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. One (2024: 0) material amber risk has been identified at present.

The public political debate surrounding housing availability and price trends is translating into efforts by NGOs, political parties and/or elected representatives to tighten the regulatory framework for the housing industry. This includes, but is not limited to, potential disadvantageous developments in rent legislation, which could interfere with Vonovia’s business model for the long term. Such developments might be (i) regulations on rental price developments (e.g., by extending the rent cap for new rentals, capping rents, etc.), (ii) restrictions on the ability to pass on charges for investment expenses and ancillary costs, or (iii) transferring residential properties to public ownership. Regulatory interventions of this nature can impair the earnings capacity of the portfolio, reduce investment incentives, and negatively impact the long-term value of the portfolio. Even public debates on or announcement of such plans can result in financial loss for Vonovia (such as in terms of reputation or potential withdrawal by investors or other funding institutions). For the purposes of risk aggregation, multiple risks were consolidated into a new risk, “disadvantageous changes in the regulatory framework.” The aforementioned factors affect Vonovia’s net assets, position and results of operations alike. They cannot be distinctly categorized as having an impact on the company’s earnings or statement of financial position. Therefore, the factors were defined as a qualitative risk with a “high” expected amount of financial loss and a probability of occurrence of 5-39%, and were also classed as an amber risk. The company is countering the risk with continuous monitoring of regulatory developments and active dialogue with stakeholders from politics and society.