The high inflation in Germany will also have consequences for tenants. At least that is the assessment of the real estate company Vonovia.
According to estimates by Germany’s largest real estate company, Vonovia, the high level of inflation will also affect rental prices if the trend continues.
“If inflation is permanently four percent, rents will have to increase accordingly every year in the future,” said CEO Rolf Buch in an interview with the “Handelsblatt” (Wednesday). Otherwise, many landlords would get into serious trouble.
“We can’t pretend inflation is bypassing rents. That won’t work,” Buch said. Many bank managers told him that they assumed “that in the long run we will have to live with higher inflation than in Germany in recent years”. A business model in which sales remain stable and costs rise with inflation is therefore finite.
What tenants have to be prepared for
In the interview, Buch answered the question “What do the tenants of Vonovia’s 500,000 apartments have to prepare for?” responded. However, a Vonovia spokeswoman emphasized that the statements were about economic development and not about a specific announcement. “We are talking here about economic relationships in the housing market,” emphasized the spokeswoman. Sharply increased construction prices would make themselves felt, especially in new buildings. The new leases were included in the rent index.
“We are in a heavily regulated market and that still applies,” said the Vonovia spokeswoman. The company also continues to adhere to the promise for its own housing stock in Berlin that rents will not rise more than one percent on average for the next three years and then no more than inflation. In addition, common solutions could be found in cases of hardship.
Vonovia is Germany’s largest housing group. The listed company rents out more than 565,000 apartments in Germany, Sweden and Austria, including more than 505,000 in this country alone. In Germany, almost half of the population lived in rented accommodation in 2020.
At the presentation of the 2021 annual balance sheet, the Vonovia Management Board reported in mid-March that the average rent had increased to EUR 7.33 per square meter – that was 2.4 percent more than a year earlier. According to the information, modernized apartments in particular contributed to the increase. The companies can partially pass on the costs for energy-related renovations such as thermal insulation and the replacement of old heating systems and windows to the rent.
Source: Stern
Jane Stock is a technology author, who has written for 24 Hours World. She writes about the latest in technology news and trends, and is always on the lookout for new and innovative ways to improve his audience’s experience.
