Risks Related to Regulatory Environment & Overall Statutory Framework

Changes in the regulatory environment and in the overall statutory framework could give rise to risks for all of Vonovia’s business segments. 0 (2023: 2) key amber risk has been identified at present.

On November 13, 2024, the German cabinet adopted the amendment to the Hazardous Substances Ordinance (Gefahrstoffverordnung), which brings changes to the risk policy for carcinogenic hazardous substances and additional obligations for activities involving asbestos. The originally planned general suspicion of asbestos for all buildings completed before 1993 and the introduction of a fundamental duty of investigation for building owners have not been adopted. In summary, the risk has been reduced significantly by the amendment to this Ordinance. Any amendment to the Hazardous Substances Ordinance has a potential impact on all of Vonovia’s technical processes (including small-scale repairs, vacant apartment refurbishment, major maintenance measures, modernization). A comprehensive risk mitigation project was launched in 2024 to consolidate the necessary process and system adjustments. These are being reviewed further now that the legislation has been passed. As a result, the risk associated with an “Amendment to the Hazardous Substances Ordinance” was downgraded overall from amber to green at the end of the 2024 reporting period. In qualitative terms, we continued to assess the risk as having a low (2023: substantial) amount of loss and a probability of occurrence of 60-95% (2023: 60-95%).  

Changes to, or the application of, legal provisions that are beyond Vonovia’s control, and inadequate documentation of management decisions can lead to legal disputes and give rise to the risk of material implications. The total number of legal disputes ongoing at Vonovia is small. In addition to cases related to the core Rental business, such as announced modernization projects or the appropriateness of ancillary expense bills, these include other operating, labor law and corporate law disputes, some of which are material, particularly in connection with transactions. At the end of the 2024 reporting period, the risk with an impact on profit and loss associated with “Material impact of legal disputes”, previously classified as an amber risk, was downgraded and assessed as having an expected loss amount of € 50-180 million (2023: € 150-375 million) and an expected probability of occurrence of 5-39% (2023: 5-39%). The lower amount of loss in 2024 as against the prior-year assessment is due to the inclusion of a judgment passed in a legal dispute with a social insurance provider. The updated assessment includes the risk with an amount of € 140.0 million (with a maximum risk of € 240.0 million) in the balance sheet.