this broader framework. 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.

At Vonovia, responsibility for customer service center lies with the CRO. While customer satisfaction is assigned to the 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 apps are also the responsibility of customer service.