Rent increases are politically in Germany, because more than half of the people are living for rent. Rolf Buch, the chief of the real estate group Vonovia, wants to treat tenants in the future, as if they could go at any time.
DW: There is concern that in the European elections, the populists feed to get those so, the promise for every complex Problem, simple solutions. The skyrocketing Rents in Germany’s big cities are a much-discussed Problem, and Vonovia stands as the largest provider, especially in the criticism. Helps your company to the rise of the populists?
On the subject of Housing there are neither simple solutions, such as in the case of European issues. It is a fact that you want to attract a lot of people in cities like Berlin, Frankfurt or Munich. But the housing problem is not solved, if no new homes are being built. It is antisocial, because the new people are likely to displace those who can afford to Live at least. That’s why we advocate to create more living space.
Rolf Buch, Chairman of the Board of the real estate group Vonovia
The mood is currently heated. There is even the demand to expropriate private housing companies, as their. And Kevin Kühnert, the chief of the SPD youth organization Jusos said: “I don’t think it is a legitimate business model, to ride with the living space of other people a living out of it.” You feel that as an attack?
No, I don’t think of this as an attack. Expropriation creates a new living space. We should, but seriously, why such claims come. This requirement is not to show that something is wrong in our country that the citizens are dissatisfied with the way you live. And we need to take as a provider of housing very seriously, but also the municipalities and the policy.
In the current annual report of Vonovia is listed on the public Image of the company as one of the biggest risks for the business. From this I conclude, you are aware that you have an acceptance – and an image problem. How do you deal with it?
We are aware that we have as a major provider of housing is a key social responsibility. For us, it can never go only to cost-effectiveness, but also to our influence on the society. If the company finds, we would provide no added value, then we lose our “licence to operate”.
In Germany, people in the past months, protesting against high Rents,
You have announced in the past week, at the annual General meeting in Bochum, a housing guarantee for seniors. What is that, exactly?
Older people worry about to leave your living room. For people over 70 it is a threat. In case of doubt, an older person is in a retirement home and I think none of the is reasonably fit, would like to live in a retirement home. We take the concern for our tenants and want them to take that’s why the fear. Now, if the rent increases after the Rent and the tenant can’t afford it, then we will make sure that he can live in the apartment more.
How?
By, or only in the extent to increase the rent either, as the tenant can afford.
That is, it would be clarified from case to case?
It must be clarified from case to case. But the important thing is: With us, nobody is going to take off over 70, because he can’t afford the rent.
In its annual report, a very remarkable quote from you from the very beginning: “If we are on the right path? The first response we get when we ask those who know best, our employees, our customers, the policy, but also social institutions.” I was surprised that you mention your shareholders at all – including your largest shareholder, the US investment company Blackrock. The shareholders must have a clear idea of the right way.
We are convinced that apartments for rent in the long term can be successful. This Conviction is matured through our experience in the Private Equity time, in the short-term profit is the goal of the company was. We know that apartments that are built for more than a hundred years, can only be successfully rented if it has a business model that lasts a hundred years. The understood our shareholders very well, support and buy our share. Sustainability is one of the main themes, under which our shareholders ‘ questions on an ongoing basis. In this respect, there is no contradiction.
Your company has recently presented the Figures for the first three months of the year. Rental income and profit increased by around 20 percent. Are you satisfied with the result?
Yes, we are very satisfied and it also shows that we are very healthy. In the case of the big challenges that we have in Germany, it is important that we have healthy companies. By the way, not only private companies, but also municipal companies and cooperatives are important. The private sector alone will not be able to solve the problem. But we believe we can contribute to this. If it would not go Vonovia now economically as well, that would help our ability to be significantly smaller.
Their shareholders are happy about high dividends. Tenant representatives complain, however, that around a third of the rental income flows as a distribution of profits to the shareholders. Whom you are obliged in case of doubt, more and more, their shareholders or their customers, i.e. the tenants?
I don’t see the contradiction. My shareholders to know that I can be without a tenant, no dividends, and the tenants know that I can’t invest without shareholders. My role is to create a balance between the interests of different groups, i.e. between tenants, between employees, between the company and between the shareholders.
There is a significant difference between “normal” companies and housing companies: If your customer, i.e. the tenant, are unhappy with Vonovia, can’t you just move, because often the supply of housing is not there. How can struts of the balancing succeed between social responsibility and profit?
Our tenants may not switch the product. This creates a special responsibility: We have to treat our customers all the time as if you can go at any time.
In your quote from the annual report you say that you listen to also on the policy. The policy makes them subject to conditions: The rental price brake is to limit the increase in Rents, moreover, you may cost less renovation on the rent to kill than in the past. In your business report, you mention Changes to the “regulatory environment” as the biggest risk to your business. They perceive such requirements as paternalism?
No, I’m of the Belief that politics is democratically legitimised to set rules according to which a society must work. In this respect, we accept a brake on the Rental price, we will accept the Rent and we also accept the new rules of modernization. That we, in the run-up to such schemes is to ensure that all interests are taken into account and all arguments heard, is good democratic culture.
Politicians want to present themselves often as a fighter for the cause of tenant – especially in times of election campaigns. At the same time however, it was also the policy of selling municipal apartments to companies like yours, and social housing largely has been set. It sucks this inconsistency of the policy?
The sale of apartments in the public sector since many years and went to Private-Equity firms. Cities that still have a good working Together of private, municipal and cooperative enterprises, should be retained, because each of these actors has in the market a different role. In some cities it works very well.
In the case of certain topics, the policy needs to moderate, but the social discussion. We can’t say, more and more people are to be allowed in the cities – but at the same time not build. We can’t say we want to reject more climate protection – but at the same time, the cost of modernization. We may also invest not to say people should remain long in age – appropriate homes-but at the same time. All of the contradictions with which we must deal. It may not be the case that a non-democratically legitimate firm falls how do we make the decision. The policy needs to moderate discussions, then to come to decisions.
More living space would have to be created, in order to relieve the market, says Rolf Buch
In other major European cities, such as London or Paris, can not afford people with lower incomes have long to live in the city for rent. In Germany, normality is?
We need to take care that this is happening to us. And that’s why we need to create in the future in the big cities of affordable housing, including social housing. I think the scheme is that a proportion of new buildings must be bound in a particular building in a particular neighbourhood social for a good solution. We need a social bonding in the large cities. In contrast to London, it is consensus in German society that we do not want the inner cities, where only the Rich live.
The trade Union close to the Hans-Böckler-Foundation has calculated that the management Board members of Dax companies earn more than 70 Times as much as the average of their employees. In the year 2005, when this calculation was first made, it was “only” 42 times more. This is a healthy development?
I have a great understanding of the fact that this development also leads to issues in society. This is a justice discussion, we have not only Executive salaries, but also in the case of footballers, artists, and other groups. With this question we have to deal in a constructive way.
According to the above-mentioned investigation, you are earning 117 Times more than the average Vonovia employee. The reason for a bad Conscience or Pride?
No, certainly not for Pride. You know, that the Supervisory Board is the remuneration in the form of a Corporation. It is, therefore, a decision is made.
Rolf Buch is Chairman of the Board of Vonovia AG, Germany’s largest real estate company. With almost 400,000 residential units, the group is the largest housing company and the largest private landlord in Germany. The group, headquartered in Bochum, Germany, has a market capitalization of around 20 billion euros (as of Dec. 2018), and is one of the 30 companies in the German stock index DAX. Precursor of Vonovia Deutsche Annington, which had taken over in 2015, the competitors Gagfah for € 3.9 billion was. 2018 Vonovia took Buwog of Austria, and Victoria Park from Sweden.