ESRS 1 (Annex A, AR2) / ESRS 2 (MDR-P) – Strategic Policies Related to “Living at Fair Prices”

As a responsible company, Vonovia is committed to providing affordable homes that reflect demand and meet the basic need for housing. We express this in our Business Philosophy to transparently communicate our stance to our tenants and society. Our policy addresses two material impacts, which directly result in our material financial risk from changes in regulatory frameworks (rents and standards). We aim to offer long-term homes to as many people as possible. The challenge here lies in being able to offer a broad supply of housing at fair, transparent and market-oriented prices, even in a more challenging environment, while at the same time pursuing our climate objectives, which include a greenhouse gas-neutral housing stock by 2045.

Social responsibility and the transparency of our rents are decisive factors in this context. Through investments in core business activities – rental, refurbishment and new construction – we aim to ease the current housing market situation.

Compliance with regulatory requirements, such as rent indices and price-fixing agreements, in a highly regulated market, ensures reliability and stability in the landlord-tenant relationship. This is therefore an essential obligation for us, as highlighted under the impact “Contribution to more affordable homes for tenants through adherence to regulatory frameworks.” However, we also recognize the potential risk of regulatory frameworks for rents and construction standards developing in an unfavorable direction for Vonovia, directly influencing the company’s financial performance and operational flexibility. Despite this, we are in favor of regulatory intervention in the housing markets because we believe that it helps to ensure social balance and creates a stable business environment as a result. In our rental operations, we always observe the applicable country-specific legislation, monitoring compliance through our local regional organization and systematic support from our central portfolio management team.

Additional measures – such as special regulations for elderly people, hardship management and the use of social managers – enable us to support low-income and vulnerable customer groups so that they can also remain in their apartments for as long as possible or continue to have access to affordable homes.

The use of public subsidies helps us to make existing and new homes affordable for our tenants (see impact “Contribution to more affordable homes for tenants through new construction and development activities”) while simultaneously implementing climate change mitigation measures. This contributes to a balanced tenant structure in our neighborhoods. We remain focused on optimizing construction costs and we have adopted the “Basic House” policy (see ESRS E1 and ESRS 2 SBM-1) to provide sustainable, affordable homes for diverse target groups while introducing a share of subsidized homes to the market. New projects, including those employing serial modular timber construction methods, are currently being implemented in cooperation with our joint venture partner, Gropyus.

Our commitment to social programs and the provision of social housing are further pillars of our approach. Cooperating closely with local authorities and involving stakeholders is essential for developing sustainable housing market solutions that meet people’s needs.

Both the identified impacts and the associated risk are reviewed annually for their validity as part of the update to the IRO assessment. This process involves collaboration between portfolio management, the legal department and corporate communications (Public Affairs).

Our rental management policies and the handling of accompanying measures apply to the entire Group and focus on our core business area, namely, the rental process and the utilization of homes by tenants.

An exception is Sweden, where rents are generally set as part of a binding, consensual process involving negotiations between tenants’ associations and landlords. Increases tend to occur annually and after refurbishment to a higher standard. In Sweden, the scope for regulatory intervention in rental pricing is narrower than in other markets, particularly Germany, resulting in less pronounced implementation of these policies there.

The Management Board makes the key decisions regarding the strategic direction of the rental business. Specifically, during modernization measures, we balance investments in climate change mitigation with the need for socially responsible cost-sharing arrangements for tenants. Following approval by the Management Board, the concrete planning and execution of measures are carried out by local landlords in the different regions. Regular exchanges of information between central and local teams ensure adherence to this approach.

Through our corporate principles and mission statement, which are publicly available on our website, as well as our communications and public relations efforts, we convey our core values externally. Additionally, our customer website provides direct access to information and contact options, such as those related to our social management initiatives. We determine tenant satisfaction regarding rent levels through customer surveys, which offer tenants the opportunity to highlight any issues. Similar surveys are conducted for new construction projects, allowing us to gather customer feedback at those locations on the product.